INTERNATIONAL CSIRO PUBLISHING
Australian Health Review, 2015, 39, 455–461 http://dx.doi.org/10.1071/AH14122
Exploring the implications of a fixed budget for new medicines: a study of reimbursement of new medicines in Australia and New Zealand Colman Taylor1,2,3,5 PhD, Post-doctoral Research Fellow Michael Wonder4 BSc (Hons) BPharm, CEO 1
The George Institute for Global Health, PO Box M201 Missenden Road, Camperdown, NSW 2050, Australia. Sydney Medical School, Edward Ford Building A27, The University of Sydney, NSW 2006, Australia. 3 Optum, Level 1, 370 Norton Street, Lilyfield, NSW 2040, Australia. 4 Wonder Drug Consulting Pty Ltd, PO Box 470, Cronulla, NSW 2230, Australia. Email: [email protected] 5 Corresponding author. Email: [email protected] 2
Abstract Objective. Spending on medicines under the Pharmaceutical Benefits Scheme (PBS) represents the ninth largest expense to the Federal Government. A recent report by the Commission of Audit to the Federal Government suggested spending on the PBS is unsustainable and a capped budget, similar to New Zealand’s PHARMAC model, may be required to contain costs. The objective of the present study was to compare listing outcomes between Australia and New Zealand, thereby exploring the opportunity cost of a capped budget for new medicines. Methods. Listing outcomes in Australia and New Zealand were compared through published research and an updated search of listing outcomes from publicly available information. Results. Previous research has demonstrated that New Zealand listed less than half of the new medicines listed in Australia over a 10-year period (2000–09). Our research shows that most of the new medicines not listed in New Zealand during this period remain unlisted today. In the previous 12 months, Australia listed 17 new medicines on the PBS, whereas New Zealand listed only one new medicine that was not already listed in Australia. Conclusion. The discrepancy in the number of new medicines listed in New Zealand compared with Australia raises questions regarding the consequences of implementing a capped budget for new medicines. However, further research is needed to understand the relationship between listing outcomes, access to medicines and health benefits for the community. What is known about this topic? Due to factors such as an aging population and longer life expectancy, total government health expenditure as a proportion of gross domestic product (GDP) is expected to rise. Consequently, many commentators have suggested current expenditure patterns are unsustainable. The PBS represents a significant expense to the government and recent reports suggest the PBS should be reformed to align with New Zealand’s PHARMAC model, where an independent entity manages access to subsidised medicines under a capped budget. However, little information exists regarding access indices for new medicines in New Zealand compared with Australia. What does this paper add? This paper builds on previously published research comparing listing outcomes for new medicines in Australia and New Zealand. The results highlight a discrepancy in listing new medicines in New Zealand compared with Australia that has not improved in recent years. Consequently, the results question the notion that a capped budget for new medicines is a good policy choice for Australia. What are the implications for practitioners? This paper reviews the current reimbursement system in Australia and compares it with New Zealand’s PHARMAC model. In addition, this paper compares listing outcomes for new medicines in Australia and New Zealand. In doing so, the results of this paper have implications for practitioners who are concerned about continued subsidised access to new medicines via the PBS, and for policy makers in relation to proposed PBS reforms. Further, our paper provides insights into PBS policy reform that may assist practitioners who are interested in commenting on any proposed reform. Received 25 July 2014, accepted 30 January 2015, published online 10 March 2015
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Introduction In its recent report to the Federal Government, the Commission of Audit made several recommendations in relation to the Pharmaceutical Benefits Scheme (PBS).1 These recommendations were based on the premise that current spending on medicines is unsustainable and reform is needed. In particular, the Commission noted that government spending on medicines is expected to be one of the fastest growing areas over the medium to long term. This trend is underpinned by an aging population, the increasing prevalence of chronic disease and the expanding proportion of concessional cardholders.2 In addition, providing subsidised access to increasingly more personalised medicines and medical technologies has been cited as a contributing factor.3 However, the notion that Federal Government spending on health care is unsustainable in the long-term remains controversial. Commentators have cited spending in other Organization For Economic Cooperation and Development (OECD) countries as well as the government’s latest health spending figures, which show the lowest growth rate since the 1980s, to refute this assumption.4,5 Regardless, as the pressure to find savings mounts, health expenditure, which cost Australian governments approximately A$100 billion in 2012–13,6 remains a prime target. In order to find savings in PBS expenditure, a key recommendation by the Commission was for the Federal Government to adopt a model similar to New Zealand’s Pharmaceutical Management Authority (PHARMAC), where an independent authority manages subsidised access to new medicines under a capped budget. However, the opportunity cost of such a decision was not considered, which potentially includes reducing health benefits by limiting subsidised access to new medicines in important disease areas. Using recent research and an updated search for new listings in Australia and New Zealand, the purpose of the present study was to understand current differences in access to new medicines between Australia and New Zealand. In doing so, we question the notion that a capped budget for medicines is a good policy choice for Australia. The PBS The PBS is managed by the Department of Health and governed by the National Health Act (NHA) (1953; http://www.comlaw. gov.au/Details/C2014C00353; cited 12 January 2015). The Schedule of Pharmaceutical Benefits (http://www.pbs.gov.au; cited 12 January 2015) lists all medicines that can be dispensed to patients at a subsidised price. To list a new medicine in the Schedule, the Pharmaceutical Benefits Advisory Committee (PBAC) considers the comparative costs and benefits and makes recommendations to the Minister for Health. The PBAC is an independent expert body appointed by the Federal Government and includes doctors, other health professionals, health economists and consumer representatives.7 Policy levers to contain expenditure The Federal Government (henceforth referred to as the Government) has several ways to constrain the fiscal challenge of funding new medicines. We do not provide an assessment regarding the efficacy of these measures; rather, we note those measures that are currently in use by the Government and/or the PBAC.
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The NHA (1953) includes a provision that medicines can be listed on one of two formularies (F1 and F2). In general, F1 includes single-branded medicines and F2 includes off-patent medicines with multiple brands. Medicines moving from F1 to F2 incur a statutory price reduction of 16%. For medicines listed in F2, the Government implemented a series of policies over recent years, collectively known as ‘price disclosure’.8 Through sponsors reporting discounts given to pharmacies, ‘price disclosure’ uses a market-based mechanism to drive down the price the Government pays for F2 medicines. The Government 2013–14 mid-year economic and fiscal outlook noted expenditure on the PBS was lower than expected, due, in part, to higher-thanestimated savings from these pricing policies.9 The Government has also created therapeutic groups so that groups of medicines in F1 and/or F2 considered ‘interchangeable’ (judged to provide similar health outcomes) are priced similarly using a weighted average monthly treatment cost (WAMTC) methodology.10 Regarding new medicines, the Government and PBAC have several other mechanisms to contain expenditure. This includes entering into risk-share agreements with sponsors to ensure expenditure is predictable and contained. Risk-share agreements can include expenditure caps with corresponding rebate arrangements, where sponsors will reimburse government expenditure exceeding forecasts. More recently, the PBAC has recommended ‘pay for performance’ and outcome-based ‘managed entry arrangements’, which can include rebates for patients not achieving an agreed clinical outcome,11 although the feasibility of such arrangements remains untested in practice. Finally, for both new and existing medicines, the Government can adjust copayments to increase the proportion of drug costs covered by patients, as was proposed in the recent Federal Budget.12 New Zealand’s PHARMAC In New Zealand, PHARMAC manages the purchasing of medicines and devices on behalf of District Health Boards (DHBs) for use in the community and, in some cases, within public hospitals.13 PHARMAC has four main roles: managing the Pharmaceutical Schedule; promoting the responsible use of medicines; managing the funding of medicines and some medical devices used in public hospitals; and managing the Named Patient Pharmaceutical Assessment policy and other special access programs. Comparing PHARMAC with the PBAC PHARMAC is a government agency responsible for the management of new and existing subsidised medicines and devices. During the evaluation of new medicines, PHARMAC receives clinical advice from the Pharmacology and Therapeutics Advisory Committee (PTAC). In Australia, the subsidisation of medicines is managed by the Department of Health with advice provided by the PBAC. There are many similarities and differences between the New Zealand and Australian models for the reimbursement of new medicines. Both take into account cost-effectiveness and budget impact. In order to contain costs, both use therapeutic groups and risk-share arrangements with corresponding caps and rebates for new medicines. However, in contrast with the PBS,
Medicines listed in Australia and New Zealand
50 40 30 20 10 0
Methods
–10
Access to new medicines in Australia and New Zealand has been compared previously.14 The analysis reviewed subsidised access to new medicines over a 10-year period (2000–09). New medicines were defined as:
–20
*
*
*
a new chemical entity in a new pharmacological and/or therapeutic class (so-called ‘first-in-class’ medicine) a new chemical entity that represents a pharmacological analogue of an existing medicine, including an analogue of an existing (recombinant) biological medicine a new presentation (e.g. prefilled syringe vs tablet) of an existing medicine that is to be administered by a different route (e.g. parenteral vs enteral administration) for use by a different patient population (‘new medicinal use’).
The analysis showed that 136 new medicines were listed in Australia during the reference period and, of these, 59 were listed in New Zealand.14 A further summary of results is provided below. Since 2009 we verified the status (as of June 2014) of the 77 new medicines that were listed in Australia and not New Zealand via a review of the PHARMAC15 and PBS websites.16 We also performed an additional review of new medicines listed in the previous 12 months (July 2013–June 2014) in both countries via the respective websites.15,16 Results Summary of Wonder and Milne14 Over the study period, 136 new medicines were listed in the Australia Schedule of Pharmaceutical Benefits and 80 new medicines were listed in the New Zealand Pharmaceutical Schedule. Of the 136 new medicines listed in Australia, less than half (n = 59; 43%) were listed in both New Zealand and Australia. As shown in Fig. 1, for the 59 common medicines, the mean time from registration to listing was 20.2 months (95% confidence interval (CI) 14.9–25.4 months) in Australia compared with 43.9 months (95% CI 35.6–52.2 months) in New Zealand. The mean difference in the time from registration to listing between Australia and New Zealand was nearly 2 years (mean 23.7 months; 95% CI 14.9–32.4 months). Registration occurred, on average, 9.0 months sooner (95% CI 3.6–14.4 months) in Australia and listing occurred on average 32.7 months earlier (95% CI 24.2–41.2 months) in Australia. Regarding the 21 new medicines listed in New Zealand but not in Australia during the study period, most were listed in Australia before the study period (n = 16; 76%). Five new medicines (24%) were listed in New Zealand and not in Australia. This includes two medicines that were rejected by the PBAC
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PHARMAC operates within a defined funding envelope, which means new medicines can only be listed if there is room in the budgetary cycle. In order to reduce costs, PHARMAC develops ‘bundling’ deals with sponsors for multiple medicines. Regarding older off-patent medicines, PHARMAC uses a unique tendering process to enter into supply contracts with a single sponsor. Between countries, the use of a defined funding envelope is a key difference between funding models for new medicines, and we hypothesise this may have contributed to differences in listing outcomes for New Zealand relative to Australia.
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Registration to listing Australia
Registration to listing NZ
Difference in time from registration to listing
–30 –40
Fig. 1. Mean time (months) from registration to listing for 59 new medicines in Australia and New Zealand and mean difference (months). Data are from Wonder and Milne (Table 2).14
(ropinirole and anagrelide), one medicine not submitted for reimbursement since 2003 (finasteride), one medicine not registered with the Therapeutic Goods Administration (TGA; pentostatin) and one intrauterine device (levonorgestrel as Mirena, Bayer Australia Ltd, Pymble, NSW, Australia). The medicines listed in Australia but not New Zealand included seven (9%) treatments for which there was no currently listed therapy, 29 (38%) therapies in a new pharmacological class, 38 (49%) new additions to an existing pharmacological class and three (4%) new presentations for use in a new patient population. Update on medicine access in New Zealand Since 2009 we have verified the status of the 77 new medicines that were listed in Australia and not New Zealand. Excluding five medicines subsequently delisted from the PBS (lumiracoxib, efalizumab, anakinra, amprenavir and sitaxentan sodium), 63 of 72 (88%) new medicines listed in Australia between 2000 and 2009 remain unlisted in New Zealand (Table 1). Regarding medicines listed from July 2013 to June 2014, there were seven new medicines listed in the New Zealand Pharmaceutical Schedule compared with 18 new medicines listed in the Schedule of Pharmaceutical Benefits (excluding one older medication, namely clobetasol propionate) in Australia (Table 2). Of the new medicines listed in Australia, seven were listed via cost-effectiveness and 11 listed via cost-minimisation. Of the seven new medicines listed in New Zealand, six were listed in Australia before July 2013 and the remaining medicine (febuxostat) was rejected by the PBAC in March 2014. Five medicines were listed via cost-effectiveness and one medicine (pegfilgrastim) was listed via cost-minimisation. Discussion Both Australia and New Zealand operate similar systems for reimbursing new medicines that take cost-effectiveness and budget impact into account. In order to reduce expenditure, the recent report by the Commission of Audit suggested the Australian system should be reformed to more closely reflect New
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Table 1. Updated status (as of June 2014) of 77 new medicines that were listed in Australia and not New Zealand between 2000 and 2009 HCC, hepatocellular carcinoma; T2DM, Type 2 diabetes mellitus; GERD, gastro-oesophageal reflux disease; PAH, pulmonary arterial hypertension; HIV, human immunodeficiency virus; mAb, monoclonal antibody; VEGF, vascular endothelial growth factor; NMDA, N-methyl-D-aspartate; mTOR, mammalian target of rapamycin; EGF, epidermal growth factor; PTH, parathyroid hormone; DPP4, dipeptidyl peptidase 4; PPAR, peroxisome proliferator-activated receptor; tPA, tissue plasminogen activator; HMG-CoA, 3-hydroxy-3-methylglutaryl coenzyme A; GnRH, gonadotrophin-releasing hormone Category
Condition
Pharmacological class
MedicineA
Listed of 1 June 2014
No listed treatment (n = 7)
Age-related macular degeneration
Light-activator for photodynamic therapy mAb to VEGF Cortisol analogue Dermal filler Phosphate binder
Verteporfin
No
Ranibizumab Anecortave acetateb Poly-L-lactic acid Sevelamer hydrochloride Lanthanum carbonate Riluzole Prasugrel hydrochloride
No No No No No Yes Yes
Bivalirudin Sorafenib tosylate Memantine hydrochloride
No No No
Monteleukast sodium
No
Pimecrolimus Cinacalcet hydrochloride Duloxetine hydrochloride
No No No
Zonisamide Everolimus Lapatinib ditosylate monohydrate Bevacizumab Bortezomib
No No Yes No Yes
Natalizumab Gefitinib Celecoxib LumiracoxibB Rofecoxib Strontium ranelate Teriparatide EfalizumabB Fondaparinux sodium
No Yes No No No No Yes No No
Epoprostenol sodium AnakinraB Abatacept Drotrecogin Alfa
No No No No
Cetuximab
No
Thyrotropin Alfa Sitagliptin phosphate monohydrate Rivastigmine hydrogen tartrate
No No
Galantamine hydrobromide Irbesartan
No No
Eprosartan Olmesartan medoxomil Valsartan
No No No
Facial lipoatrophy Hyperphosphataemia
New pharmacological class (n = 29)
Motor neurone disease Acute coronary syndromes
Advancer HCC Alzheimer’s disease Asthma Atopic dermatitis Chronic kidney disease Depression Epilepsy Kidney transplantation Metastatic breast cancer Metastatic colorectal cancer Multiple myeloma Multiple sclerosis Non-small cell lung cancer Osteoarthritis
Osteoporosis Plaque psoriasis Prevention of thromboembolic events following surgery PAH Rheumatoid arthritis Sepsis Squamous cell cancer of the larynx Thyroid ablation T2DM New addition/s to an existing pharmacological class (n = 38)
Glutamate antagonist Platelet aggregation inhibitor Direct thrombin inhibitor Protein kinase inhibitor NMDA receptor antagonist Leukotriene receptor antagonist Calcineurin inhibitor Antiparathyroid agent Serotonin–noradrenaline reuptake inhibitor Sulfonamide mTOR inhibitor Protein kinase inhibitor mAb to VEGF Reversible inhibitor of 26S proteasome mAb to a4-integrin EGF receptor antagonist Coxib
Antiresorptive agent Recombinant human PTH mAb to CD11 Inhibitor of activated Factor X Prostacyclin analogue Interleukin-1 antagonist mAb to CD80 and CD86 Recombinant human activated protein C mAb Thyrotropin DPP4 inhibitor
Alzheimer’s disease
Cholinesterase inhibitor
Hypertension and heart failure
Angiotensin II receptor antagonist
No
(continued next page)
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Table 1. (continued ) Category
Condition
Pharmacological class
MedicineA
Hypertension
Calcium channel blocker Imidazoline receptor agonist Sulfonylurea Thiazolidinedione (PPAR agonist) Insulin analogue Proton pump inhibitor Somatostatin analogue Recombinant form of tPA Triazole derivative
Lercanidipine hydrochloride Moxonidine
No No
Glimepiride Rosiglitazone maleate
No No
Insulin detemir Rabeprazole sodium Lanreotide acetate Tenecteplase Voriconazole Posaconazole Ciclesonide Ibandronic acid
No No No No Yes Yes No No
Nilotinib hydrochloride monohydrate Etonogestrel Reboxetine mesylate
No No No
Rosuvastatin calcium
No
Fenofibrate Eplerenone Bisoprolol fumarate Telbivudine AmprenavirB Tipranavir Deferasirox Lenalidomide Modafinil
No No No No No No No No No
Granisetron hydrochloride
No
Pemetrexed sodium heptahydrate Hydromorphone hydrochloride Pramipexole dihydrochloride monohydrate Triptorelin embonate Sitaxentan sodiumB
No
T2DM
Peptic ulceration and GERD Acromegaly Acute myocardial infarction Fungal infection Asthma Bone metastases from breast cancer Chronic myeloid leukaemia Contraception Depression Dyslipidaemia
Heart failure Hepatitis B HIV infection Iron overload Multiple myeloma Narcolepsy
New formulation for a new patient population (controversial inclusion; n = 3)
Glucocorticoid Bisphosphonate Protein kinase inhibitor Progestogen Serotonin–noradrenaline reuptake inhibitor HMG-CoA reductase inhibitor Fibrate Aldosterone antagonist Beta-blocker Nucleoside analogue Protease inhibitor Iron chelator Thalidomide analogue Centrally acting sympathomimetic Serotonin antagonist
Nausea and vomiting following cytotoxic chemotherapy or radiotherapy Non-small cell lung cancer
Antifolate antimetabolite
Pain
Opioid receptor agonist
Parkinson’s disease
Dopamine agonist
Prostate cancer PAH Osteoporosis Luteal phase support in IVF
GnRH analogue Endothelin receptor antagonist Bisphosphonate Progestogen
Opiate dependence Superovulation before IVF
Opioid receptor agonist Gonadotrophin
Listed of 1 June 2014
No Yes No No
Risedronate sodium Progesterone
No No
Buprenorphine hydrochloride Choriogonadotropin
No No
A
Some medicines may not have been registered by Medsafe (NZ Regulatory Body for Medicines). Subsequently delisted from the Pharmaceutical Benefits Scheme.
B
Zealand’s PHARMAC model,1 where an independent entity manages subsidised access to new medicines under an annual capped budget. The Commission’s report did not consider the full opportunity cost of its recommendation. Previous research of new medicines reimbursed in both Australia and New Zealand shows New Zealand listed fewer
than half the new medicines listed in Australia over a 10-year period (2000–09).14 Our present study shows that the majority of new medicines not listed in New Zealand during this period remain unlisted today. Over the 12 months from July 2013 to June 2014, Australia listed 17 new medicines on the PBS whereas New Zealand listed only one new medicine that was
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Table 2. Reimbursement of new branded (patent protected) medicines in Australia and New Zealand between July 2013 and June 2014 Month
Australia
New Zealand
July 2013 August 2013 September 2013 October 2013 November 2013 December 2013
Nil Abiraterone acetate, ipilimumab, mifepristone Tafluprost Nil Nil Alogliptin benzoate, canagliflozin hemihydrate, dabrafenib mesylate, dapagliflozin propanediol monohydrate, dimethyl fumarate, ivabradine hydrochloride, rifaximin, teriflunomide Nil
Ticagrelor, pegfilgrastim Nil Boceprevir Riluzole Nil Nil
January 2014 February 2014 March 2014 April 2014 May 2014 June 2014
Nil Nil Clobetasol propionate,A dolutegravir sodium, glycopyrronium bromide, panitumumab Sapropterin hydrochloride, plerixafor Tapentadol hydrochloride
Eltrombopag olamine, erlotinib hydrochloride Nil Nil Nil Nil FebuxostatB
A
Clobetasol propionate is an older medication; it may have been previously listed on the Pharmaceutical Benefits Scheme (PBS). B Febuxostat is the only medicine that that is not listed on the PBS; the rest were first listed on the PBS before 1 July 2013.
not already listed in Australia. Although we cannot account for the timing of applications for public subsidy by sponsors in both countries, the time from registration to listing is almost 2 years longer in New Zealand for new medicines that have been listed in both countries. Based on the comparison of funding systems in Australia and New Zealand, we hypothesised that the use of an annual budget cap in New Zealand was likely to lead to a difference in listing outcomes between the two countries, including the number of new medicines and the time to listing. Our results do not directly prove causation, because it is acknowledged that unmeasured confounders may impact funding outcomes, such as funding priorities and specific decision criteria. However, given both countries use similar health technology assessment criteria for new medicines, which rely primarily on the clinical benefit–risk profile in addition to cost-effectiveness and budget impact, it is plausible to assume that a strict annual funding cap in New Zealand limits funding options relative to Australia. This is also verified by previous correspondence from PHARMAC, which highlights the capped annual budget as a key difference between the two systems, and the ‘extra care’ required to fit expenditure in a budgetary cap may cause ‘slower’ funding outcomes.17 Despite the difference in the number of new medicines listed between both countries, our data do not permit an inference between a reduction in new medicines listed and health benefits forgone. Furthermore, because access to medicines is impacted by other factors, such as copayments, we cannot make an inference between a reduction in new medicines listed and community access to medicines in both communities. However, of the medicines not listed in New Zealand over a 10-year period, just under half (n = 36) were part of a new pharmacological class or were for the treatment of a disease with no currently listed medicines (e.g. age-related macular degeneration). Based on our updated outcome data, most of these medicines (n = 30) remain unlisted today. Further, in the 12 months from July 2013 to June
2014, 39% of new medicines listed in Australia were recommended and listed on the basis of acceptable cost-effectiveness. Unlike medicines listed via cost-minimisation, these medicines may yield additional health benefits or provide access to subpopulations not able to use existing medicines. Quantifying the total health impact of not listing these new medicines, relative to standard care, requires further exploration. The Australian healthcare system is built on equity principles that include providing universal and affordable access to highquality medical, pharmaceutical and hospital services.18 By using cost–utility analyses, both PHARMAC and the PBAC can ensure health gains are equivalent for each dollar spent on different therapeutic options across different diseases. However, by capping annual expenditure, equity principles are compromised because only a proportion of ‘fundable’ therapies can be listed within a given budget cycle. In practice, this requires preferencing therapies for funding based on budget capacity, which means specific patient populations will not be able to access new cost-effective therapies until additional funds can be obtained. Based on the data presented, there is a clear difference in the number of new medicines listed in Australia and New Zealand. Although we cannot definitively link the use of an annual capped budget for medicines to reduced access or health outcomes, our data raise questions regarding the consequences of such a policy. Overall, we believe future reform proposals need to look beyond the cost paradigm to take into account access metrics for new medicines and the downstream effects for the health of the community. Competing interests Both CT and MW undertake consultative work for pharmaceutical companies and the government; however, neither party was involved in the generation of this work.
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References 1
2
3
4
5
6
7
8
9
National Commission of Audit. National Commission of Audit report. 7.4 The Pharmaceutical Benefits Scheme. Canberra: National Commission of Audit; 2014. Available at: http://www.ncoa.gov.au/report/phase-one/ part-b/7-4-the-pharmaceutical-benefits-scheme.html [verified 24 June 2014]. Department of Health & Medicines Australia. Trends in and drivers of Pharmaceutical Benefits Scheme expenditure. Canberra: Department of Health; 2013. Available at: http://www.pbs.gov.au/publication/ reports/trends-in-and-drivers-of-pbs-expenditure.docx [verified 24 June 2014]. Department of Health. The Minister for Health, Peter Dutton, address to CEDA conference; 2014. Available at: http://www.health.gov.au/ internet/ministers/publishing.nsf/Content/health-mediarel-yr2014-dutton001a.htm [verified 12 January 2015]. Gittins R. Health spending crisis isn’t real. Sydney: Sydney Morning Herald; 2014. Available at: http://www.smh.com.au/comment/healthspending-crisis-isnt-real-20141021-1196j8.html [verified 12 January 2015]. Richardson J. Australia’s ‘unsustainable’ health spending is a myth. The Conversation; 2014. Available at: http://theconversation.com/australiasunsustainable-health-spending-is-a-myth-26393 [verified 12 January 2015]. Australian Insitute of Health and Welfare (AIHW). Health expenditure Australia 2012–2013. Canberra: AIHW; 2014. Available at: http://www. aihw.gov.au/publication-detail/?id=60129548871 [verified 12 January 2014]. Department of Health. Pharmaceutical Benefits Advisory Committee (PBAC). Canberra: Department of Health. Available at: http://www.pbs. gov.au/info/industry/listing/participants/pbac [verified 24 June 2014]. Department of Health. Price disclosure (EAPD). Canberra: Department of Health. Available at: http://www.pbs.gov.au/info/industry/pricing/eapd [verified 24 June 2014].
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14 15
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17 18
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Department of Treasury. Mid-year economic and fiscal outlook: December 2013. Part 3: fiscal outlook. Canberra: Department of Health; 2013. Available at: http://budget.gov.au/2013-14/content/myefo/html/ 03_part_3.htm [verified 24 June 2014]. Department of Health. Therapeutic groups. Canberra: Department of Health. Available at: http://www.pbs.gov.au/browse/therapeutic-group [verified 24 June 2014]. Department of Health. PBAC meeting outcomes: positive recommendations. Canberra: Department of Health; 2014. Available at: http://www. pbs.gov.au/info/industry/listing/elements/pbac-meetings/pbac-outcomes [verified 24 June 2014]. Department of Treasury. Australian Governement budget 2014–2015. Statement 6: expenses and net captital investment (table 3.1). Canberra: Department of Tresury; 2013. Available at: http://www.budget.gov.au/ 2014-15/content/bp1/html/bp1_bst6-01.htm [verified 24 June 2014]. Pharmaceutical Management Agency. Your guide to PHARMAC. Wellington: PHARMAC; 2014. Available at: http:// www.pharmac.health.nz/about/your-guide-to-pharmac/ [verified 24 June 2014]. Wonder M, Milne R. Access to new medicines in New Zealand compared to Australia. N Z Med J 2011; 124: 12–28. Pharmaceutical Management Agency. PHARMAC online pharmaceutical schedule. Wellington: PHARMAC; 2014; Available at: http://www. pharmac.govt.nz/PharmaceuticalSchedule/Schedule [verified 24 June 2014]. Department of Health. Browse the PBS. Canberra: Department of Health. Available at: http://www.pbs.gov.au/browse/body-system [verified 24 June 2014]. Moodie P, Metcalfe S, Poynton M. Do pharmaceutical score cards give us the answers we seek? N Z Med J 2011; 124: 69–74. Department of Health. Overview. Canberra: Department of Health. Available at: http://www.health.gov.au/internet/main/publishing.nsf/ Content/health-overview.htm [verified 12 January 2014].
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Australian Health Review, 2015, 39, 455–461 http://dx.doi.org/10.1071/AH14122
Exploring the implications of a fixed budget for new medicines: a study of reimbursement of new medicines in Australia and New Zealand Colman Taylor1,2,3,5 PhD, Post-doctoral Research Fellow Michael Wonder4 BSc (Hons) BPharm, CEO 1
The George Institute for Global Health, PO Box M201 Missenden Road, Camperdown, NSW 2050, Australia. Sydney Medical School, Edward Ford Building A27, The University of Sydney, NSW 2006, Australia. 3 Optum, Level 1, 370 Norton Street, Lilyfield, NSW 2040, Australia. 4 Wonder Drug Consulting Pty Ltd, PO Box 470, Cronulla, NSW 2230, Australia. Email: [email protected] 5 Corresponding author. Email: [email protected] 2
Abstract Objective. Spending on medicines under the Pharmaceutical Benefits Scheme (PBS) represents the ninth largest expense to the Federal Government. A recent report by the Commission of Audit to the Federal Government suggested spending on the PBS is unsustainable and a capped budget, similar to New Zealand’s PHARMAC model, may be required to contain costs. The objective of the present study was to compare listing outcomes between Australia and New Zealand, thereby exploring the opportunity cost of a capped budget for new medicines. Methods. Listing outcomes in Australia and New Zealand were compared through published research and an updated search of listing outcomes from publicly available information. Results. Previous research has demonstrated that New Zealand listed less than half of the new medicines listed in Australia over a 10-year period (2000–09). Our research shows that most of the new medicines not listed in New Zealand during this period remain unlisted today. In the previous 12 months, Australia listed 17 new medicines on the PBS, whereas New Zealand listed only one new medicine that was not already listed in Australia. Conclusion. The discrepancy in the number of new medicines listed in New Zealand compared with Australia raises questions regarding the consequences of implementing a capped budget for new medicines. However, further research is needed to understand the relationship between listing outcomes, access to medicines and health benefits for the community. What is known about this topic? Due to factors such as an aging population and longer life expectancy, total government health expenditure as a proportion of gross domestic product (GDP) is expected to rise. Consequently, many commentators have suggested current expenditure patterns are unsustainable. The PBS represents a significant expense to the government and recent reports suggest the PBS should be reformed to align with New Zealand’s PHARMAC model, where an independent entity manages access to subsidised medicines under a capped budget. However, little information exists regarding access indices for new medicines in New Zealand compared with Australia. What does this paper add? This paper builds on previously published research comparing listing outcomes for new medicines in Australia and New Zealand. The results highlight a discrepancy in listing new medicines in New Zealand compared with Australia that has not improved in recent years. Consequently, the results question the notion that a capped budget for new medicines is a good policy choice for Australia. What are the implications for practitioners? This paper reviews the current reimbursement system in Australia and compares it with New Zealand’s PHARMAC model. In addition, this paper compares listing outcomes for new medicines in Australia and New Zealand. In doing so, the results of this paper have implications for practitioners who are concerned about continued subsidised access to new medicines via the PBS, and for policy makers in relation to proposed PBS reforms. Further, our paper provides insights into PBS policy reform that may assist practitioners who are interested in commenting on any proposed reform. Received 25 July 2014, accepted 30 January 2015, published online 10 March 2015
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Introduction In its recent report to the Federal Government, the Commission of Audit made several recommendations in relation to the Pharmaceutical Benefits Scheme (PBS).1 These recommendations were based on the premise that current spending on medicines is unsustainable and reform is needed. In particular, the Commission noted that government spending on medicines is expected to be one of the fastest growing areas over the medium to long term. This trend is underpinned by an aging population, the increasing prevalence of chronic disease and the expanding proportion of concessional cardholders.2 In addition, providing subsidised access to increasingly more personalised medicines and medical technologies has been cited as a contributing factor.3 However, the notion that Federal Government spending on health care is unsustainable in the long-term remains controversial. Commentators have cited spending in other Organization For Economic Cooperation and Development (OECD) countries as well as the government’s latest health spending figures, which show the lowest growth rate since the 1980s, to refute this assumption.4,5 Regardless, as the pressure to find savings mounts, health expenditure, which cost Australian governments approximately A$100 billion in 2012–13,6 remains a prime target. In order to find savings in PBS expenditure, a key recommendation by the Commission was for the Federal Government to adopt a model similar to New Zealand’s Pharmaceutical Management Authority (PHARMAC), where an independent authority manages subsidised access to new medicines under a capped budget. However, the opportunity cost of such a decision was not considered, which potentially includes reducing health benefits by limiting subsidised access to new medicines in important disease areas. Using recent research and an updated search for new listings in Australia and New Zealand, the purpose of the present study was to understand current differences in access to new medicines between Australia and New Zealand. In doing so, we question the notion that a capped budget for medicines is a good policy choice for Australia. The PBS The PBS is managed by the Department of Health and governed by the National Health Act (NHA) (1953; http://www.comlaw. gov.au/Details/C2014C00353; cited 12 January 2015). The Schedule of Pharmaceutical Benefits (http://www.pbs.gov.au; cited 12 January 2015) lists all medicines that can be dispensed to patients at a subsidised price. To list a new medicine in the Schedule, the Pharmaceutical Benefits Advisory Committee (PBAC) considers the comparative costs and benefits and makes recommendations to the Minister for Health. The PBAC is an independent expert body appointed by the Federal Government and includes doctors, other health professionals, health economists and consumer representatives.7 Policy levers to contain expenditure The Federal Government (henceforth referred to as the Government) has several ways to constrain the fiscal challenge of funding new medicines. We do not provide an assessment regarding the efficacy of these measures; rather, we note those measures that are currently in use by the Government and/or the PBAC.
C. Taylor and M. Wonder
The NHA (1953) includes a provision that medicines can be listed on one of two formularies (F1 and F2). In general, F1 includes single-branded medicines and F2 includes off-patent medicines with multiple brands. Medicines moving from F1 to F2 incur a statutory price reduction of 16%. For medicines listed in F2, the Government implemented a series of policies over recent years, collectively known as ‘price disclosure’.8 Through sponsors reporting discounts given to pharmacies, ‘price disclosure’ uses a market-based mechanism to drive down the price the Government pays for F2 medicines. The Government 2013–14 mid-year economic and fiscal outlook noted expenditure on the PBS was lower than expected, due, in part, to higher-thanestimated savings from these pricing policies.9 The Government has also created therapeutic groups so that groups of medicines in F1 and/or F2 considered ‘interchangeable’ (judged to provide similar health outcomes) are priced similarly using a weighted average monthly treatment cost (WAMTC) methodology.10 Regarding new medicines, the Government and PBAC have several other mechanisms to contain expenditure. This includes entering into risk-share agreements with sponsors to ensure expenditure is predictable and contained. Risk-share agreements can include expenditure caps with corresponding rebate arrangements, where sponsors will reimburse government expenditure exceeding forecasts. More recently, the PBAC has recommended ‘pay for performance’ and outcome-based ‘managed entry arrangements’, which can include rebates for patients not achieving an agreed clinical outcome,11 although the feasibility of such arrangements remains untested in practice. Finally, for both new and existing medicines, the Government can adjust copayments to increase the proportion of drug costs covered by patients, as was proposed in the recent Federal Budget.12 New Zealand’s PHARMAC In New Zealand, PHARMAC manages the purchasing of medicines and devices on behalf of District Health Boards (DHBs) for use in the community and, in some cases, within public hospitals.13 PHARMAC has four main roles: managing the Pharmaceutical Schedule; promoting the responsible use of medicines; managing the funding of medicines and some medical devices used in public hospitals; and managing the Named Patient Pharmaceutical Assessment policy and other special access programs. Comparing PHARMAC with the PBAC PHARMAC is a government agency responsible for the management of new and existing subsidised medicines and devices. During the evaluation of new medicines, PHARMAC receives clinical advice from the Pharmacology and Therapeutics Advisory Committee (PTAC). In Australia, the subsidisation of medicines is managed by the Department of Health with advice provided by the PBAC. There are many similarities and differences between the New Zealand and Australian models for the reimbursement of new medicines. Both take into account cost-effectiveness and budget impact. In order to contain costs, both use therapeutic groups and risk-share arrangements with corresponding caps and rebates for new medicines. However, in contrast with the PBS,
Medicines listed in Australia and New Zealand
50 40 30 20 10 0
Methods
–10
Access to new medicines in Australia and New Zealand has been compared previously.14 The analysis reviewed subsidised access to new medicines over a 10-year period (2000–09). New medicines were defined as:
–20
*
*
*
a new chemical entity in a new pharmacological and/or therapeutic class (so-called ‘first-in-class’ medicine) a new chemical entity that represents a pharmacological analogue of an existing medicine, including an analogue of an existing (recombinant) biological medicine a new presentation (e.g. prefilled syringe vs tablet) of an existing medicine that is to be administered by a different route (e.g. parenteral vs enteral administration) for use by a different patient population (‘new medicinal use’).
The analysis showed that 136 new medicines were listed in Australia during the reference period and, of these, 59 were listed in New Zealand.14 A further summary of results is provided below. Since 2009 we verified the status (as of June 2014) of the 77 new medicines that were listed in Australia and not New Zealand via a review of the PHARMAC15 and PBS websites.16 We also performed an additional review of new medicines listed in the previous 12 months (July 2013–June 2014) in both countries via the respective websites.15,16 Results Summary of Wonder and Milne14 Over the study period, 136 new medicines were listed in the Australia Schedule of Pharmaceutical Benefits and 80 new medicines were listed in the New Zealand Pharmaceutical Schedule. Of the 136 new medicines listed in Australia, less than half (n = 59; 43%) were listed in both New Zealand and Australia. As shown in Fig. 1, for the 59 common medicines, the mean time from registration to listing was 20.2 months (95% confidence interval (CI) 14.9–25.4 months) in Australia compared with 43.9 months (95% CI 35.6–52.2 months) in New Zealand. The mean difference in the time from registration to listing between Australia and New Zealand was nearly 2 years (mean 23.7 months; 95% CI 14.9–32.4 months). Registration occurred, on average, 9.0 months sooner (95% CI 3.6–14.4 months) in Australia and listing occurred on average 32.7 months earlier (95% CI 24.2–41.2 months) in Australia. Regarding the 21 new medicines listed in New Zealand but not in Australia during the study period, most were listed in Australia before the study period (n = 16; 76%). Five new medicines (24%) were listed in New Zealand and not in Australia. This includes two medicines that were rejected by the PBAC
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60
Months
PHARMAC operates within a defined funding envelope, which means new medicines can only be listed if there is room in the budgetary cycle. In order to reduce costs, PHARMAC develops ‘bundling’ deals with sponsors for multiple medicines. Regarding older off-patent medicines, PHARMAC uses a unique tendering process to enter into supply contracts with a single sponsor. Between countries, the use of a defined funding envelope is a key difference between funding models for new medicines, and we hypothesise this may have contributed to differences in listing outcomes for New Zealand relative to Australia.
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Registration to listing Australia
Registration to listing NZ
Difference in time from registration to listing
–30 –40
Fig. 1. Mean time (months) from registration to listing for 59 new medicines in Australia and New Zealand and mean difference (months). Data are from Wonder and Milne (Table 2).14
(ropinirole and anagrelide), one medicine not submitted for reimbursement since 2003 (finasteride), one medicine not registered with the Therapeutic Goods Administration (TGA; pentostatin) and one intrauterine device (levonorgestrel as Mirena, Bayer Australia Ltd, Pymble, NSW, Australia). The medicines listed in Australia but not New Zealand included seven (9%) treatments for which there was no currently listed therapy, 29 (38%) therapies in a new pharmacological class, 38 (49%) new additions to an existing pharmacological class and three (4%) new presentations for use in a new patient population. Update on medicine access in New Zealand Since 2009 we have verified the status of the 77 new medicines that were listed in Australia and not New Zealand. Excluding five medicines subsequently delisted from the PBS (lumiracoxib, efalizumab, anakinra, amprenavir and sitaxentan sodium), 63 of 72 (88%) new medicines listed in Australia between 2000 and 2009 remain unlisted in New Zealand (Table 1). Regarding medicines listed from July 2013 to June 2014, there were seven new medicines listed in the New Zealand Pharmaceutical Schedule compared with 18 new medicines listed in the Schedule of Pharmaceutical Benefits (excluding one older medication, namely clobetasol propionate) in Australia (Table 2). Of the new medicines listed in Australia, seven were listed via cost-effectiveness and 11 listed via cost-minimisation. Of the seven new medicines listed in New Zealand, six were listed in Australia before July 2013 and the remaining medicine (febuxostat) was rejected by the PBAC in March 2014. Five medicines were listed via cost-effectiveness and one medicine (pegfilgrastim) was listed via cost-minimisation. Discussion Both Australia and New Zealand operate similar systems for reimbursing new medicines that take cost-effectiveness and budget impact into account. In order to reduce expenditure, the recent report by the Commission of Audit suggested the Australian system should be reformed to more closely reflect New
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Table 1. Updated status (as of June 2014) of 77 new medicines that were listed in Australia and not New Zealand between 2000 and 2009 HCC, hepatocellular carcinoma; T2DM, Type 2 diabetes mellitus; GERD, gastro-oesophageal reflux disease; PAH, pulmonary arterial hypertension; HIV, human immunodeficiency virus; mAb, monoclonal antibody; VEGF, vascular endothelial growth factor; NMDA, N-methyl-D-aspartate; mTOR, mammalian target of rapamycin; EGF, epidermal growth factor; PTH, parathyroid hormone; DPP4, dipeptidyl peptidase 4; PPAR, peroxisome proliferator-activated receptor; tPA, tissue plasminogen activator; HMG-CoA, 3-hydroxy-3-methylglutaryl coenzyme A; GnRH, gonadotrophin-releasing hormone Category
Condition
Pharmacological class
MedicineA
Listed of 1 June 2014
No listed treatment (n = 7)
Age-related macular degeneration
Light-activator for photodynamic therapy mAb to VEGF Cortisol analogue Dermal filler Phosphate binder
Verteporfin
No
Ranibizumab Anecortave acetateb Poly-L-lactic acid Sevelamer hydrochloride Lanthanum carbonate Riluzole Prasugrel hydrochloride
No No No No No Yes Yes
Bivalirudin Sorafenib tosylate Memantine hydrochloride
No No No
Monteleukast sodium
No
Pimecrolimus Cinacalcet hydrochloride Duloxetine hydrochloride
No No No
Zonisamide Everolimus Lapatinib ditosylate monohydrate Bevacizumab Bortezomib
No No Yes No Yes
Natalizumab Gefitinib Celecoxib LumiracoxibB Rofecoxib Strontium ranelate Teriparatide EfalizumabB Fondaparinux sodium
No Yes No No No No Yes No No
Epoprostenol sodium AnakinraB Abatacept Drotrecogin Alfa
No No No No
Cetuximab
No
Thyrotropin Alfa Sitagliptin phosphate monohydrate Rivastigmine hydrogen tartrate
No No
Galantamine hydrobromide Irbesartan
No No
Eprosartan Olmesartan medoxomil Valsartan
No No No
Facial lipoatrophy Hyperphosphataemia
New pharmacological class (n = 29)
Motor neurone disease Acute coronary syndromes
Advancer HCC Alzheimer’s disease Asthma Atopic dermatitis Chronic kidney disease Depression Epilepsy Kidney transplantation Metastatic breast cancer Metastatic colorectal cancer Multiple myeloma Multiple sclerosis Non-small cell lung cancer Osteoarthritis
Osteoporosis Plaque psoriasis Prevention of thromboembolic events following surgery PAH Rheumatoid arthritis Sepsis Squamous cell cancer of the larynx Thyroid ablation T2DM New addition/s to an existing pharmacological class (n = 38)
Glutamate antagonist Platelet aggregation inhibitor Direct thrombin inhibitor Protein kinase inhibitor NMDA receptor antagonist Leukotriene receptor antagonist Calcineurin inhibitor Antiparathyroid agent Serotonin–noradrenaline reuptake inhibitor Sulfonamide mTOR inhibitor Protein kinase inhibitor mAb to VEGF Reversible inhibitor of 26S proteasome mAb to a4-integrin EGF receptor antagonist Coxib
Antiresorptive agent Recombinant human PTH mAb to CD11 Inhibitor of activated Factor X Prostacyclin analogue Interleukin-1 antagonist mAb to CD80 and CD86 Recombinant human activated protein C mAb Thyrotropin DPP4 inhibitor
Alzheimer’s disease
Cholinesterase inhibitor
Hypertension and heart failure
Angiotensin II receptor antagonist
No
(continued next page)
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Table 1. (continued ) Category
Condition
Pharmacological class
MedicineA
Hypertension
Calcium channel blocker Imidazoline receptor agonist Sulfonylurea Thiazolidinedione (PPAR agonist) Insulin analogue Proton pump inhibitor Somatostatin analogue Recombinant form of tPA Triazole derivative
Lercanidipine hydrochloride Moxonidine
No No
Glimepiride Rosiglitazone maleate
No No
Insulin detemir Rabeprazole sodium Lanreotide acetate Tenecteplase Voriconazole Posaconazole Ciclesonide Ibandronic acid
No No No No Yes Yes No No
Nilotinib hydrochloride monohydrate Etonogestrel Reboxetine mesylate
No No No
Rosuvastatin calcium
No
Fenofibrate Eplerenone Bisoprolol fumarate Telbivudine AmprenavirB Tipranavir Deferasirox Lenalidomide Modafinil
No No No No No No No No No
Granisetron hydrochloride
No
Pemetrexed sodium heptahydrate Hydromorphone hydrochloride Pramipexole dihydrochloride monohydrate Triptorelin embonate Sitaxentan sodiumB
No
T2DM
Peptic ulceration and GERD Acromegaly Acute myocardial infarction Fungal infection Asthma Bone metastases from breast cancer Chronic myeloid leukaemia Contraception Depression Dyslipidaemia
Heart failure Hepatitis B HIV infection Iron overload Multiple myeloma Narcolepsy
New formulation for a new patient population (controversial inclusion; n = 3)
Glucocorticoid Bisphosphonate Protein kinase inhibitor Progestogen Serotonin–noradrenaline reuptake inhibitor HMG-CoA reductase inhibitor Fibrate Aldosterone antagonist Beta-blocker Nucleoside analogue Protease inhibitor Iron chelator Thalidomide analogue Centrally acting sympathomimetic Serotonin antagonist
Nausea and vomiting following cytotoxic chemotherapy or radiotherapy Non-small cell lung cancer
Antifolate antimetabolite
Pain
Opioid receptor agonist
Parkinson’s disease
Dopamine agonist
Prostate cancer PAH Osteoporosis Luteal phase support in IVF
GnRH analogue Endothelin receptor antagonist Bisphosphonate Progestogen
Opiate dependence Superovulation before IVF
Opioid receptor agonist Gonadotrophin
Listed of 1 June 2014
No Yes No No
Risedronate sodium Progesterone
No No
Buprenorphine hydrochloride Choriogonadotropin
No No
A
Some medicines may not have been registered by Medsafe (NZ Regulatory Body for Medicines). Subsequently delisted from the Pharmaceutical Benefits Scheme.
B
Zealand’s PHARMAC model,1 where an independent entity manages subsidised access to new medicines under an annual capped budget. The Commission’s report did not consider the full opportunity cost of its recommendation. Previous research of new medicines reimbursed in both Australia and New Zealand shows New Zealand listed fewer
than half the new medicines listed in Australia over a 10-year period (2000–09).14 Our present study shows that the majority of new medicines not listed in New Zealand during this period remain unlisted today. Over the 12 months from July 2013 to June 2014, Australia listed 17 new medicines on the PBS whereas New Zealand listed only one new medicine that was
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Table 2. Reimbursement of new branded (patent protected) medicines in Australia and New Zealand between July 2013 and June 2014 Month
Australia
New Zealand
July 2013 August 2013 September 2013 October 2013 November 2013 December 2013
Nil Abiraterone acetate, ipilimumab, mifepristone Tafluprost Nil Nil Alogliptin benzoate, canagliflozin hemihydrate, dabrafenib mesylate, dapagliflozin propanediol monohydrate, dimethyl fumarate, ivabradine hydrochloride, rifaximin, teriflunomide Nil
Ticagrelor, pegfilgrastim Nil Boceprevir Riluzole Nil Nil
January 2014 February 2014 March 2014 April 2014 May 2014 June 2014
Nil Nil Clobetasol propionate,A dolutegravir sodium, glycopyrronium bromide, panitumumab Sapropterin hydrochloride, plerixafor Tapentadol hydrochloride
Eltrombopag olamine, erlotinib hydrochloride Nil Nil Nil Nil FebuxostatB
A
Clobetasol propionate is an older medication; it may have been previously listed on the Pharmaceutical Benefits Scheme (PBS). B Febuxostat is the only medicine that that is not listed on the PBS; the rest were first listed on the PBS before 1 July 2013.
not already listed in Australia. Although we cannot account for the timing of applications for public subsidy by sponsors in both countries, the time from registration to listing is almost 2 years longer in New Zealand for new medicines that have been listed in both countries. Based on the comparison of funding systems in Australia and New Zealand, we hypothesised that the use of an annual budget cap in New Zealand was likely to lead to a difference in listing outcomes between the two countries, including the number of new medicines and the time to listing. Our results do not directly prove causation, because it is acknowledged that unmeasured confounders may impact funding outcomes, such as funding priorities and specific decision criteria. However, given both countries use similar health technology assessment criteria for new medicines, which rely primarily on the clinical benefit–risk profile in addition to cost-effectiveness and budget impact, it is plausible to assume that a strict annual funding cap in New Zealand limits funding options relative to Australia. This is also verified by previous correspondence from PHARMAC, which highlights the capped annual budget as a key difference between the two systems, and the ‘extra care’ required to fit expenditure in a budgetary cap may cause ‘slower’ funding outcomes.17 Despite the difference in the number of new medicines listed between both countries, our data do not permit an inference between a reduction in new medicines listed and health benefits forgone. Furthermore, because access to medicines is impacted by other factors, such as copayments, we cannot make an inference between a reduction in new medicines listed and community access to medicines in both communities. However, of the medicines not listed in New Zealand over a 10-year period, just under half (n = 36) were part of a new pharmacological class or were for the treatment of a disease with no currently listed medicines (e.g. age-related macular degeneration). Based on our updated outcome data, most of these medicines (n = 30) remain unlisted today. Further, in the 12 months from July 2013 to June
2014, 39% of new medicines listed in Australia were recommended and listed on the basis of acceptable cost-effectiveness. Unlike medicines listed via cost-minimisation, these medicines may yield additional health benefits or provide access to subpopulations not able to use existing medicines. Quantifying the total health impact of not listing these new medicines, relative to standard care, requires further exploration. The Australian healthcare system is built on equity principles that include providing universal and affordable access to highquality medical, pharmaceutical and hospital services.18 By using cost–utility analyses, both PHARMAC and the PBAC can ensure health gains are equivalent for each dollar spent on different therapeutic options across different diseases. However, by capping annual expenditure, equity principles are compromised because only a proportion of ‘fundable’ therapies can be listed within a given budget cycle. In practice, this requires preferencing therapies for funding based on budget capacity, which means specific patient populations will not be able to access new cost-effective therapies until additional funds can be obtained. Based on the data presented, there is a clear difference in the number of new medicines listed in Australia and New Zealand. Although we cannot definitively link the use of an annual capped budget for medicines to reduced access or health outcomes, our data raise questions regarding the consequences of such a policy. Overall, we believe future reform proposals need to look beyond the cost paradigm to take into account access metrics for new medicines and the downstream effects for the health of the community. Competing interests Both CT and MW undertake consultative work for pharmaceutical companies and the government; however, neither party was involved in the generation of this work.
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