Drug prices may fall by up to 82 percent in Australia

By Dr. Ananya Mandal, MDDec 20 2011

There is good news for patients who regularly take drugs for conditions such as high blood pressure and diabetes. The prices of these medicines in Australia could be reduced sharply from next year.

As a result of reforms exploiting cheaper generic drugs and exposing once-hidden discounts received by pharmacists, the prices to the government and to consumers of about 170 products will fall by between 10.5 per cent and 82 per cent from April 1 next year. A spokeswoman from the Department of Health and Ageing says the reform will usher in cheaper prices for 171 different strengths of 63 drugs. Four of the top 10 most prescribed medicines, which include treatments for cholesterol, blood pressure, reflux and diabetes, will be reduced in price, the spokeswoman said.

For example the price of commonly used 40mg simvastatin pills used to lower cholesterol will fall by 55 per cent from $42.77 to $22.68. Those who pay $34.20 for the medicine under the subsidy scheme will pay $22.68 once the changes come into effect. However, the price for pensioners, who pay $5.60, will not change.

The reforms are expected to save the Government about $1.9 billion over four years, from the increase in generic medicines. The Health Minister, Tanya Plibersek, said the reforms were good news for patients who had to buy medicines regularly and would mean reductions of 55 per cent for some drugs.

The Pharmacy Guild has told its 5000 members that given the impact of the reforms, the government should not be “returning to the well” to extract yet further savings from the sector.

The chief executive of Medicines Australia, Brendan Shaw, said the price cuts would “cause significant commercial difficulty for many of the companies taking substantial price cuts”. The Generic Medicines Industry Association, which represents the sector standing to benefit most by increased sales of its products, hailed “the largest single price cut in PBS history” which would deliver “substantial savings to government”.