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 ranks among the top markets worldwide, and is set to surpass AUD 25 billion by the end of 2020.  

Australia’s national public health program, Medicare, 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. All services subsidised by the Australian Government under Medicare are listed on the Medicare Benefits Schedule (MBS). The Australian Federal Government also subsidises private health cover through an income-tested rebate system. Private health insurance provides extended coverage 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 (such as medicines, medical devices or biologics) in Australia, which are listed on the Australian Register of Therapeutic Goods (ARTG). The Special Access Scheme (SAS) allows certain health practitioners to access therapeutic goods that are not included in the ARTG) for a single patient. Therapeutic goods that are not included in the ARTG (and are not otherwise exempt from being in the ARTG) are categorised as ‘unapproved’. TGA-approved pharmaceuticals may be government subsidised under the Australian Pharmaceutical Benefits Scheme (PBS) or the National Immunisation Program (NIP).

Recommendations for PBS reimbursement of ARTG products are provided by the Pharmaceutical Benefits Advisory Committee (PBAC), an independent statutory body that 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:

    1. Unrestricted 
    2. Restricted for specific therapeutic uses 
    3. Authority (medical practitioner approval for use required) 

The PBAC also reviews the recommendation of expensive and life-saving medications supply for life-threatening and rare diseases under the Life Saving Drugs Programme (LSDP). Medications that require restricted supply through public and private hospitals include the PBS Section 100: Highly Specialised Drugs Program, or the PBS Section 100: Efficient Funding of Chemotherapy.

Other notable influencers include Medicines Australia (MA), which impacts 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 regularly publishes online updates offering health professionals timely, independent, evidence-based information on new listings and changes to listings on the PBS.

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 Evaluation Section and Economic Sub-Committee (ESC).

Submissions fall into four broad categories for both PBS and NIP funding:

    1. 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.
    2. Minor submissions (changes to existing listings that do not change the population or cost-effectiveness, or the listing of a new form or strength of an already-listed medicine that has a bioequivalence or equivalence statement from the TGA) – evaluated directly by the PBAC.
    3. Committee secretariat submissions – listing changes that do not require comparison of effectiveness, cost-effectiveness or clinical need; there is no difference in patient safety or population for the new item compared to an already-listed item; and there is no financial effect associated with the proposed change to the PBS.
    4. Generic equivalent submissions – lodged directly with the Department of Health when there is no requirement for consideration by the PBAC as a minor submission.

Companies must provide major submissions 17 weeks prior to a PBAC meeting, and 11 weeks prior for minor submissions. Sponsors are emailed advice of outcomes within one week and receive ratified PBAC minutes for positive recommendations within three weeks post- PBAC meeting.

Public summary documents (PSDs) inform the public of PBAC decisions and the basis for each PBAC outcome. PSDs are generally published 16-18 weeks post- PBAC meeting. In the instance where the PBAC must enter into treatment cost negotiations with the manufacturer, such as for PBS Section 100 listings, PBS listings 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.

The Medicine Status Website (MSW), launched in early 2020, centralises key information on how to list a medicine on the PBS, enables users to track a medicine’s progress through the PBS listing process, and provides advice on how consumers can contribute to PBAC decision making.

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 each year in January in line with the Consumer Price Index (CPI).

Sustaining the Pharmaceutical Benefits Scheme (PBS) 

In May 2017, The Australian Government signed a five-year Strategic Agreement with Medicines Australia that included significant PBS process reform and new measures to accelerate patient access to innovative medicines. The agreement aims to ensure the sustainability of the PBS, while maintaining prescriber choice and offering certainty for the Australian pharmaceutical industry through a stable PBS policy environment.

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 in relation to generics, drug substitution is permitted with consumer consent). As a result, cost-effectiveness plays an important role, not only in determining whether a treatment is PBS listed, but how a brand fits within a tightly regulated pricing scheme.

Brand Value Beyond Safety and Efficacy 

To build and sustain brand value, manufacturers 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 with these key stakeholders at all levels in Australia.

For a complimentary 30-minute consultation

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