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Thursday, 12 August 2004
Page: 26385

Senator NETTLE (5:44 PM) —I do not know whether the minister had the opportunity to see the Four Corners program on this issue last week. A former member of the Pharmaceutical Benefits Advisory Committee, Professor David Henry, from the University of Newcastle, was describing the great benefits—there are many—of the scheme that exists in Australia. One of the benefits that he described was that part of the cost-effectiveness, part of being able to keep down the price, is the fact that pharmaceutical companies put a case to the PBAC, the Pharmaceutical Benefits Advisory Committee, as to why their drugs should be listed and what the price should be. Often there is a process of back and forth negotiations where the PBAC rejects their application. They are provided with reasons and they do more research and put forward, based on the information they have received from the PBAC, a case as to why they believe they should get a different price. They make adjustments and put forward another case. One of the mechanisms that keeps down the prices that the Australian government pays for the drugs, and which maintains the cost-effectiveness of the model, is this back and forth process of negotiation, whereby the pharmaceutical company puts forward a case, the case is rejected and it then puts forward another case. An inherent factor of the way the PBAC operates is the maintenance of the cap on prices that the Australian government pays.

This review mechanism allows for a pharmaceutical company that has had its application to list a drug on the PBS knocked off at the first opportunity to be able to go to another independent review. Rather than the existing process, where they would rejig the application if they believed they had a case and an argument to put forward and it would be put back to the PBAC, they will now go to an independent review mechanism. Does the minister acknowledge the value of the current system, whereby part of that cost-effectiveness is ensuring that pharmaceutical companies go back, restate their case and put it to the PBAC? Does the minister acknowledge that that is part of what keeps the cap on the prices of pharmaceuticals?