The Australian pharmaceutical industry comprises domestic and international enterprises. Foreign-owned multinationals dominate overall, and while Australia is a relatively small market in terms of population, it is ranked within the top 20 markets worldwide.
Australia’s Medicare national public health program covers a high percentage of the cost of a variety of pharmaceuticals and medical services, as well as the costs of public hospital care nationwide. The Australian Federal Government also subsidises private health cover through an income-tested rebate system. Private health insurance provides extended cover for private hospitals, broader medical services and pharmaceuticals beyond the costs covered by Medicare.
Australia’s Payer Stakeholders
Australia’s regulatory medical body, the Therapeutic Goods Administration (TGA), is responsible for the registration of therapeutic goods in Australia. TGA-approved pharmaceuticals may be subsidised under the Australian Pharmaceutical Benefits Scheme (PBS), or for vaccines, via the National Immunisation Program (NIP), and are administered by Medicare. TGA-approved pharmaceutical products are registered on the Australian Register of Therapeutic Goods (ARTG).
Recommendations for PBS reimbursement of ARTG products are provided by the Pharmaceutical Benefits Advisory Committee (PBAC), an independent statutory body which reports to the Federal Department of Health. The PBAC accepts established product safety and efficacy as a condition of ARTG registration.
The PBAC typically meets three times a year, when new product submissions, together with new product indications and changes to indications, are reviewed for recommendation, pricing, category placement and repeat access. Medications will fall into one of three categories:
- Restricted for specific therapeutic uses
- Authority (medical practitioner approval for use required)
The PBAC also reviews the recommendation of expensive life-saving medications for supply under the Life Saving Drugs Programme (currently in review) and medications that require restricted supply through public and private hospitals such as the PBS Section 100: Highly Specialised Drugs Program or the PBS Section 100: Efficient Funding of Chemotherapy.
Other notable influencers include Medicines Australia, which influences pharmaceutical industry reputation and regulates the advertising and promotion of prescription products, and NPS MedicineWise, which is responsible for prescribing behaviour in Australia. In particular, the NPS MedicineWise RADAR program, published three times per annum to coincide with PBAC recommendations, offers health professionals necessary information regarding new PBS-listed treatments.
Important Points to Keep in Mind
The pricing and reimbursement process for medicines in Australia is often long and complex. It is based on clinical benefit, comparison to medicines in the same therapeutic class, cost-effectiveness and budgetary implications.
Clinical and economic evaluations are initially reviewed by the PBAC’s Pharmaceutical Evaluation Section and Economic Sub-Committee (ESC).
Submissions fall into three broad categories for both PBS and NIP funding:
- Major submissions (new listings, new indications, orphan medicines, significant changes to existing listings) – evaluated by the PBAC’s Pharmaceutical Evaluation Section and presented to the ESC prior to PBAC evaluation
- Minor submissions (new indications, changes to use of listed products) – evaluated directly by the PBAC
- Generic equivalent submissions – reviewed only by the Pharmaceutical Evaluation Section
Companies must provide major submissions 17 weeks prior to a PBAC meeting, while minor submissions are required 11 weeks prior. Sponsors are verbally informed of outcomes within one week, and in writing within three weeks post PBAC meetings.
In the instance where the PBAC must enter into treatment cost negotiations with the manufacturer, such as for PBS Section 100 listings, PBS listing may be delayed or postponed.
In general, new PBS listings are available on the first day of each calendar month prior to a subsequent PBAC meeting and products may receive listing as early as the calendar month immediately post- PBAC review.
Implications for Industry
The PBS currently covers up to 80 per cent of prescriptions dispensed in community pharmacies. However, consumers do carry an out-of-pocket cost or co-pay for their medications. The PBS co-payment scheme is adjusted annually every January in line with the Consumer Price Index.
Sustaining the Pharmaceutical Benefits Scheme
As of January 2015, the Australian Government implemented a four-year program aimed at achieving sustainability of the PBS. Under the revised program, the amount consumers pay for medicine has increased. While the Government envisages the increased consumer contributions will allow for PBS cost efficiencies that will subsequently enable new medications to be listed, consumer and pharmacy industry groups believe such changes will impact consumer access to medicine.
Within a therapeutic group, the PBS subsidises medicines up to the cost of the lowest-priced drug in the group. Those extra costs for medicines carrying a therapeutic group premium are at the expense of the consumer and do not contribute to the consumer’s PBS safety net threshold. Under Therapeutic Group Premium Policy, drug substitution by pharmacists is not permitted (note, under Brand Premium Policy as relates to generics, drug substitution is permitted with consumer consent). As a result, cost-effectiveness plays an important role, not only in determining whether or not a treatment is PBS listed, but how a brand fits within a tightly regulated pricing scheme.
Brand Value Beyond Safety and Efficacy
In order for manufacturers to build and sustain brand value, they must be willing to reach agreements with Government, invest in life-cycle value management initiatives and build relationships and advocacy networks with physicians and prescribers.
Offering key players best available data, maintaining ongoing brand awareness, reinforcing brand value proposition and understanding the nuances of the Australian reimbursement environment can help a brand team sustain volume and value throughout the brand lifecycle.
GLOBALHealthPR can help you map out and implement your strategy for engaging and communicating to these key players at all levels in Australia.
for a complimentary 30-minute consultation
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