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Fewer medicines subsidised in New Zealand than Australia

15th July 2014

Fewer medicines subsidised in New Zealand than Australia

New Zealand has economical medicines policies, but subsidises fewer medicines and fewer new drugs, compared to Australia and other countries.

This was highlighted in a recent editorial on the differences in Australian and New Zealand medicines funding policies, published in Australian Prescriber.

Editorial lead author, Dr Zaheer-Ud-Din Babar from the University of Auckland’s School of Pharmacy, says that Australia and New Zealand are well known internationally for having implemented national medicines policies that aim for equitable access to cost-effective and safe medicines.

“But each country adopted a different approach to this,” he says. “In 2011, Australia spent more than double what New Zealand spent on pharmaceuticals per capita.”

Australia spent US$587 (around 22 percent more than the Organisation for Economic Co-operation and Development (OECD) average) while New Zealand spent US$288 (around 40 percent less than the OECD average).

A 2011–12 analysis conducted by Australian Researchers showed that, of the 73 individual drug-dose combinations that are prescribed the most often or account for the most expenditure in Australia, Australian prices were, on average, eight times higher than New Zealand's.

The analysis stated that if Australia adopted New Zealand's prices for 62 identical drug-dose combinations which are available in both countries, their total Pharmaceutical Benefits Scheme (PBS) expenditure would be reduced by $Au1.1 billion a year.

“New Zealand is able to achieve savings because of a combination of programme budgeting, tough price negotiations and different procurement mechanisms, such as competitive tendering,” says Dr Babar.

“Some of these policies have been emulated with success in other countries, but the New Zealand policies are criticised because fewer medicines, including new drugs, are subsidised compared to other countries.”

“In another study comparing the funding of cancer drugs in 13 countries or regions, New Zealand was the country that reimbursed the fewest indications,” he says. These differences are partly due to PHARMAC operating on a capped budget.

“Pharmac prioritises new drugs against each other and against access to all medicines. In Australia, the Pharmaceutical Benefits Advisory Committee (PBAC) also considers the cost-effectiveness of new drugs compared with current standard of care, but has no capped budget,” says Dr Barbar.

In Australia, the decision to subsidise an item has to be determined by the Minister for Health if the nett cost to the Pharmaceutical Benefit Scheme is greater than $20 million per year.

Australia has introduced new pricing policies that involve price disclosure by manufacturers to the government, including incentives and discounts to pharmacies. Australian consumers support accelerating these price cuts, but there are concerns that they will affect the profitability of pharmacies.

“Only a minority of new drugs provides a definite therapeutic advantage over standard treatments,” says Dr Babar.

Most of the drugs funded in Australia and not in New Zealand were additions to an existing therapeutic class rather than new drugs providing important therapeutic benefits.

“New Zealand is also less likely to fund 'me too' products,” he says. “There is a dearth of research on whether or not the lack of access to some innovative medicines in New Zealand, or switching patients to different brands of medicines, adversely affects patient outcomes.”

“On the other hand, New Zealanders may have access to some forms of treatment that are not funded in Australia,” says Dr Barbar.

For example, insulin pumps are subsidised for all patients with type 1 diabetes in New Zealand, but only in children and adolescents under 18 years in Australia.

There are benefits if unnecessary new drugs are not funded and the savings are allocated to more effective interventions.

“Policy challenges ahead include growth in medicines expenditure, and consumer expectations that expensive specialised medicines will be funded by the government,” he says.

“In both countries, concerns have been expressed that the Trans-Pacific Partnership Agreement may affect access to affordable medicines by delaying the availability of generic medicines and by changing the funding policies.”

There is a move to harmonise the regulation of medicines in Australia and New Zealand with the creation of an Australia New Zealand Therapeutic Products Agency, but there are no current plans for harmonising funding models.

Until now there has been limited public debate on what the priorities are for Australia and New Zealand, including which decision criteria should be used to fund new drugs and at what price, says Dr Babar

“In New Zealand there are concerns about access to high cost drugs, red tape in accessing unlisted treatments for individual patients, and equitable access for Maori and Pacific Island people,” he says.

“Public input and consumer engagement in debates around medicines policies and priorities are essential for ensuring the continuous commitment of health authorities to community values and maintaining public confidence in government decision-making processes.”

“It is important that this debate is not driven by the pharmaceutical industry, which is mostly motivated by ensuring high profits for its new drugs whatever their effectiveness.”

Dr Babar says Australian and New Zealand citizens need to be independently informed about the delicate balance between equity and cost-effectiveness and between individual and societal needs when funding new drugs.

“We need an open informed public debate on the choices that have to be made to ensure equitable and sustainable access to new drugs in the future.”


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