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COMMUNITY AFFAIRS REFERENCES COMMITTEE
07/05/2010
Consumer access to pharmaceutical benefits

CHAIR —Welcome. I am sure you know the drill—in fact, I know you know the drill. I know that you also know about parliamentary privilege and the protection of witnesses and evidence. I invite you to make an opening statement and then we will ask you some questions.

Prof. Sansom —I have been the chair of the PBAC since 2001. The PBAC is a statutory committee which provides independent advice to the Minister for Health and Ageing regarding the listing of medicines on the PBS and on other related matters referred to it by the minister. The minister cannot list a drug on the pharmaceutical benefits schedule unless a positive recommendation is received by the PBAC. The expert members of the committee are medical practitioners, both specialist and general practitioners, a health economist, a pharmacist and a consumer representative. The PBAC is committed to full transparency and I have been attempting to achieve that for the 10 years of my term. The PBAC believes that submissions, evaluations and minutes of the PBAC should be in the public domain. Full transparency strengthens the process; it does not challenge the process. While there have been considerable improvements in transparency in this period, such as the publication of public summary documents and most decisions, there is still a way to go. We are continually dialoguing with Medicines Australia to progress this issue.

We have recently received permission from Medicines Australia to list the agenda for PBAC meetings six weeks prior to that meeting to allow input from the wider community, including from consumer and others. We have had discussions with consumer organisations to publicise this system. I note that there is debate within the department and it is looking at ways in which we can facilitate consumer input as a result of that system. Further, the PBAC holds stakeholder meetings involving clinicians, consumers and sponsors to progress difficult areas. In certain circumstances the PBAC also seeks consumer impact statements, seeking consumer comments on the questions: in living with this disease, what is it like for you, your family and your carers? Examples of where we have done this are for the disease social anxiety disorder and for sleep and restless leg syndrome. The PBAC also has regular meetings with a number of medical groups, including the Medical Oncology Group of Australia, the Australian Rheumatology Association, the Multiple Myeloma Research Foundation, just to mention a few.

In making recommendations to the minister the PBAC is required to take into consideration comparative effectiveness, comparative cost and thereby cost effectiveness. There is a difference in the role of the regulatory agency, whose task it is to evaluate the benefit and the risk of medicines and the TGA is not required to consider comparisons with other medicines. The important role for the PBAC is to consider the value-for-money concept. The majority of the committee’s deliberations result from submissions from the pharmaceutical industry, although submissions from others, including consumer groups, medical groups can and have been received.

The PBAC considers how a medicine compares, both in regard to comparative efficacy and toxicity, with the medicine or other intervention that in practice it is likely to replace. If the new medicine shows that it is superior in health outcomes to its comparator then the sponsor will provide a cost-effective analysis and will usually, almost invariably, seek a higher price on which the PBAC will adjudicate, taking into account factors such as the robustness of the evidence, the clinical need and social values and the increased benefit and increased cost. If the sponsor is unable to show superiority but provides satisfactory evidence that the medicine is no worse than its comparator, in either efficacy and/or toxicity, it is recommended at the same price as its comparator to ensure that the system pays no more for the same health outcome. That is a statement that I commonly use in public: the same bang, the same buck. Mr Delaat, this morning, called it cost minimisation. It is the same thing.

The cost-minimisation approach is taken, irrespective of whether the medicines are a member of the same pharmacological class. They may in fact be medicines within completely different mechanisms of action but whose patient relevant outcomes are no worse than one another. The same outcome warrants the same price in the context of a funding or pricing program.

All the drugs within a therapeutic group are in the same therapeutic class and have been funded on the basis of being no worse than one another with respect to the dominant indication. The PBS system, as you know, is held in the highest regard in Australia and overseas. It provides an equity of access both in terms of universality and comprehensiveness, which is the envy of most countries. Drugs are often recommended in this country before other comparative countries and I give the example of Avastin for colorectal cancer as an example of that.

In regard to the formation of therapeutic groups, which commenced, as you know, in 1998 the PBAC has taken note of the relevant legislation. The PBAC considers the therapeutic group policy used by governments in regard to the cost of goods is an appropriate tool. The principle involves the concept of value for money and the purchase of health outcomes, which are the foundations of the PBAC processes. With respect to some of the submissions and statements by others at this inquiry there seems to be considerable confusion, even in the last presentation, between therapeutic group policy and brand substitution policy. They are two distinct and separate policies. The brand substitution policy allows substitution between brands of the same medicine which have been given patient and prescribed approval by a pharmacist. This is completely different from the therapeutic group policy, which is simply a pricing policy, which does not allow substitution by a pharmacist of a different medicine or formulation. There may be a requirement for the patient to pay a therapeutic group premium if the sponsor does not agree to any subsequent price reduction. Of the number of products currently involved in therapeutic groups, which equals almost 600, a brand premium has only ever been asked for six such products. That includes the company which manufactures the drug risedronate, which has been a topic of much discussion today. Thus, from the patient’s and the prescriber’s position, for the four new groups which we provided advice to the minister on, there would have been absolutely no difference in either what particular medicines from the group could be prescribed or the cost to the consumer.

The PBAC has interpreted the statement of the term ‘interchangeable on a patient basis’ in the following way: drugs within the therapeutic group are very alike—that is, they belong to the same therapeutic class and, in the vast majority of patients, would work just as well as one another. That is, in commencing a patient on any one of the drugs in a therapeutic group it would make no difference in health outcomes for the vast majority of patients. This does not mean of course that each patient will respond exactly the same to every medicine in the group. Clearly, it is unrealistic to expect that. We are not clones of one another and individual differences will always exist in regard to both response and toxicity. Further, the history of the formation of therapeutic groups acknowledges that fact by allowing applications for exemptions from any therapeutic group premium. So to say that the interchange at the patient level has to be the same with each individual is not the way PBAC has interpreted this legislation at all. For the majority of patients, no specific characteristic is apparent which would predict that a patient may respond better to one medicine than another within a therapeutic group. That is unlike the situation, for example, with some anticancer drugs where molecular targeting may predict which patients will respond better to one drug than to another. Clearly, these types of drugs would be unsuitable for inclusion within a therapeutic group. I have informed Medicines Australia of the PBAC’s interpretation of the term at the annual Medicines Australia-PBAC meeting and on repeated occasions to the officers of Medicines Australia. I have also informed that the PBAC does not have the capacity to make legal interpretations of acts or regulations. I have informed them of the interpretation that PBAC has taken of that piece of legislation—that is, interchangeability in a pragmatic way, taking into account the history since 1997.

A number of people have stated that the term ‘bioequivalence’ should be included in the context of the definition of ‘interchangeability’ as it refers to the formation of therapeutic groups. Even just a while ago you heard the term ‘bioequivalence’ between alendronate and risedronate. That is scientifically incorrect. Bioequivalence relates only to the rate and extent of absorption of the same drug in different brands. It is absolutely irrelevant within therapeutic group policy.

I would also like to take this opportunity to respond to some of the issues raised in the submissions, in particular with regard to the formation of therapeutic groups of bisphosphonates. A number of submissions addressed the issue of different mechanisms of action resulting in advantages for risedronate over alendronate. These submissions quote a review by Russell and others, published in Osteoporosis International in 2008. This review discusses the relative potency of the bisphosphonates with regard to different biochemical and cellular effects. Of course, what is relevant to patients is the impact on fracture risk or toxicity. What the submission fails to mention from this paper is the following conclusion by the authors of the paper:

Based on the available data, we have proposed that these differences might be clinically relevant, although additional work will need to be done to confirm these hypotheses.

Another statement relates to the onset of action of fracture prevention. In two of the submissions, the sponsor raised this issue. The major reference used to support the hypothesis that risedronate has a more rapid onset is a paper published by Silverman in Osteoporosis International in 2007. This paper used health record databases from the USA to examine the effectiveness of alendronate and risedronate on non-vertebral fractures in the first year of therapy. They examined records of 34,000 women and concluded that patients receiving risedronate have lower rates of non-vertebral fractures during their first year of therapy than patients receiving alendronate. The submissions, however, fail to report a more recent study by Cadarette published in Annals of Internal Medicine in 2008. Like Silverman and others, they used health record data from the United States. They concluded:

We found little difference in non-vertebral fracture rates among new recipients of alendronate or risedronate, regardless of the duration of observation (6, 12 or 24 months …

They went on to say:

Our results contrast with findings from other observational studies—

referring to the Silverman paper—

that document risedronate as more effective than alendronate …

They also went on to say:

Our large observational study of persons aged 65 years or older—

which would be the largest recipient group for these drugs—

who received drug treatment for osteoporosis identified no difference in the effectiveness of bisphosphonates (risedronate versus alendronate) in preventing non-vertebral fractures.

The editors of the journal, in a note to that paper, stated:

There probably is no single clearly superior drug therapy for osteoporosis.

The issue of mental health has also been raised at today’s hearing. The only therapeutic group which involves drugs used in mental health is venlafaxine and desvenlafaxine—that is, Effexor and Pristiq. No other therapeutic groups exist for drugs used in mental health. The issue regarding the interchangeability of these two agents was discussed with the sponsor and their clinical expert at a hearing before PBAC in March 2009. We asked their clinical expert specifically whether there was any one patient that would benefit from this drug over the other. The answer was no. That is recorded within the minutes of the PBAC. It is interesting to note that the sponsor has recently withdrawn its application for registration of desvenlafaxine to the European Medicines Evaluation Agency due to concerns expressed by that agency. PBAC has sought advice from the TGA on this matter.

These examples demonstrate that there is uncertainty regarding some of the statements made to this inquiry. Uncertainty is not uncommon in many submissions, and the PBAC, in providing advice to the minister, has to deal with this frequently, using a risk management type strategy. The issue is whether, in the face of significant uncertainty, the funding agency should take all the risk or whether the responsibility is on the sponsor to provide the evidence to significantly reduce that uncertainty. In a teleconference with the Australian & New Zealand Bone & Mineral Society in December 2009, I made this point to the executive of that association. I encouraged them to provide any additional data to the PBAC for its reconsideration of the formation of bisphosphonate groups in December and January of 2009. The society has not provided any such data to the PBAC at this time.

The issue of vitamin D and calcium has also been raised. In March 2009 the PBAC recommended to the minister a combination product of alendronate, vitamin D and calcium at no brand premium. We did so again in November 2009. There is to be a base price combination product of alendronate, vitamin D and calcium listed on the PBS schedule. In summary, I believe that the PBAC has been able to interpret the requirements for the formation of therapeutic groups and has the mechanisms and processes in place to investigate the evidence available, taking into account the uncertainty which is inherent within some of the data.

Senator FIERRAVANTI-WELLS —Professor, can I start by asking if you could outline for us the process. You have spoken about the process, but could you outline for us the actual process for the formation of a therapeutic group?

Prof. Sansom —The PBAC received a request from the minister for us to consider therapeutic groups in the following areas. We did that.

Senator FIERRAVANTI-WELLS —So firstly there is a request from the minister?

Prof. Sansom —Yes. In regard to venlafaxine and desvenlafaxine, I think the PBAC made it clear within the minutes of that discussion that we would not consider that there would be any difference between venlafaxine and desvenlafaxine. The request comes from the minister. The PBAC then looks at all of the publicly available data. It evaluates that data and makes a recommendation. The amount of material that the PBAC members evaluate is incredible. We receive information from the sponsors. People do their own literature searches and collect their own data and make what I would say are properly informed decisions on the evidence that is available, taking into account the uncertainty around some of that evidence. Nothing is ever black and white in this situation.

Senator FIERRAVANTI-WELLS —In the circumstances in relation to the therapeutic groups that we are talking about now, the requests came from the minister?

Prof. Sansom —In March we advised the minister that venlafaxine and desvenlafaxine could form a therapeutic group. In June we advised that oral bisphosphonate should form two separate groups, one for osteoporosis and one for Paget’s disease. They were at the request of the minister. The PBAC looked at it. The PBAC discussed it and made a recommendation to the minister on those dates in relation to those therapeutic groups.

Senator FIERRAVANTI-WELLS —When was the PBAC first approached?

Prof. Sansom —I would have to take that on notice. All I know is that on 5 June we notified the minister and provided advice. Presumably it was before then. It could have been April, but I do not know. It could have been March. I would have to take that on notice. You might ask the department; they might know.

Senator FIERRAVANTI-WELLS —In terms of the timing of the release of the public information, is that purely a matter for the minister?

Prof. Sansom —No, I think this situation is somewhat different. As I said earlier, the PBAC believes that transparency is fundamental. In these cases of course it was in a budget context and that is up to the government and the minister. I do not think that is a question for me to answer.

Senator FIERRAVANTI-WELLS —That is the point—it was in the budget context. It came to you as part of a financial consideration, if I can put it that way.

Prof. Sansom —I suppose a lot of things in the PBS are to do with financial considerations. We are spending over $8 billion. It is a very rapidly growing section of the system. I presume it would be appropriate for any government to monitor that and seek advice as appropriate.

Senator FIERRAVANTI-WELLS —I appreciate that. It is also a source of savings when you are looking for money to save in the system.

Prof. Sansom —The sustainability of the PBS is fundamental to the future health care of this country.

Senator RYAN —I hope I have got the timing correct here. You considered these in the first half of last year at the first two PBAC meetings, but the sponsors of the medicines involved were told—if I have read the department of health submissions correctly—at the end of last year.

Prof. Sansom —In November, and then they were given the opportunity to provide further advice, which the PBAC considered.

Senator RYAN —At a meeting of the PBAC?

Prof. Sansom —At a teleconference of the PBAC.

Senator RYAN —I appreciate that these timelines are not always yours. It strikes though that, when forming these therapeutic groups, if you are using all of the available data, it would make more sense to initially approach the sponsors and potentially some of the clinicians and stakeholders to clear up some of the other issues you have mentioned in your verbal submission at the initial consideration, rather than giving almost a right of reply after a decision had been taken.

Prof. Sansom —Senator, you should realise that we have been looking at this data on these groups of drugs for nearly a decade. We have looked at alendronate. We have looked at risedronate. They have been here many times and there have been many submissions. We have seen a lot of this data previously. So it was not as if it was pulled out of the air de novo.

Senator RYAN —I appreciate your earlier comments and I know you have a long record of PBAC transparency. I also know there have always been ongoing arguments about it, but it strikes me that, when undertaking the consideration it might be easier—in fact, it could even save the PBAC time—to call in the relevant sponsors, stakeholders and clinicians and hear from them at the initial consideration rather than having the two-stage process.

Prof. Sansom —As I said initially, the circumstances of the formation of these groups were in a different context than usual.

Senator RYAN —I have one quick question and I suppose the answer will be a yes or no. These requests come from the minister. You mentioned earlier that the agenda for these meetings is now public. Does that mean any subsequent requests from a minister to consider a therapeutic group would be on the publicly available agenda?

Prof. Sansom —You would have to ask the minister whether or not it would be on the agenda. My personal view would be that, yes, there should be no reason why not. But you would have to ask the department.

Senator RYAN —Who publishes the agenda when it goes public with this?

Prof. Sansom —The department publishes it.

Senator RYAN —So I can ask the department later on?

Prof. Sansom —Yes, I am sure that you can.

Senator RYAN —Do you approve that agenda before it is published?

Prof. Sansom —No, there is no approval. PBAC is required to look at everything before it. There is no selection of what the PBAC will look at. It is quite unlike many other agencies in the world. We are required to look at every submission.

Senator RYAN —Because these requests come from the minister, I will refer those questions to the department later on.

Prof. Sansom —I would prefer it if that went to the department.

Senator FIERRAVANTI-WELLS —Professor, I do not know if you followed some of the evidence that was given this morning.

Prof. Sansom —Yes, I did.

Senator FIERRAVANTI-WELLS —We talked about the various provisions in the legislation about the definition of interchangeability, and I will come to that in a moment. It is very clear from the legislation that the minister makes the decision, in the sense of the formation of the therapeutic group, and then comes to you. But it is very clear from the legislation that the minister does not necessarily have to follow your advice.

Prof. Sansom —No minister has to follow the advice. PBAC is a statutory committee; it advises the minister. The recommendation from PBAC is not binding on any minister and it never has been. It is always advisory to the minister. It makes a recommendation. Not all recommendations are accepted. I can remember one recommendation which was not accepted by the minister. I can remember one where we said no and the drug was funded outside the PBS system. PBAC is advisory to the minister. We are not a statutory authority; we are a statutory committee. That is not understood by many people. Many people believe that a decision by recommendation by PBAC is binding. The answer is it is not and never has been.

Senator FIERRAVANTI-WELLS —Just on that point, perhaps this might be the appropriate time to raise this: a number of the witnesses have indicated and expressed the view that you have been put in an unenviable position. They have raised issues in relation to risk and confusion for the doctors and for the patients. Do you have a comment in relation to these concerns? What would be your response in relation to that?

Prof. Sansom —PBAC is an independent committee. It makes its recommendation without fear or favour. PBAC did not feel under any pressure here when asked by the minister about a question. Whether or not we believe that, for the majority of people, it would make no difference about which drug they were commenced on and therefore whether a therapeutic group should be formed was just normal process for us. We looked at the data, made a recommendation and that recommendation took into account the fact that there may well be some people that require one drug against another. An exemption is allowed for in the legislation. PBAC did not feel any more pressure on this than in any other decision. All decisions by PBAC are difficult. The easiest thing for PBAC members to do is always vote yes or whichever way. That is the easiest thing to do. Some of these decisions are not easy, but they are made in good faith, they take into account the evidence and they take into account the requirements under the act that we advise the minister about cost effectiveness.

Senator FIERRAVANTI-WELLS —When a drug is listed, you become aware of a whole series of information that is available about a particular drug. When the PBAC goes to make the decision that medicines are interchangeable as a part of the process, do you conduct a new evaluation for the formation of the therapeutic groups?

Prof. Sansom —Absolutely. In November and December we undertook a literature review of what was new and what had come out. It is just part of the normal process. PBAC does inform itself.

Senator FIERRAVANTI-WELLS —And that includes consultation with third parties?

Prof. Sansom —It can. For example, as I said, we used the consumer impact statement in some instances—not within therapeutic groups of course. There was confidentiality around the request to the minister because it was in the budget context. But in other cases, yes, the PBAC has sought input—and you heard the Consumers Health Forum this morning talking about the consumer impact statements. We would go out, if we believed that was necessary, and seek further advice.

Senator FIERRAVANTI-WELLS —Do I infer from that that it is possible you may have consulted with third parties in relation to these therapeutic groups but not consulted with the companies in question before the decision was announced?

Prof. Sansom —No. In reaffirming our decision with respect to the therapeutic groups, the risedronate people, Sanofi-aventis, put in a submission to us. That submission was looked at.

Senator FIERRAVANTI-WELLS —Not in reaffirming, Professor, in the original decision about interchangeability.

Prof. Sansom —The issue is that the minister asked for our advice in a budget context. This was not in the public domain—

Senator FIERRAVANTI-WELLS —The minister comes to you and in this case she says, ‘I want to form a therapeutic group,’ and she asks for your advice. If I understand correctly, without paraphrasing, you make your evaluation and that may include consultation with third parties.

Prof. Sansom —No, I did not say that. I said that third parties include industry, as is appropriate. But in this case it was within a budget context. PBAC had no right to go out. It was not in the public domain.

Senator FIERRAVANTI-WELLS —So if it is potentially a drug that is considered outside the budget process, you would have then consulted—is that what you are saying?

Prof. Sansom —We would have considered consultation. Whether that would have been necessary would have depended upon the evidence before us and what evidence we had.

Senator FIERRAVANTI-WELLS —If these drugs—whether it be Crestor, Lipitor, or the antidepressants or the drugs related to osteoporosis—had been outside the budget process and not been a decision purely associated with money in the budget process, then we probably would have seen a different process?

Prof. Sansom —No, you may have depending upon whether or not PBAC was satisfied with the evidence that it had available to it.

Senator RYAN —Professor Sansom, were you told that this was being done in the budget context?

Prof. Sansom —I think it was within the phraseology—and I cannot remember the exact words that the government used—

Senator RYAN —You were under the distinct impression that you were asked to review this in the budget context?

Prof. Sansom —The PBAC was aware that this information was being sought by the minister, and that information was to the minister.

CHAIR —Let me just clarify that. Any information that the minister asks you to review is therefore considered confidential or outside—

Prof. Sansom —We generally believe that the minister is after advice and we provide advice to the minister on the basis on which we make that advice. Submissions by third parties, apart from that, are quite a different scenario, I believe. I presume any minister can ask advisory committees for advice.

Senator RYAN —I appreciate that. You have mentioned the budget context quite a bit in the last few minutes and I am interested in exploring whether or not this request was made to you in the context of the budget, as opposed to whether you are asked for something in the month of July—and that might be different because there is no budget in the near future.

Prof. Sansom —I think we were told that it was in relation to a fiscal consideration around the therapeutic issues as they pertain to groups of drugs on the PBS at the moment.

Senator RYAN —You stated earlier that you are an independent committee and I appreciate—

Prof. Sansom —Yes.

Senator RYAN —that you are a longstanding member and I do not wish to cast any aspersions—and I will say that at the start. But it strikes me that you are an independent committee and you are asked to make a decision which, as you have said, was in the context of fiscal consideration you have described as being in ‘budget context’. Therefore that is one of the reasons—not only, maybe, but one of them—that you are not consulting with external stakeholders, be they clinicians, the companies involved, stakeholder groups or patient groups, and then they hear about it six months later when they are given an opportunity post budget to have the decision reviewed. It strikes me that, if you are asked to do something in the budget context, that is going to weigh on your mind when you are thinking about it.

Prof. Sansom —No; it simply means that we will make the advice within the evidence that we have had previously and the evidence that now is in the public domain.

Senator RYAN —Why would that constrain your behaviour about consultation, then? If a decision on these medicines and therapeutic groups is being made absolutely purely on the evidence—and I respect you when you say that because of the longstanding traditions of the PBAC—then I do not see how the budget context is relevant, because there is either a scientific basis for the TGP or there is not. And if the minister is saying to you, ‘I need you to do this in the context of the budget’ then—I am not having a go at you, Professor Sansom, but I have got questions for the minister.

Prof. Sansom —They are issues you may wish to take up. The issue for us is that, when a submission comes in, that is in the public domain. The company knows about that. When the minister asks us for advice, that is asking us for advice. We look at the information. What the minister does with that advice and the way she or he manages that is an issue for the minister. You will have to ask the department.

Senator RYAN —One last factual question: when this was communicated to you, was it communicated to you by an official in the department or by the minister, in writing, or a ministerial staffer?

Prof. Sansom —I would have to take that on notice. I cannot remember exactly how it was that—

Senator FIERRAVANTI-WELLS —In relation to each group, could you—

Prof. Sansom —It would possibly have been in writing—I would have thought so.

Senator RYAN —I would assume it was.

Senator FIERRAVANTI-WELLS —Professor, can I just be clear: can you take that question on notice—

Prof. Sansom —Yes.

Senator FIERRAVANTI-WELLS —in relation to each group. We would appreciate knowing who contacted you, when you were contacted, when you first became aware, and the process that you followed in relation to each and every one of them, preferably in—

Prof. Sansom —Yes.

CHAIR —Can I also ask, for clarification: has this process changed under this government? Has it always been the practice for the committee that, if the minister seeks advice, it is done in the same way?

Prof. Sansom —Yes. The minister seeks advice—

CHAIR —So it has not been public? There hasn’t been consultation? So there has been no change in process recently—is that right?

Prof. Sansom —No. The minister seeks advice; we provide advice to the minister, and we provide the context of the information that made up that advice.

Senator FIERRAVANTI-WELLS —No, but in relation to therapeutic groups—that is the issue. You should qualify that, Senator Siewert.

CHAIR —I know that you want to know about this specific episode. But what I am also keen to know is: when the minister has been seeking advice, in the past, whichever minister it has been, they have gone to you in the same sort of way, and you have provided advice in the same context of—

Prof. Sansom —Yes.

CHAIR —It is direct to the minister and you have not gone out to third parties?

Prof. Sansom —Yes.

CHAIR —Or was this one specifically different?

Prof. Sansom —No. The minister asked for advice; we provided advice to the minister.

Senator RYAN —Can I please finish my question?

CHAIR —Yes.

Prof. Sansom —I was just going to say that one of the pieces of advice to the minister may have been that wider consultation is required. But that would be the context of the—

Senator RYAN —The reason I asked the question, Professor Sansom, is that I am interested, effectively, in knowing where the request to you came from—was it via the department or was it from the minister personally?—and the form in which it came. As in the previous questions, this is not in any way questioning the work you have undertaken. Could I also ask—given that we have budget estimates coming up in only a fortnight—that that information, if possible, be provided, to allow the committee to investigate that further at estimates.

Prof. Sansom —I am sure it can be provided. It is just—as you can appreciate—

Senator RYAN —I understand. You cannot keep everything in your head!

Prof. Sansom —the amount of material; I mean, the last agenda was 43 kilos in weight, which gives you some idea! Just bear in mind that I cannot remember every detail.

Senator FIERRAVANTI-WELLS —You can appreciate why there is concern. I respect what you have just told us about the process you go through. And then you get a five-line public document—for example, the one on Lipitor and Crestor is barely five lines. So concern is understandable when there is a process that supposedly contains so much and then, at the end of the process, it does not really stack up in terms of transparency.

Prof. Sansom —If the minutes of the PBAC were on the website that would become available. I can assure you, the discussion document and the documentation that was discussed in that particular one you are talking about was very extensive, including quite extensive discussion about a diminishing margin of returns as you increased the doses and so on—very detailed discussion.

Senator FIERRAVANTI-WELLS —Well, Professor, perhaps not in this context, but after the evidence is concluded: there were some concerns that were raised and I think, in fairness—do you perceive that there could be some reform, or consideration given to a much more open and transparent process? You said at the beginning of your comments that certainly it is a lot more than it used to be, but do I understand that a lot more could be done?

Prof. Sansom —I do not comment on government processes or ministerial processes, but let me reiterate that I am not, and nor is the PBAC, scared of full transparency.

Senator FIERRAVANTI-WELLS —Thank you, Professor. Are your recommendations about therapeutic groups subject to independent review like other recommendations?

Prof. Sansom —Not that I am aware of. Again, I will have to take it on notice. It would not worry me if they were.

Senator FIERRAVANTI-WELLS —That would be helpful if you did have some sort of background.

Prof. Sansom —I do not believe that, under the agreement, these issues are subject to review.

Senator FIERRAVANTI-WELLS —What data did the PBAC use to assess the clinical risks to patients in considering these new therapeutic groups?

Prof. Sansom —What you look at is whether, for the vast majority of patients, it would make any difference which drug they had. The answer is that that information is contained within the body of literature which is in the public domain. As I said, there are many publications on osteoporosis, particularly if. that is the one you talked about, and with statins it is exactly the same. The PBAC looks at each one of those and determines whether or not there is a specific subgroup of people. As I said earlier, in certain cancer therapies you might identify a subgroup of people, but in statins, for example, we are spending one dollar in every seven of the PBS budget on statins. Where 95 per cent of the population can actually be managed irrespective of which statin they use, that clearly is an issue for the sustainability and total cost of which we must advise the minister. In this particular case, there are potentially one or two groups.

If you look at the submission from the Bone and Mineral Society, you see that they talk about a subgroup of people who perhaps are undergoing an organ transplant, with high-dose corticosteroids for a short time, where they would want to be able to stop the bisphosphonates after that exposure. That may well be a valid exemption. We did not get to the stage of recommending to the minister what exemptions might apply to these therapeutic groups. We were asked for advice about whether a therapy should be formed. We would presume that, if the process went forward, in due course the PBAC would have been asked for advice by the minister about whether exemptions, if any, should apply to these therapeutic groups. The PBAC would then have considered those issues which have been raised in the submissions.

Senator FIERRAVANTI-WELLS —In the Department of Health and Ageing submission, it says that in the vast majority of cases patients can move from one drug in the group to another without any clinical or financial impact. What is the cut-off point for determining the vast majority and what is the impact on patients who are not in the vast majority?

Prof. Sansom —The PBAC has interpreted this and we have had discussions. We would think between 90 and 95 per cent at least of people where it would not make any difference which one—we talk about the vast majority. If you have a subgroup of 40 per cent, that does not become a vast majority. We are thinking here of the order of 90 to 95 per cent plus and for all the evidence that is available with the group we have recommended, that would fit that category.

Senator FIERRAVANTI-WELLS —What does ‘interchangeable at an individual patient level’ mean and what definition do you use? Do you have internal guidelines that assist you in how you apply that definition?

Prof. Sansom —As I said earlier, the PBAC has interpreted the statement of the term ‘interchangeable on a patient basis’ as meaning that the medicines within a therapeutic group are very alike—that is, belonging to the same therapeutic class—and, in a vast majority of patients, they would work just as well as one another. That means that commencing a patient on any one of the drugs in a therapeutic group would make no difference to the health outcomes for the vast majority of patients. This does not mean that each patient would respond exactly the same to each medicine in the group. It is unrealistic to believe that that would be the case. We are not clones of one another and individual differences will always exist both in regard to response and toxicity. Further, the formation of the therapeutic group acknowledges that fact by allowing applications for exemption from any therapeutic group. That is the interpretation that PBAC has put on that.

Senator FIERRAVANTI-WELLS —That is your interpretation but there is—

Prof. Sansom —No, that is the PBAC’s interpretation.

Senator FIERRAVANTI-WELLS —But there is no legislative definition..

Prof. Sansom —No. Again, let me go on. I do not know if you heard me, Senator, but I did say that I have informed Medicines Australia, who also have asked me that same question repeatedly, that the PBAC is not a group of lawyers, and the interpretation of that in a legal context is a legal issue.

Senator FIERRAVANTI-WELLS —Professor, do not get defensive. I think that there is a legislative deficiency, and that is why it has been canvassed at this committee hearing.

Prof. Sansom —The PBAC has looked at the history of it. You can provide exemptions; that means that it is not everyone—this is not an absolute. So we have interpreted that in what I would think is a pragmatic, commonsense way of proceeding forward with this policy, which has been in operation since 1998 and served the country well in relation to the PBS.

CHAIR —I need to move on to Senator Moore now.

Senator MOORE —Professor, I think a lot of the questions I have are actually for the department. But from your perspective—you have seen some of the evidence and the submissions—a lot of it relates to feelings of confusion and inability to get clear information about what is going on. My understanding of the PBAC is that you publish your minutes on the website.

Prof. Sansom —The minutes are not published.

Senator MOORE —But on the website there is—

Prof. Sansom —The public summary documents, which are based on the minutes.

Senator MOORE —That is right. That is public.

Prof. Sansom —While they are based on the minutes, they are not the minutes.

Senator MOORE —They are a summary document.

Prof. Sansom —They have been, in certain areas—

CHAIR —Massaged.

Prof. Sansom —To protect commercial-in-confidence issues, which is maybe not necessarily inappropriate at times. But they are based on the minutes, and they have been a major breakthrough in transparency.

Senator MOORE —How do individual sponsors exercise their rights to get more detailed information and feedback?

Prof. Sansom —After each PBAC meeting, if the PBAC has failed to make a positive recommendation I sit down with the companies, I go through their submissions and I go through why the PBAC rejected their submission and what needs to be addressed in moving forward. The PBAC will often give me authority to say, ‘If you reduce the price to X then you can have a positive recommendation.’ That is an ongoing dialogue, which has been going now for nearly 10 years, since I took over, and I think the sponsors have appreciated that. Remember that we have had only two reviews in that time. If you enter into dialogue with people after their submission has been rejected you can often find a way forward.

Senator MOORE —That is the process if they are putting up a drug for approval.

Prof. Sansom —Yes.

Senator MOORE —The supplementary process occurs if the drug is going to be included in one of the therapeutic groups. The concern felt by many of the people who were sponsors of drugs was that there was no advice or information given back as to why and how their particular product was included in the group, based on advice from the PBAC.

Prof. Sansom —That is true in a sense, but through due diligence the companies would have known that their drugs would likely have been subject to consideration of therapeutic group premium policy.

Senator MOORE —But nothing is given out to them stating the reasons?

Prof. Sansom —If the minister asks for advice, we provide advice to the minister.

Senator MOORE —So it does not come back through you; it comes back through the minister. If people are upset and have concerns about why their drugs are included in a therapeutic group, it is not an issue of complaint to you; it should be an issue of complaint to the minister.

Prof. Sansom —No. In this particular case, in November 2009 the sponsors were asked to provide additional evidence. One sponsor, I think, refused to do so, and one did so. That submission, which was submitted to us in November or December of last year, was looked at, all the issues were addressed and the recommendations were made to the minister. The department actually wrote to the sponsors. They had raised a number of issues. They were then asked to provide further advice to the PBAC, who would reconsider those issues. We did so and provided advice to the minister in January of this year.

As I said, I also received a number of letters from medical organisations. I had a teleconference with the executive of the Bone and Mineral Society. Again, they had misunderstood the policy: they thought the pharmacist could substitute alendronate. They confused brand policy and therapeutic group policy. I told them that if they had any further evidence surrounding the issues they raised about onset of action and these things that I have raised, they should provide it to the PBAC, which is always willing to look at new evidence. We had not received any evidence, so we made the decision on the evidence that we had available to us—the evidence that we found in the literature, which had not been mentioned in any of the presubmissions. This is what we do routinely: with any submission, we do our own literature search, so it is not as if we are being cynical. The issue is that if the companies put in a literature search then we do a literature search to find whether there are disparities between the types of databases or the types of information upon which we might make a decision. In that context, we did in this particular case reconsider the material from Sanofi with regard to Actonel, or risedronate.

Senator MOORE —So there is no review process for that, as Senator Fierravanti-Wells clarified?

Prof. Sansom —Again, I do not think that is mentioned within it—

Senator MOORE —We will check with the department.

Prof. Sansom —You will have to check with the department.

Senator MOORE —Professor, you were not around in the 1998 process?

Prof. Sansom —No, Senator.

Senator MOORE —Lucky you.

Prof. Sansom —I was not appointed until January 2001.

Senator MOORE —I will follow-up with the department because I am trying to see whether there is a difference in the creation and the process from 1998 to now. A lot of evidence has been given to us—and you did address it in your opening statement—about the various bases of proof. A number of submitters felt that the proof test was not sufficient to prove interchangeability and that there should have been a more intense proof basis for the drugs.

Prof. Sansom —Interchangeability says: is the therapeutic outcome in any one group different from another? Virtually all of the papers and literature about osteoporosis suggest that there is no difference between the outcomes of any of the bisphosphonates. In fact, the submissions which we received from the sponsors to get listing of their drug stated that there was no difference; their drug was no worse than the comparator. In other words, as Will Delaat said this morning, the first thing the PBAC asks members of a group is: ‘Were they all considered on a cost minimisation basis? Is there any evidence to suggest one is any better than another?’ If they were, I can assure you that the sponsor would be seeking an increased price. Even on things like compliance, which has been mentioned two or three times today, the legislation quite clearly allows that, if a sponsor believes their drug improves compliance and that compliance improves health outcomes, that is a legitimate thing for the PBAC to consider in price-setting. No such evidence has been provided to the PBAC in this regard which is of a strength which would enable to us make that decision.

Senator MOORE —My final question is more an opinion, Professor, so if you do not want to answer it, that is fine. There has been a degree of opposition and claims of confusion and patient disadvantage, even to the extent of very serious impacts on patients’ health, raised as objections to this process. From your position as chair of the PBAC. Were you surprised at the degree of opposition and the statements that have been made in evidence about this process to this committee?

Prof. Sansom —Yes.

CHAIR —Senator, you have one question.

Senator FIERRAVANTI-WELLS —I do not have a question; I have a comment. I foreshadowed this morning that there would be evidence given this afternoon. Professor has given certain evidence and I think the department will also give evidence. In fairness, I think those appearing this morning in particular ought to be given the opportunity to respond and, if required, we should rehear some of those who come before us again. I would like to put that on the record.

CHAIR —I said this morning that we will accept supplementary submissions, and I expect to get supplementary submissions, and then we will make a decision as to whether we will hear them.

Senator FIERRAVANTI-WELLS —Thank you.

Prof. Sansom —I do apologise, Madam Chair, that I decided only last week that I should ask to appear because of what I had seen in some of the submissions. I finished the submission only last night. I apologise that it was not earlier. Mr Delaat said this morning that he had not received it, but I am sure, as I said earlier, that there is nothing in there which he has not heard repeatedly from me over many years.

Senator MOORE —Chair, can I put on record one thing before we move on: it is standard practice of this committee and always has been to allow the right of reply.

Prof. Sansom —I would expect that to happen. It is due process:

Senator MOORE —Any inference made by people listening to this hearing that that is not standard practice of the committee would be inappropriate.

CHAIR —Senator Ryan promises me that he has a short question.

Senator RYAN —Thank you. I was just thinking about the previous discussion. In considering this request from the minister about therapeutic groups in the budget context, when the sponsor companies were not considered in the initial consideration did the PBAC go outside the PBAC or the department of health and consult other third parties?

Prof. Sansom —No. It worked purely within the committee, within the evidence before it—the evidence that it got from the public domain.

Senator RYAN —Sure. That is all I have, Chair.

CHAIR —Thank you very much. We do appreciate your time.

Proceedings suspended from 2.39 pm to 2.48 pm