|Implemented in this survey?|
As part of the Australia - United States Free Trade Agreement (AUSFTA), the Australian Government committed itself to reforming the decision-making processes of the Pharmaceutical Benefits Scheme (PBS). As part of this commitment, the Government is currently establishing a formal process whereby pharmaceutical companies can ask for their application to be reviewed if the Pharmaceutical Benefits Advisory Committee (PBAC) has recommended against subsidising the drug in question.
|Degree of Innovation||traditional||innovative|
|Degree of Controversy||consensual||highly controversial|
|Structural or Systemic Impact||marginal||fundamental|
|Public Visibility||very low||very high|
A Parliamentary Committee examined the AUSFTA which included public hearings and consideration of stakeholder submissions. The Parliamentary Committee recognised the contentious nature of the
proposed review mechanism (Joint Parliamentary Committee on Treaties, 2004). Some submissions to the committee were concerned about the possibility that the review process would act as
a threat to PBAC's authority.
Some stakeholders were concerned with the emphasis given in the AUSFTA to the need to recognize pharmaceutical R&D (Joint Parliamentary Committee on Treaties, 2004). PBAC's assessment of applications considered the effectiveness and cost-effectiveness of new drugs. This assessment incorporates notions of innovation if the new drug produces additional health benefits. Whilst the text of the AUSFTA is rather ambiguous, one interpretation is that PBAC could be required to now consider the cost of innovation (rather than the outcome of innovation). It remains unclear how the AUSFTA text will affect, if at all, the decision making criteria of PBAC. The Australian Government has argued that the essential elements of the PBS architecture remain intact (Abbott, 2005).
Increased transparency should make the decision-making process more legitimate and robust. However, the process as it now stands has created an imbalance in that pharmaceutical companies can publicly argue their case but PBAC has very llimited scope to defend their decision.
|Implemented in this survey?|
The processes for listing a drug onto the Pharmaceutical Benefit Scheme (PBS) are summarised in the attached figure, and highlight the changes brought about by the Australia - United States
Free Trade Agreement (AUSFTA). In brief, following marketing approval by the Therapeutic Goods Administration (TGA), drug companies can choose to market their drug with or without PBS public
subsidies. If an application for PBS listing is made, the Pharmaceutical Benefits Advisory Committee (PBAC) evaluates the effectiveness and cost-effectiveness of the drug. The evaluations are based
on submissions by the drug's manufacturers, which include the price they would like to be paid. If approved for PBS listing, the Pharmaceutical Benefits Pricing Authority recommends to the Department
of Health what price to offer the drug's manufacturer. If the drug's sponsor agrees on the government's price, the drug is added to the PBS. If not, the sponsor can return to the Committee or the
Authority with further information (Burton and Varghese, 2004).
As part of the AUSFTA, which came into effect on 1 January 2005, the Australian Government is required to establish a review mechanism within the PBS process as well undertake for regular revisions of the schedule (DFAT 2004, and Burton and Varghese, 2004).
Using the principles set out in the AUSFTA, a working group comprising representatives from PBAC and Medicines Australia (the peak Australian pharma industry group) developed the review mechanism in more detail. In February 2005, the Government released the details of the independent review process (Abbott 2005).
An independent review can only be instigated by the applicant (the pharmaceutical company) when PBAC has recommended not to list the new drug on the PBS. A convenor will manage the review and will appoint a reviewer from a panel of identified experts. The applicant will identify the issues that are in dispute and the review will focus on these issues. The reviewer will have access to all the information placed before the PBAC and may seek clarifying information from the applicant, the PBAC or the Department and other relevant experts but no new information is to be provided to the reviewer (Abbott 2005).
The outcomes of the independent review will be made public and the findings will be reported to the PBAC. PBAC will then assess whether or not the review findings warrants a change in the original decision. The review findings and the outcome of the PBAC's reconsideration will then be reported to the Minister for Health and Ageing (Abbott 2005).
Applicants will retain the option to resubmit their application to the PBAC if additional data or information subsequently becomes available.
The Pharmaceutical Benefit listing process Source: Burton, K. and Varghese, J (2004).,
|Cabinet||very supportive||strongly opposed|
|Joint Committee on Treaties||very supportive||strongly opposed|
|Private Sector or Industry|
|Medicines Australia||very supportive||strongly opposed|
|US Government||very supportive||strongly opposed|
|PBAC||very supportive||strongly opposed|
The new review process does not require legislative amendments, and therefore its design and implementation are the responsibility of the executive arm of government.
It is noteworthy that no legislative amendments have been made. Under the National Health Act 1953, the Pharmaceutical Benefits Advisory Committee (PBAC) is an independent statutory body that gives advice to the Minister about which drugs should be made available as pharmaceutical benefits. No new drug may be made available as a pharmaceutical benefit unless the Committee has recommended it.
This legislation protects PBAC as the body that acts as the gatekeeper to publicly subsidised medicines under the PBS.
|Joint Committee on Treaties||very strong||none|
|Private Sector or Industry|
|Medicines Australia||very strong||none|
|US Government||very strong||none|
In February 2005, the Australian Government released details of the review mechanisms and at the same time invited nominations for the role of review process convener and panel experts. The outcome of the selection process is, as at 11 April 2005, yet to be released.
The Australian Government has committed to review these processes 12 months following their implementation to ensure that the AUSFTA provisions, as well as the objectives of accountaibility and transparancy for all stakeholders, are being met.
The stated objectives of this policy are to improve accountability and transparancy of the decsion making process. The review process, as well as the publication of the review and PBAC decision
(covered in an earlier survey) is likely to achieve this.
As the review process is yet to fully established, it is too early to say what the actual outcome will be.
|Quality of Health Care Services||marginal||fundamental|
|Level of Equity||system less equitable||system more equitable|
|Cost Efficiency||very low||very high|
Under current legislation, the Minister for Health, must act upon the recommendations of PBAC for the listing of new drugs on the PBS. It is for this reason that a number of commentators have
suggested that the powers of the review process are unlikely to have a real bearing on the outcome of pharmaceutical policy decisions. However, one of the political unknowns of this policy is
what happens if the review findings and the final PBAC decision are at odds. Such a situation would leave the Minister for Health with two conflicting pieces of advice that may require a
Whilst the Minister for Health must follow PBAC recommendations for PBS listings, there is a precedent in Australia to fund a pharmaceutical outside of the PBS program. In 2001, following a recommendation by PBAC against listing, the then Minister for Health went outside the PBS program and established a separate funding mechanism to publicly subsidise Herceptin (a drug used for late stage breast cancer). It is therefore possible for a Minister to fund new drugs outside of the PBS program (see HIC 2005).
Abbott, Tony (2005)., Minister for Health Ageing, Statement on the Implementation of Australia's AUSFTA Commitments., Statement available at www.health.gov.au/internet/wcms/publishing.nsf/Content/health-mediarel-yr2005-ta-abb008.htm
accessed at 31 March 2005.
Burton, K. and Varghese, J (2004.)., The PBS and the Australia-US Free Trade Agreement., Research Note 2004-05 No. 3 21 July 2004, Parliamentary Library, available at http://www.aph.gov.au/library/pubs/rn/2004-05/05rn03.pdf accessed at 31 March 2005.
DFAT (2005a), Australia-United States Free Trade Agreement - fact sheets, Department of Foreign Affairs and Trade, available at http://www.dfat.gov.au/trade/negotiations/us_fta/outcomes/index.html, accessed 1 April 2005.
DFAT (2005b), Australia-United States Free Trade Agreement Chapter 2 - Annex 2C, Department of Foreign Affairs and Trade, available at http://www.dfat.gov.au/trade/negotiations/us_fta/final-text/chapter_2.html, accessed at 1 April 2005.
HIC (2005), About Herceptin, Health Insurance Commission, information available at http://www.hic.gov.au/providers/programs_services/herceptin.htm, accessed 4 April 2005.
Joint Parliamentary Committee on Treaties (2004), Report Number 61 - Australia-United States Free Trade Agreement, Report available at www.aph.gov.au/house/committee/jsct/usafta/report.htm accessed at 31 March 2005.
Kees van Gool