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Cash flow pressure relief welcomed

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The Pharmacy Guild has responded to the 2018-19 Budget by highlighting the sustainability of the PBS and welcoming changes to payment for high-cost medicines

“The Pharmaceutical Benefits Scheme has again been confirmed in the 2018-19 Budget as the most fiscally sustainable component of the health system,” says the Guild in a Budget special edition of its newsletter, Forefront.

It says the new way the Government will pay for high-cost medicines – hinted at by Health Minister Greg Hunt during the APP2018 conference on the Gold Coast last week, and now announced in the Budget – will “drive a sharp reduction in the headline cost of the PBS”.

The change means the removal of most rebates previously paid to the Government by medicines manufacturers.

According to the Turnbull Government, the new arrangements will address the pharmacy cash flow issues raised during the Review of Pharmacy Remuneration and Regulation.

“The change will see a significant reduction in revenue from rebates for high-cost medicines with special pricing arrangements, reducing PBS revenues and expenses by a corresponding amount,” says the Pharmacy Guild.

“The Government’s Budget papers state that there will be no net reduction in the Government’s overall investment in the PBS as a result of this change.

“The reduction in PBS revenue through the paring back of the rebates, and the corresponding reduction in PBS expenses (specifically high-cost medicine prices) amounts to $5.4 billion from 2018-19 to 2021-22.

“While the details of the implementation of this change are yet to be finalised, the Pharmacy Guild welcomes the measure to the extent that it reduces the cash flow pressures on pharmacy small businesses when they purchase high-cost medicines for their patients.

“It will also make the Government’s investment in the PBS more transparent, which is also welcome.”

Revenue rebates for some high-cost drugs are set to be reduced from 1 July 2018, with the agreement of medicines manufacturers, and with a corresponding reduction in the published price of these medicines.

A new payment administration trial for some high-cost drugs with special pricing arrangements will begin on 1 July 2019.

The Guild says it plans to liaise with the Government on the design, implementation and transition arrangements for the trial, and that it will “insist” that the administration of these arrangements is “automated and seamless” for community pharmacies.

It says it will also insist that there be no reduction in dispensing-related remuneration, including the AHI fee.

“This change has significant implications for the cost of the PBS – without changing the Government’s net overall investment in the PBS,” says the Guild.

“Indeed, the headline cost of the PBS is expected to decrease by 19.8% in real terms over the period 2018-19 to 2021‑22 due largely to the change to the rebate regime.

“If the impact of this high-cost drug decision is removed from the numbers, the headline cost of the PBS is still estimated to decrease by 7.3% in real terms over the period 2018-19 to 2021‑22 – mainly reflecting ongoing medicine price reductions through the price disclosure process.”

Health Minister Greg Hunt said that the Turnbull Government is increasing investment in new medicines by $2.4 billion.

“This includes a new $1 billion provision to maintain our commitment to listing all new medicines recommendation by the independent Pharmaceutical Benefits Advisory Committee,” he said.

“We list and will continue to list, every single drug recommended by the medical experts – the Pharmaceutical Benefits Advisory Committee – with approximately $9 billion of investment in new drug listings since coming into government.  

“In particular, the Government will provide $703.6 million for the listing of Kisqali on the PBS to support women with breast cancer. Without subsidy, patients would pay $71,820 per year. 

“We will also list Spinraza on the PBS, a life-changing medicine which treats the devastating illness Spinal Muscular Atrophy. Without subsidy, patients would pay more than $367,850 per year.

“These new listings mean patients will have access to these medicines paying a maximum of $39.50 per script. Concessional patients, including pensioners, will pay just $6.40.

“The Turnbull Government has also signed a landmark agreement with Medicines Australia to improve access to life saving medicines for rare diseases through key reforms to the Life Saving Drugs Program.”

Not all stakeholders were pleased with the health side of the Budget, however: the Public Health Association of Australia lamented that the “prevention focus” was “missing”.

“Despite repeated advice – and repeated commitments in principle – the Government is still not developing a preventative health focus for our health system,” said its Chief Executive, Michael Moore.

“People who should be destined to live healthy lives will not because of the preventable diseases they will suffer,” he said.

“While we need to look after the aged populations and those requiring medical treatment, we need to focus even more heavily on the younger generation we are failing.”

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