Regulation impact statement: Codeine re-scheduling

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Version 1.1, December 2016

20 December 2016

Codeine is a commonly used medicine of abuse. Codeine in over the counter (OTC) combination analgesics and codeine dependence contributes to severe adverse health outcomes associated with overdose of other active constituents such as paracetamol or ibuprofen. There is substantial evidence of harm from abuse or misuse of codeine-containing medicines, including liver damage, gastrointestinal perforations, respiratory depression and death. The Department of Health, through the Therapeutic Goods Administration (TGA), has reviewed OTC access to codeine-containing medicines in Australia to ensure that regulation protects public health and safety.

Currently the options being considered to address this issue are grouped into 4 scenarios:

Scenario 1: No change to the status quo.

Scenario 2: Schedule 2 and Schedule 3 entries for codeine to be amended to reduce the pack size to not more than 3 days' supply and include a label warning that codeine can cause addiction.

Scenario 3: The current Schedule 2 entries for codeine in cough and cold preparations to be up-scheduled to Schedule 3. All Schedule 3 entries to be amended to reduce the pack size to not more than 3 days' supply, and include a label warning that codeine can cause addiction.

Scenario 4: Schedule 2 and Schedule 3 entries for codeine to be up-scheduled to Schedule 4.

In addition to extensive public consultation by the TGA prior to and during preparation of this RIS, the consultancy firm KPMG produced a regulatory costing model and an economic and social impacts model (health economic model). Each of these models were informed by a range of sources, including industry and peak body consultations, as well as guidance from the TGA and the OBPR. A summary of the results from the modelling is presented in the following table.

Regulatory (for first year, 2017 and the period 2017-2026) as well as the economic costs and benefits (for the period 2017-2026) for each option and scenario ($million)
Scenario 2 Scenario 3 Scenario 4
Option 2 Option 5 Option 3 Option 5 Option 4 Option 6
Regulatory costs (average annual) Option ($0.05) ($0.13) ($10.14) ($0.13) ($10.24) ($2.21)
Scenario ($0.18) ($10.27) ($12.45)

For the 10-year period from 2017-2026 the following costs and benefits have been estimated:

Regulatory costs (not discounted) Option ($0.50) ($1.30) ($101.40) ($1.30) ($102.40) ($22.10)
Scenario ($1.80) ($102.70) ($124.50)
Health economic costs (7% discounted) Option ($20.70) ($409.87) ($14.49) ($409.87) ($56.03) ($209.87)
Scenario ($430.57) ($424.36) ($265.90)
Health economic benefits (7% discounted) Option 0 0 0 0 $243.95 $5,353.17
Scenario 0 0 $5,597.12
Net benefit (7% discounted) Option ($21.20) ($411.17) ($115.89) ($411.17) $85.52 $5,121.20
Scenario ($432.37) ($527.06) $5,206.72

Source: KPMG 2016, Table ES2 (Annex 1)

Only Scenario 4 (Options 4 and 6) results in a net benefit to society. The economic benefits are driven by gains in quality of life, deaths prevented, and net financial savings to consumers; for example, those consumers who substitute OTC codeine medicines with paracetamol and/or ibuprofen, post regulatory change. This positive net benefit for Scenario 4 is robust to a wide range of sensitivity analyses, including the following set of cost maximising and benefit minimising assumptions:

  • if no deaths are prevented
  • if the costs of gaining any quality of life improvements, for example through improved treatment for chronic pain, are increased by 80%
  • if the quality of life gain from treatment is reduced by 80%.

The variables that the net benefit was most sensitive to were the average Quality Adjusted Life Year (QALY) gain resulting from additional treatment received for pain symptoms, and the number of repeat scripts. The economic model was only moderately sensitive to the discount rate, number of deaths prevented, and the co-payment for GP and specialist consultations.

Scenario 4 will provide the greatest protection of public health and safety as a result of positive changes in consumer purchasing behaviour, raising awareness of codeine dependency through education, and the increased exploration of alternative therapeutic and treatment pathways for pain management. This scenario also delivers a net economic benefit to society significantly greater than any other scenario.

The implementation of Scenario 4 involves up-scheduling codeine entries from Schedules 2 and 3 to Schedule 4, the implication of which is that no codeine-containing products would be available without a prescription. The minimum implementation timeframe for Scenario 4 is 12 months. At this time, the estimated regulatory burden is expected to be less than $12.5 million per annum, which will be offset in the ensuing couple of years.

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