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Australian PBS Cost Rises 8.8% Y/Y to US$7.7 bil. in FY 2008/09

Published: 11/30/2009
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In fiscal year 2008/09, the Pharmaceutical Benefits Scheme spend increased by 8.8% to A$7.65 billion, with the highest government spend going to lipid-modifying agents.

IHS Global Insight Perspective

 

Significance

In fiscal year (FY) 2008/09, Australian's PBS cost increased by 8.8% year-on-year to A$7.7 billion. During the same period, 112 drug items were newly included or extended in the PBS listing with an additional cost estimated to reach A$154.3 million.

Implications

The estimated additional cost from new listings in FY 2008/09 dropped compared with the previous year.

Outlook

Although the overall PBS cost remained at a steady rate of increase, the additional cost from newly-added items has shown a trend of decline as the PBPA endeavours to control the healthcare cost to the government and patients. On the other hand, the most-prescribed drugs have remain pretty much in line with previous years while lipid modifying products are poised to continue enjoying significant market share.

Australia's Pharmaceutical Benefits Pricing Authority (PBPA) has published its annual report for fiscal year (FY) 2008/09 ended 30 June 2009 including an annual review of the country's public health insurance programme, the Pharmaceutical Benefits Scheme (PBS). In the 12 months through June 2009, the PBS cost reached A$7.65 billion (US$6.98 billion), up by 8.8% year-on-year (y/y).

PBS Annual Cost Reaches A$7.7 bil. in FY 2008/09

In FY 2008/09, the Pharmaceutical Benefit Assessment Commission (PBAC) recommended a total of 146 items for listing on the PBS, among which 112 were listed. The new inclusion or extension to the PBS listing is estimated to generate A$154.3-million additional cost of drugs, representing a 20.2% decline compared with the previous year.

Australia: PBS Annual Cost FY 2008/09

Category

Processed Script Numbers (mil.)

PBS Cost (A$ mil.)

General

26.33

1,390.70

Concessional

155.14

5,178.39

PB Other

-

1,085.63

Total

181.47

7,654.72

Source: PBPA Annual Report 2008/09

During the same period, Pfizer's cholesterol-lowering drug Lipitor (atorvastatin) 40-mg and 20-mg tablets snatched up the top two positions in the list of most prescribed items under the PBS, with total cost of A$503.6 million. Sanofi-Aventis/Bristol-Myers Squibb's (France/U.S.) Plavix was ranked sixth, following atorvastatin, esomeprazole, atenolol and pantoprazole. Lipid-modifying agents are the top group by the highest government cost, increasing the government cost by A$1.1 billion during FY 2008/09.

Australia: Most Prescribed Items Under the PBS, 2008/09

Drug

Volume (mil.)

Government Cost (A$ mil.)

Total Cost (A$ mil.)

Average Price (A$)

Atorvastatin 40 mg

3.73

244.5

292.8

78.54

Atorvastatin 20 mg

3.67

163.8

210.8

57.46

Esomeprazole 20 mg

3.09

78.2

117.3

37.96

Atenolol 50 mg

3.03

19.1

31.5

10.40

Pantoprazole 40 mg

2.70

82.1

111.1

41.22

Clopidogrel 75 mg

2.58

189.6

211.6

81.88

Esomeprazole 40 mg

2.35

109.7

137.2

58.45

Simvastatin 40 mg

2.22

79.8

102.1

45.90

Omeprazole 20 mg

2.06

59.6

72.3

35.19

Salbutamol Sulfate 100 mg

2.05

22.9

31.0

15.08

Six High-Cost Drugs Receive Extended or Newly-Added Listing

In Australia's PBS system, high-cost medicines include those predicted to cost the PBS over A$10 million per annum during at least one of the first four years of listing and such drugs' listing must be approved by the Cabinet. In FY 2008/09, six drugs expected to reach the threshold of A$10 million annual cost to the PBS have been newly listed or had an extended listing, namely Amgen's Sensipar, Biogen Idec's Tysabri, Abbott's Humira, Schering-Plough's Noxafil, Sanofi-Aventis/Bristol-Myers Squibb's Plavix/Iscover and Pfizer's oncology drug Sutent.

Australia: High-Cost Medicines Listed in FY 2008/09

Drug

Active Ingredient

Manufacturer

Listed Indication

Listing Date

Sensipar

Cinacalcet

Amgen (U.S.)

Secondary hyperparathyroidism

1 July 2008

Tysabri

Natalizumab

Biogen Idec (U.S.)

Relapsing remitting multiple sclerosis

1 July 2008

Humira

Adalimumab

Abbott (U.S.)

Crohn's disease

1 August 2008

Noxafil

Posaconazole

Schering-Plough (U.S.)

Prophylaxis and treatment of invasive fungal infections

1 January 2009

Plavix/Iscover

Clopidogrel

Sanofi-Aventis (France)/BMS (U.S.)

Acute coronary syndrome

1 February 2009

Sutent

Sunitinib

Pfizer (U.S.)

Renal cell carcinoma

1 May 2009

Source: PBPA Annual Report 2008/09

Outlook and Implications

The trend highlighted in the PBPA's annual report for FY 2008/09 is largely in line with the trend demonstrated in recent years in Australia's public expenditure on drugs. The consistent growth of PBS costs has fuelled the need of the Australian government to exercise cost-containment measures to realise multi-million-dollar savings to its expenditure in this field. In FY 2007/08, the number of items listed on the PBS, 112, represented a significant 37.4% drop from the previous year's 179. The number of high-cost drugs listed during this period has declined as well compared to that in FY 2007/08. Similar measures such as the control of high-cost drug listing and overall PBS cost are likely to continue in the coming years. Other actions to reach the government's goal of saving may also include generics promotion and increased co-payments from patients as well. In terms of the funding of drugs, the general trend has remained pretty much the same as previous years with lipid modifying products topping the government's spending list. Cardiovascular treatments like Lipitor, Plavix and simvastatin are to see more years of solid sales to follow.
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