AUSTRALIA Law and Practice Contributed by: Greg Williams and Sheena McKie, Clayton Utz
legislative instruments, along with the Eighth Com- munity Pharmacy Agreement between the Common- wealth and the Pharmacy Guild of Australia, and the First Pharmaceutical Wholesaler Agreement (1PWA) between the Commonwealth and National Pharma- ceutical Services Association Limited, together set various elements of pricing that apply across the supply chain, including wholesaler mark-up and phar- macy dispensing fees. The particular requirements will depend on the type of medicine in question (eg, chemotherapy drugs or highly specialised drugs sup- plied in hospitals have different requirements). In addition, the Commonwealth Government sets patient co-payment levels and a “Safety Net”, which ensure that costs to patients remain low, irrespective of the cost of the medicine to the government. Medical device prices are not directly controlled by government. However, for devices used in public hos- pitals, pricing is effectively constrained by state/ter- ritory health department procurement and tendering processes. In addition, the Prescribed List sets maxi- mum prices for certain device and tissue products that must be supplied under private health insurance cover. 8.2 Price Levels of Pharmaceuticals or Medical Devices “Prices of items containing the drug in reasonably comparable overseas countries” are one factor that the Department of Health, Disability and Ageing’s Pric- ing Section considers when negotiating prices with the sponsor for listing on the PBS. However, this is not an element of the PBAC’s task in providing recom- mendations as to whether a particular drug or medici- nal preparation should be listed on the PBS. Most of the analysis is driven by domestic cost-effectiveness rather than direct cross-country price benchmarking. Overseas prices nevertheless remain a background consideration in pricing negotiations between the government and a company (“responsible person”) once the PBAC has made a positive recommendation for listing. 8.3 Reimbursement From Public Funds The PBS subsidises the cost of medicines listed on the Schedule of Pharmaceutical Benefits for all eli-
gible Australian residents and overseas visitors from countries with which Australia has a Reciprocal Health Care Agreement (the UK, Ireland, New Zealand, Malta, Italy, Sweden, the Netherlands, Finland, Norway, Bel- gium and Slovenia). A medicine can only be listed on the PBS if the PBAC recommends it based on clinical effectiveness and cost-effectiveness. The Australian public hospital system also subsidises pharmaceuticals and medical devices through state and territory health department budgets, generally via procurement processes. There are a limited number of other schemes that subsidise products or services for particular purposes and groups of people, such as the National Hearing Program, the National Diabetes Services Scheme and the National Disability Insur- ance Scheme. 8.4 Cost-Benefit Analyses Australia introduced health technology assessments (HTAs) in 1992, to ascertain the cost-effectiveness for PBS listings. The PBAC cannot recommend a medicine for PBS listing unless it is satisfied that the medicine represents value for money compared with existing therapies for an identifiable group of patients. For medical devices and diagnostic services, the equivalent HTA body is the Medical Services Advi- sory Committee (MSAC), which assesses clinical effectiveness and cost-effectiveness before a service or device can be funded through the Medicare Ben- efits Schedule (MBS) or recommended for listing on the Prescribed List (for complex devices requiring full HTA process). 8.5 Regulation of Prescriptions and Dispensing by Pharmacies In Australia, prescribing is regulated at the Common- wealth and state and territory level. The PBS imposes restrictions on subsidised medicines at the Common- wealth level. There are three applicable tiers of pre- scribing restrictions on the PBS: • unrestricted – no conditions; • restricted – limited to specific therapeutic uses; and
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