Commercial realities

Some companies are confused about Pharmaceutical Benefits Scheme (PBS) pricing principles. This needn't be the case as the Pharmaceutical Benefits Pricing Authority, particularly the industry representative on the Authority, is always available to explain pricing principles.

The underlying principles are not complex:

• If a new product offers minimal or no clinical advantages over a cheaper product already in the PBS, then the cheaper price is offered.
• If a company claims that its product has advantages over others, an economic analysis can quantify those benefits and determine a price which reflects the advantages. The fact that another "me too" drug substance or formulation may be under patent, or a late entry into the marketplace, is seen as a commercial decision -- one that neither the patient nor the taxpayer should be expected to subsidise at any higher level. The pricing strategies being adopted in the international marketplace, and to some extent the rationalisation and diversification of the pharmaceutical industry, reflect similar views by the industry's customers. In this respect, the industry is moving to a more normal market environment.

However, the Government may decide that exceptional prices are warranted where it is in society's interests. The Factor (f) scheme is one such example.

New timetable for the PBS Schedule

From August 1995, the Schedule of Pharmaceutical Benefits will be published four times a year without the current amendments in between. The amendments, which were difficult to incorporate within the Schedule, were an ineffective means of updating the PBS information.

For 1996 the effective dates and closing dates for the Schedule will be:

Consulting on Information Technology (IT)

IBM recently commenced work on a consultancy which will investigate options for providing the Schedule in electronic form. The project will also examine other ways in which information technology can be applied to pharmaceutical information particularly in relation to prescribing.

Australian Medicines Handbook

A grant has been provided to the Royal Australian College of General Practitioners, the Pharmaceutical Society of Australia and the Australasian Society of Clinical and Experimental Pharmacologists and Toxicologists to develop an Australian Medicines Handbook (AMH). The handbook will provide an independent, peer reviewed source of pharmaceutical product information for all health professionals. It will also provide the foundation for teaching materials in pharmacology and therapeutics courses at both undergraduate and graduate levels. The AMH will be available in both hard copy and electronic formats in about two years time.

History of the Pharmaceutical Benefits Scheme

The Australian Government Publishing Service has recently published A History of the Pharmaceutical Benefits Scheme, 1947-1992. The publication (ISBN 0 644 33458 4) is available from Commonwealth Government Bookshops.