Australian health review : a publication of the Australian Hospital Association
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Comparative Study
High prices for generics in Australia - more competition might help.
It is commonly believed that dispensed prices of medicines in Australia are substantially lower than those in other developed countries, particularly the US. This article reports the results of an analysis comparing dispensed prices for the most commonly prescribed and the highest cost items in Australia with dispensed prices in the US. Although a large majority of items are less expensive in Australia than in the US, Australian prices are higher for a substantial number of products, particularly generic drugs. ⋯ Prices offered by the individual supplier would apply until the next pricing review. The PBS would continue to subsidise up to the price of the lowest priced brand, with brand premiums applying to all brands priced higher than the benchmark price. Such an approach would provide opportunity for players in the market to capture market share by being the lowest priced brand.
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In this paper we argue that Australia's pharmaceutical cost sharing policy has been applied as if cost sharing is unproblematic for medicine affordability and good health outcomes. Australian and international experience with pharmaceutical cost sharing strongly suggests a negative impact on affordability and quality use of medicines, disproportionately affecting low income patients. We argue that Australia's use of cost sharing reflects the currency of a cognitively powerful and morally charged idea - moral hazard. ⋯ Applied to pharmaceuticals, this means that low out-of-pocket cost will lead to waste. Moral hazard mixes the explanatory power of price with the intuitively cogent notion that if people do not experience consequences they will behave irresponsibly. Cost sharing policy has gone unscrutinised and uncontested not because cost sharing is unproblematic, but because in the light of the idea of moral hazard it has all the question-deadening weight of common sense.