Australia's Price Cuts Contrast Sharply With US Drug Costs

As US Drug Prices Increase, Australia's "PBS" Keeps Drug Costs Manageable
Will trade policy cause prices hikes?

An Australian government law effective April 1, 2012 will slash prices on 1000 brands of 60 popular prescription medicines by up to $14 a script. Not only will thousands of families pay less for prescription drugs, but taxpayers who subsidize the cost of the life-saving medicines through the national government's Pharmaceutical Benefits Scheme (PBS) will also save $1.9 billion over five years. The Sydney Morning Herald reports "Millions of patients will pocket average savings of $3 a pack on essential drugs to treat high blood pressure, cholesterol, diabetes, epilepsy, depression and pain. Sixty commonly prescribed drugs will be cheaper for patients, while taxpayers will save $1.9 billion - freeing up funds to subsidies new drugs for leukemia, arthritis and HIV for the first time."

Drug prices in Australia are already very low in comparison to in the US
because of the role of the Australian government in both subsidizing drug costs for its citizens and also establishing reference pricing under the national PBS. For example, 300 patients a year who are newly diagnosed with chronic myeloid leukemia will no longer face bills of $30,000 a year to buy the drugs dasatinib and nilotinib.

According to an article in the Courier Mail/Sunday Mail, "Drug companies hope those savings will also help the Government list new drugs on the taxpayer-funded PBS, with a swag of new treatments for cancer, arthritis and kidney failure set to join the taxpayer-subsidized medicines scheme."

The paper reports, "Because the price of the drugs will now fall below the co-payment for prescription medicine of $35.40, patients will secure big savings and pharmacists can compete on price. Pensioners and concession card holders will continue to pay $5.80 a script."

Such drug costs are almost shockingly low even without the price cuts from a US standpoint. A recent AARP report found that the retail price of the 514 drugs most widely used by Medicare recipients rose approximately 26% between 2005 and 2009. Although the price of generics decreased 31% during this same time period, brands increased 41% and specialty drugs increased more than 48%. Read the AARP report.

According to the Sunday mail article "The vast majority of prescription medicines are purchased by patients with concession cards who will continue to pay $5.80 a script,'' Pharmacy Guild of Australia spokesman Greg Turnbull said. "The average cost of the thousands of medicines on the PBS is about $48. So every time you pay $5.80 you are getting a massive saving.''

The price cuts also apply to super-expensive cancer and specialty drugs. For example, 300 Australian patients a year who are newly diagnosed with chronic myeloid leukaemia will no longer face bills of $30,000 a year to buy the drugs dasatinib and nilotinib.

Compare this to what Americans face. An April 2 article on US prices in FiercePharma reported that new cancer drugs are "more expensive than ever. Just look at some of the recently approved products in the category: Dendreon's prostate drug Provenge at $93,000; Pfizer's targeted lung-cancer treatment Xalkori at $115,000 a year; Bristol-Myers Squibb's melanoma drug Yervoy at $120,000 per year; and Roche's targeted melanoma med Zelboraf at $56,400 for a 6-month course."

Reuters reports on the implications of these high costs for developed and developing countries alike: "Cancer is a leading cause of death worldwide, accounting for 7.6 million deaths in 2008 and predicted to top 13 million in 2030, according to the World Health Organization. Some 70 percent of deaths occur in low- and middle-income countries.

For drugmakers, the disease is a rich seam of sales and profits. Cancer medicines overtook cholesterol fighters as the biggest-selling selling prescription drug class five years ago and sales are set to hit $85 billion in 2016, up from $58 billion last year and a mere $8 billion in 2000, according to consensus forecasts compiled by Thomson Reuters Pharma."

The Reuters article acknowledges that in the United States, "some cancer patients have abandoned medical care because of their bills or else face a significant risk of bankruptcy, according to studies presented at the American Society of Clinical Oncology last year."

Capping specialty drug costs. No wonder some states are rebelling, and putting limits on what insurance companies can charge for specialty drugs such as these new cancer drugs, with Maine recently enacting a $3500 annual out of pocket limit for specialty drugs. Link to LD 1691 The federal Affordable Care Act will also require prescription drug costs to be included within the overall deductible for medical costs in insurance policies beginning January 1, 2014. Read more.

Trade policy implications. Of course, this does little to address the underlying prices of these drugs, and there is widespread concern among NGOs concerned with access to medicines, academics, and US states that recent trade agreements with Korea and under negotiation with Pacific Rim countries (the Trans-Pacific Partnership or TPP) will lead to locking in these high "market-based" prices. In Australia, concerns have been raised that the TPP will interfere with the successful pricing strategies of the PBS. For more on this trade and pharmaceutical pricing, read about trade policy on the NLARx website.

Recent Action on Prescription Drug Policy in the States

More Action in the States: Vaccination Policy, Immunity, Joint Purchasing, Payments to Doctors & More

VERMONT VACCINATION POLICY DEBATE:
The House Committee on Health Care marked a significant policy shift last week, when a majority of the committee in a straw poll said it would oppose removing a philosophical exemption for parents who choose not to vaccinate their children.

The Senate passed, by an overwhelming majority, a bill that requires all children be vaccinated against a range of illnesses. The bill prevented parents from claiming "philosophical exemptions," which would allow them to refuse to vaccinate their child before sending them
to school.

The House committee, however, passed a bill that allows for those philosophical exemptions.

According to reporting by WCAX.com, "The bill they voted out will not directly address the decline in rates we've seen in Vermont. I am disappointed. I wish they could've done more," said Sen. Kevin Mullin, R-Rutland County, who is also Vice Chair of the NLARx Board of Directors.

But the bill saw fierce debate in the House, and last week a compromise that would have kept the exemption failed on a tie vote. It is unclear at this point whether it will make it to the House floor. Read the Vermont Digger story.

VERMONT MARKETING & DOC PAYMENT REPORT OUT:
Vermont's annual report from its Attorney General on drug company spending on payments to doctors and other medical providers is now out. The Vermont law is one of the models for the federal Physician Payment Sunshine Act which was part of the Affordable Care Act, the implementation of which remains delayed. Vermont's current report found in FY11, approximately 42% of the $5.6 million in expenditures were for clinical trials and research. Doctors received 23% of the expenditures, 12% went to professional, educational, or patient organizations and 5% to academic institutions; 12% of the expenditures went to all health care providers combined for educational materials.

Overall, 154 manufacturers of pharmaceuticals, biologics, and medical devices spent approximately $5.6 million in direct payments to Vermont doctors, hospitals, universities and others. That figure represents an overall spending increase of 17% from the $4.8 million reported the previous fiscal year. In particular, the amount spent on pharmaceutical marketing ($2.2 million) is about 22% higher than the $1.8 million reported in the previous fiscal year. This is in spite of the fact that Vermont has a law banning most gifts and payments to medical providers. Read more in the Vermont Digger.

ILLINOIS GOVERNOR QUINN SEEKS BIG CUTS:
Lawmakers are trying to figure out how to meet Governor Pat Quinn's goal of cutting the $14 billion Medicaid program by $2.7 billion, and are scrutinizing the big-ticket cost of the pharmaceuticals. More

OREGON'S EFFORT TO MAKE STATE DRUG PURCHASING MORE EFFICIENT FAILS AGAIN:

Oregon is not finding it easy to make state drug purchasing more efficient. For the second year in a row, legislation requiring state agencies to purchase their prescription drugs through the Oregon Prescription Drug Program (OPDP) was unable to overcome staunch opposition from the pharmaceutical industry and insurance lobbyists. This is in spite of the fact that a legislatively required study by the Department of Corrections showed the agency could save approximately $1.4 million based on half the drugs purchased by the department. In addition, Public Employees' Benefit Board could save $5.1 million. Read more in The Lund Report.

ARKANSAS MEDICAID FALSE CLAIMS ACT CASE GOES AFTER RISPERDAL MARKETING:
Bloomberg BusinessWeek reports that the state of Arkansas is in court charging a subsidiary of pharmaceutical company Johnson & Johnson improperly marketed an antipsychotic drug and lied to doctors for years about the risk of side effects.

Arkansas wants Janssen Pharmaceuticals Inc. fined for each of the 250,000 Risperdal prescriptions issued to the state's Medicaid patients from November 2002 through June 2006, an award that could range from $1.25 billion to $2.5 billion and would go toward the state's Medicaid fund.

The state claims that Janssen violated Arkansas' Medicaid Fraud False Claims Act by misrepresenting of the drug's side effects of diabetes and hormonal imbalance. The state also claims the company violated the Deceptive Trade Practices Act by lying about the drug's risks in a letter sent to Arkansas doctors. Read more

NORTH CAROLINA CONSIDERS DRUG COMPANY IMMUNITY:
A senate committee is considering legislation to immunize drug companies from liability for harm from FDA-approved drugs, after case filed involving Brittany Prewitt, 15, who was taking the drug Yaz to clear up her acne and collapsed while playing catch with her father. The family is suing Bayer, claiming the company suppressed information about dangers associated with Yaz. More

RHODE ISLAND BILL WOULD BAN COUPONS:
Rhode Island would join Massachusetts as the only states with a ban on coupons for prescription drugs if a bill currently pending passes. Read the bill.