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Government response to PBAC recommendations

Country: 
Australia
Partner Institute: 
Centre for Health, Economics Research and Evaluation (CHERE), University of Technology, Sydney
Survey no: 
(9)2007
Author(s): 
Haas, Marion
Health Policy Issues: 
Pharmaceutical Policy
Reform formerly reported in: 
PBAC outcomes
PBAC Processes
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no yes no no

Abstract

The Australian government has responded differently to two decisions not to recommend listing a drug on the PBS: when the PBAC recommended against listing Herceptin for metastatic breast cancer, the government set up a special fund to be operated outside of the PBS. However, when the PBAC recommended against funding Gardasil for the human papilloma virus (HPV), the government intervened by asking the PBAC to reconsider its decision once the price of the drug had been re-negotiated.

Purpose of health policy or idea

The Pharmaceutical Benefits Advisory Committee (PBAC) helps decide whether and, if so, how medicines should be subsidised in Australia. It considers submissions from manufacturers which seek either to have a medicine listed on the Pharmaceutical Benefits Schedule (PBS) or change the circumstances under which a medicine is listed. The PBAC makes its recommendations to list/not list or change circumstances/ not change circumstances to government. ("Change circumstances" means change the indication for the drug, for example, expand the conditions for which it can be prescribed or allow it to be prescribed for a different group of patients with the same condition).  It can also defer a decision pending the provision of information relevant to the decision. Submissions from manufacturers include evidence regarding the effectiveness and cost-effectiveness of the medicine for one or more conditions for which the drug has been approved for use in Australia.

Once a medicine has been recommended for listing, the price is negotiated between the manufacturer and the Department of Health and Ageing. All PBAC recommendations are considered by the government: if a drug is expected to cost more the $A5m per year, it is considered by the Department of Finance and Administration; if it expected to cost more than $10m per year, it is considered by Cabinet, a committee of high level ministers, chaired by the Prime Minister.

However, on two occasions when the PBAC has recommended against listing a medicine, the government has stepped in, responding to public demands that the decisions be reversed. In the case of Herceptin (for metastatic breast cancer), a special fund was set up, to be administered by Medicare Australia, separately from the PBS. However, in the case of Gardasil (for the prevention of cervical cancer), the Prime Minister, John Howard, intervened personally by announcing that the drug would be subsidised (ie listed) as soon as the manufacturer offered the right price. The PBAC subsequently convened a special meeting and recommended that Gardasil be listed on the PBS.

Both types of reactions have the potential to send signals to manufacturers and lobby groups that a decision made by the PBAC may be be reversed if sufficient public and/or political pressure is able to be brought to bear on the PBAC. Such pressure may be more effective for some drugs such as those aimed at conditions or groups which generate emotional responses among the public eg breast cancer which has affected many well-known women and is perceived as being relatively common or conditions which affect children. In turn, this may undermine the processes used by the PBAC to determine its recommendations and hence the perceived independence of the PBAC.     

Main points

Main objectives

The objectives of the PBAC are to consider the effectiveness and cost-effectiveness of medicines in making recommendations to government regarding the listing of drugs for public subsidy. A perceived willingness to interfere in this process may undermine these objectives. Therefore, this survey is not about a "policy" but about approaches which, if adopted, could disrupt the decision-making capacity of the PBAC.

Type of incentives

A perceived ability to interfere with or side-step negative PBAC decisions will result in incentives for manufacturers and lobby groups to develop strategies which will maximise their chances of over-turning such decisions eg lobby influential politicians, use the media to publicise the negative consequences of non-listing for affected individuals

Groups affected

PBAC, Drug manufacturers, General Public

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Characteristics of this policy

Degree of Innovation traditional innovative innovative
Degree of Controversy consensual controversial highly controversial
Structural or Systemic Impact marginal neutral fundamental
Public Visibility very low low very high
Transferability strongly system-dependent system-neutral system-neutral

At the time each of these new approaches were devised, they raised a considerable level of controversy in relation to the PBAC approach to judging cost-effectiveness, access to drugs for cancer or for preventing cancer and the way in which the independence of the PBAC could potentially be compromised. However, in both cases, once the decision was made, the controversy died down and both sorts of reactions seemed generally acceptable to the general public.

Political and economic background

The PBAC is an independent body of experts set up to evaluate the effectiveness and cost-effectiveness of drugs being considered for subsidisation by the Australian government. As such, it has the power to recommend or not recommend that drugs be listed on the Schedule, thus playing a part in determining the extent to which a drug will be prescribed by doctors, benefit patients and be a source of income for the manufacturer. However, the final decision is left to the Minister for Health or, in the case of drugs expected to cost more than $AU10 million, the Cabinet. It should be noted that the Monister cannot list drugs on the PBS which have not been recommended by the PBAC.

The PBAC has been criticised by manufacturers for keeping prices articifially low and not taking into account the costs of research and development when negotiating prices for drugs recommended for listing on the PBS.

Through lobbying the government, patients, manufacturers and other interested groups have an opportunity to influence the final decision. To date, the influence of such lobbying has been visible in only two cases (those described here). Thus, although there is no official change in policy associated with these cases, they may point to increasing sophistication and influence of lobby groups towards the PBAC process.

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no yes no no

Origins of health policy idea

This is not an official policy; it represents two seemingly ad hoc responses to particular circumstances. However, it is likely that both approaches were politically driven rejoinders to intense lobbying by drug manufacturers (directly or indirectly) and patients, members of the general public affected by the condition (metastatic breast cancer or cervical cancer) or other interested parties (eg researchers involved in the development of the drugs or in the prevention of cancer).

Initiators of idea/main actors

  • Government: In both cases, the government stepped in to modify or change the decision. It was supported by the Opposition.
  • Patients, Consumers: The media reported comments from women with breast cancer and cervical cancer supporting the subsidisation of herceptin or Gardasil
  • Scientific Community: The developer of the Cervical Cancer vaccine was prominent in the media during the debate about listing. His influence was enhanced by his position as Australian of the Year.
  • Political Parties: The Labor Party Opposition supported the Government's intervention.

Stakeholder positions

Two different positions were adopted: In the case of Herceptin for advanced breast cancer, the government accepted the PBAC's recommendation that it not be listed on the PBS but chose instead to set up a separate system for approval and administration of the drug via Medicare Australia, the National Insurer. This system requires doctors to supply Medicare Australia with information indicating the presence of metastatic disease, such as diagnostic reports with the application for treatment. Once patients are registered on the program, the prescriber (ie treating doctor) must confirm their ongoing registration every six months. Consent must be obtained from both women and doctors. Women with breast cancer and breast cancer lobby groups welcomed the availability of the drug but doctor's groups have complained about the additional administrative work required.

In the case of Gardisil (the vaccine for cervical cancer), the PBAC rejected the initial application for listing on November 7th, 2006. The Minister for Health defended the integrity and independence of the PBAC, supported the organisation of a meeting between Department of Health and Ageing and the company and supported a second application being made. However, the PBAC was not due to meet again until March 2007. On Thursday November 9th 2006, the Prime Minister, John Howard was reported as saying that the vaccine would be subsidised and that, if agreement could be reached soon,  the planned school-based vaccination would begin in 2008. Between that date and November 29th, there was almost daily reporting on the progress of talks between the PBAC and the vaccine manufacturer, including a petition brought by members of Parliament asking the government to request the PBAC to review its decision and reports from the manufacturer that it had lowered its asking price. On November 29th 2006, the PBAC convened a special meeting and agreed to recommend the listing of Gardisil. The decision was announced by the Prime Minister. 

 

Actors and positions

Description of actors and their positions
Government
Minister for Healthvery supportivevery supportive strongly opposed
Prime Ministervery supportivevery supportive strongly opposed
Women members of parliamentvery supportivevery supportive strongly opposed
Patients, Consumers
patientsvery supportivevery supportive strongly opposed
Scientific Community
Ian Frazer, Scientistvery supportivevery supportive strongly opposed
Political Parties
Opposition partiesvery supportivevery supportive strongly opposed

Influences in policy making and legislation

It is not envisaged that any legislation will be introduced regarding making changes to the way in which the PBAC operates.

Actors and influence

Description of actors and their influence

Government
Minister for Healthvery strongvery strong none
Prime Ministervery strongvery strong none
Women members of parliamentvery strongstrong none
Patients, Consumers
patientsvery strongstrong none
Scientific Community
Ian Frazer, Scientistvery strongvery strong none
Political Parties
Opposition partiesvery strongneutral none
Opposition partiesWomen members of parliament, patientsMinister for Health, Prime Minister, Ian Frazer, Scientist

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Adoption and implementation

For Herceptin, the government set up a separate process using Medicare Australia to administer the protocols required to obtain permission for the drug. This entails:

  • the establishment of eligibility for individual women
  • registration of individual women
  • dosage regime for each woman
  • confirmation of registration every six months

For Gardasil, there are two processes now being organised. Currently the vaccine is available at an unsubsidised cost of $AU460 for the recommended 3 doses. Under the new subsidised regime, all girls will receive 3 doses of the vaccine over a 7 month period at age 13 (ie at school). This will begin in April 2007. Girls aged 14-17 will also receive a catch-up regime during 2007 at school or college. Women aged 18-26 can receive a free vaccine regime (ie 3 doses) from their GP, starting in July 2007. The catch-up program will apply for a 2 year period.

Arrangements with each State and Territory Health and Education departments are being finalised. The arrangements for the GP-delivered vaccines (ie from 18-26 year olds) have not been announced as yet.

Monitoring and evaluation

As the approaches here do not represent a formal policy, there is no mechanism available to formally evaluate its effects. However, these incidents set precedents that have the potential to undermine the PBAC process and, ultimately, PBAC decisions. This area of policy is therefore worth following closely.

Results of evaluation

Herceptin:

As at May 2006, a total of 2157 patients were taking Herceptin for advanced breast cancer. A further 818 patients had been withdrawn from the scheme and 297 patients had died. Since May 2005, tThe number of new patients being added to the scheme has varied by month from 36 to 68. Overall, the numbers have increased slowly since its inception with 47 patients being added in May 2005, 59 in November 2005 and 68 in May 2006. No data are available regarding the long term survival of patients on Herceptin or the quality of life of survivors.

The most recent data shows the average course of treatment for patients in the Herceptin program is longer than originally forecast. The dosage of Herceptin relates principally to body weight and the average body weight of the patient group was slightly higher than expected; this, combined with the longer period of treatment, meant that the average cost of treatment for one year was approximately $AU67,000.

No information is yet available on the implementation of the Gardasil regime.

Expected outcome

The Herceptin program has provided women with advanced breast cancer with access to a drug that is believed will provide them with an increased response rate, time to disease progression and an increased probability of survival. The forecast average cost of treatment with Herception was estimated at $AU50,000;  currently, the average cost of treatment for one year is approximately $67,000 ie, $AU144,519,000 per year total cost to government..

 It is expected that, if the policy regarding Gardasil is implemented as expected and the vaccine is taken up by all girls aged 13, over time, the rate of cervical cancer in Australia will fall. This fall will be accelerated if the catch-up program is also implemented successfully as this will prevent a number of cancers in young women aged up to 26 in 2008. However, as cervical cancer is a rare disease and the vaccine does not prevent all cancers, the rate of take-up of the vaccine is critically important here. Whilst it will be implemented as a school-based regime, parental consent will be required. Some parents may refuse consent on the grounds that the vaccine has not been shown to be safe in the long term (although it has not been shown to be unsafe either) or that it will encourage early or promiscuous sexual activity. The program will cost the Australian government $AU600million per year, although this may drop if another vaccine comes onto the market and as the catch-up program finishes by the end of 2009.

Impact of this policy

Quality of Health Care Services marginal rather marginal fundamental
Level of Equity system less equitable neutral system more equitable
Cost Efficiency very low low very high

There will be little impact, if any, on health care services, from the use of Herceptin or Gardasil.

All women are or will be equally able to receive Herceptin and Gardisil as long as they are able to access breast cancer services in the first place (Herceptin) or GPs (Gardasil).

Although the prices of both drugs was lowered in the negotiating phases, it is unlikely that either are very cost-effective. Herceptin for advanced stage breast cancer will, at the most increase the average life expectancy by weeks or perhaps months whilst the outcomes of Gardasil will only be seen in the long term and still depend on a) women being vaccinated and b) continuing to have Pap tests.

References

Sources of Information

Recommendation made by the extraordinary PBAC meeting, November 2006. www.health.gov.au/internet/wcms/publishing.ncf/pbacrec-nov06-extra

Late stage metastatic breast cancer (Herceptin). www.hic.gov.au/providers/programs_services/herceptin

Australian Government funding of Gardasil. www.health.gov.au/internet/wcms/publishing.ncf/Content/gardasil_hpv.htm

Robotham, J. Pap smears missing high risk groups. Sydney Morning Herald, November 6, 2006.

AAP. Women forced to pay $500 for cancer drug. Sydney Morning Herald, November 8, 2006

Metherall M, Marriner C. Chemists set for gain as vaccine outcry grows. Sydney Morning Herald. November 10, 2006

Metherall M. Promised cancer vaccine off the free list. Sydney Morning Herald. November 9, 2006.

Robotham J. Let's not get into valuing one type of patient over others. Sydney Morning Herald. November 14, 2006.

Metherall M, Tadros E. Abbott warns of vaccine competitor. Sydney Morning Herald. November 15, 2006.

AAP. Cervical cencer vaccine price dropped. Sydney Morning Herald. November 20, 2006.

Metherall M. Girls to get cervical cancer vaccine. Sydney Morning Herald. November 29, 2006.

Metherall M, Patty A. Girls to get cervical cancer vaccine. Sydney Morning Herald. November 30, 2006

Reform formerly reported in

PBAC outcomes
Process Stages: Implementation
PBAC Processes
Process Stages: Implementation

Author/s and/or contributors to this survey

Haas, Marion

Suggested citation for this online article

Haas, Marion. "Government response to PBAC recommendations". Health Policy Monitor, March 2007. Available at http://www.hpm.org/survey/au/a9/4