Chapter 6
Consequences for the pharmaceutical sector and the availability of
medicines in Australia
...the key concern is the uncertainty that this creates for
our future pipeline. The impact of this type of uncertainty on our business is
immeasurable.
It makes it impossible for us to plan adequately in terms of
our workforce needs, our likely revenue base, our contribution to global
performance, our clinical trials program, and results in the diminution of
business confidence.[1]
Introduction
6.1
The possible implications of listing deferrals on the pharmaceutical
sector, investment in research and development and the availability of medicines
in the Australian market were raised by a number of submitters and clearly
constitute significant grounds for concern.
Consequences for companies
6.2
Concerns regarding the implications of the Government's deferral
decision have also united the pharmaceutical industry, with the generic and originator
sectors agreeing that deferring the listing of medicines until savings are made
to fund those listings is not the way to manage the Pharmaceutical Benefits
Scheme (PBS).[2]
6.3
Submitters argued that the deferral decision undermines the
pharmaceutical industry's confidence in Australia as a stable regulatory and
policy environment for business and development, and this uncertainty may
impact the strategic interest of pharmaceutical companies in bringing products
to the Australian market.[3]
Submitters also alluded that another possible consequence of this may be that
clinical trial investment and special access programs may be reduced or
abandoned.[4]
The impact of uncertainty on
investment decisions
6.4
Putting together a submission to have a medicine listed on the PBS is an
expensive and lengthy exercise, which involves evaluation of the medicine and
gathering all of the information required by the rigorous assessment process.[5]
Further, the committee heard that on average it takes 2.2 submissions to
receive a positive Pharmaceutical Benefits Advisory Committee (PBAC)
recommendation. Medicines Australia explained that in comparison to other Organisation
for Economic Co-operation and Development (OECD) countries, 'Australia is
already regarded as a very difficult market to enter with a high regulatory
burden (i.e. market entry costs)', and provided the committee with a breakdown
of the costs involved:[6]
...to lodge a submission with the TGA, it is $200,000; to
lodge a major submission to the PBAC is around $120,000; and if you get a
rejection by the PBAC and you resubmit, it is another $120,000.[7]
6.5
The committee was told that the current state of affairs is causing a
significant amount of uncertainty, as 'Companies have multiple products in
their pipelines and they have to consider how to bring them to market and how
to bring them onto the PBS'.[8]
Allergan Australia submitted:
The uncertainty created by the deferrals decision places
Australian affiliates of multinational pharmaceutical companies at a
considerable disadvantage when competing for funds to invest in PBS related
activities and justify the considerable expenditure devoted to PBAC
submissions.[9]
6.6
Similarly, Janssen-Cilag argued that without a stable and predictable
environment, a small market like Australia may miss out on future investment:
Like any business, predictability is essential to continue to
develop and introduce innovative medicines in Australia. Comparatively
speaking, Australia is a small market for global pharmaceutical companies and domestic
subsidiaries often have to negotiate for inclusion in global market access
plans. Key to this is the ability to demonstrate predictability within the
political, policy and regulatory environment, without which, major industry
players will simply switch their investment focus to other economies. This has
significant flow-on effects for investment, jobs and importantly, access to
medicines for Australians.[10]
6.7
Ms Liliana Bulfone of Deakin University explained to the committee that
pharmaceutical companies will weigh up the costs and benefits of pursuing
product listings before they proceed:
...these reforms will introduce some uncertainties for
manufacturers. In some circumstances, manufacturers may consider that the extra
risks and costs that are involved in trying to have a drug listed on the PBAC,
beyond just having it recommended by the PBS, outweigh the potential benefits
of having the drug available on the PBS, particularly where the drug will be
high cost and used for a small number of patients. That may mean that some
manufacturers—I do not imagine there will be a massive number of drugs that fall
into that category, but it may be bigger than we think—may choose not to bother
to engage with the process of trying to get a PBS listing at all.[11]
6.8
While Mr David Learmonth of the Department of Health and Ageing (DoHA)
acknowledged that Cabinet deferral of medicines is a new level of uncertainty,
he also suggested that companies will learn to calibrate the level of risk
involved in Cabinet consideration of listings:
I think, like anything else, they will have developed their
understanding of PBAC, for example, over time by getting experience with the
process and seeing what is rejected or accepted at various levels of price and
uncertainty, and the incremental cost-effectiveness ratio. They will build a
sense of what they think they can get away with to maximise their chances and
maximise their profit, having regard to both unit price and time of entry to
the market. They make those judgments all the time. In this case, I think they
would look at the decisions of government over the last year, which listed an
overwhelming majority—96 per cent—of what has come forward. They will look at
the statements of the minister in relation to what has been listed and what has
not been listed, and they will equally start to calibrate and understand that
risk.[12]
6.9
However, submitters explained that pharmaceutical companies had
certainty and predictability under the previous listing process, and companies
are keen to reinstate that certainty. It was argued that Cabinet consideration
of listings has introduced a new level of uncertainty, as companies do not know
by which criteria the listing of medicines will be assessed, and they can no
longer anticipate which products will or will not be approved.[13]
iNova Pharmaceuticals (Australia) commented:
...arrangements to bring these therapies to Australian
patients require certainty of the PBS listing timeframes which is currently
proving difficult in light of the recent PBS deferrals.
Specifically, we can no longer assume the PBS process as
outlined in the National Health Act given that Cabinet involvement and the
issue of managing the Federal Budget back to surplus have now usurped PBS
relevant matters advised by the PBAC including clinical need, effectiveness, safety
and value for money in spending tax payer dollars.[14]
6.10
Mr John Latham, Chairman and Managing Director of Pfizer Australia also
added his concern and stated:
The unpredictable nature of listings will become a key
consideration for Pfizer in making future investment decisions for the
Australian market, particularly in view of the business changes we are facing.[15]
6.11
This was echoed by Mr Bruce Goodwin of Janssen-Cilag Australia who
commented:
There is a higher risk associated with some of our new
products coming through that was not there before. If the delay occurs it significantly
impacts on the commercial viability. We have at least one product in that
situation.[16]
6.12
The impact of deferrals on the generic medicines sector, which relies on
the flow of medicines subsidised under the PBS was also considered. Ms Kate
Lynch, of the Generic Medicines Industry Association (GMiA), agreed that
deferrals would eventually affect the generic medicines industry.[17]
Financial impact and effects on
stock and employment
6.13
Medicines Australia submitted that a number of the pharmaceutical
companies affected by the deferral have suffered financial loss as a result of the
Government's decision:
Many of the affected companies incurred significant financial
losses as a result of the sudden and unanticipated announcement of the
deferrals in February. To meet the Government’s own listing requirements,
affected companies had purchased and warehoused stock (all of which carry
expiry dates), employed people, established post-approval trials and monitoring
programs for pharmacovigilence and invested heavily in education programs so
that the medicines could be used safely and effectively. Much of this expense
could not be recouped and became deadweight loss to the companies (and
therefore to the Australian economy) as a result of the deferrals. Apart from
the instant financial losses, companies are unsure whether to make further
investment, place launch plans on hold or cease investment altogether.[18]
6.14
Concerns were raised that due to the deferral of listings, medical
stocks would expire and would have to be destroyed. Mr Learmonth, DoHA
explained that the importation of stock is a business decision taken by the
company:
Firstly, there is no requirement to have stock in country
when a decision is made; there is only a requirement for companies to say they
will have stock available at the time of listing. It is entirely up to the
company how they manage that risk. Secondly, these are multinational companies
operating multinational supply chains to multiple markets around the world.
Access to those markets happens in different ways and at different times, and
they juggle their supply chains accordingly. Finally, there are other markets,
even within Australia, where medicines can be sold—whether it is on the private
market or the state hospital system. I am certainly aware of drugs that are
sold on those markets when they are not on the PBS. It is up to the company to
manage the risk in the context of managing a global supply chain and global
market access.[19]
6.15
However, Pfizer Australia submitted that under the National Health Act,
as part of the post PBAC process, a company is required to submit to the PBS
listings section a notification of the guarantee to supply the medicine from
the date of PBS listing:
In the case of the deferred Pfizer medicines, we were
required to provide this information prior to 15 February 2011 for a 1 April
2011 PBS listing. Pfizer was not informed of the deferral until 25 February
2011. Once the company has committed to supply from a certain date, it must commence
the necessary procedures to meet this government-required commitment. This
includes manufacturing and/or importing stock, which generally requires 2-3
months.[20]
6.16
Mundipharma submitted that at the time that its stock was imported, the
$10 million threshold was in place, and its product, Targin®, did not exceed that
threshold, therefore, in order to meet its obligations under the guarantee of
supply upon the listing of the product, Mundipharma imported a quantity of
stock:
Mundipharma notes that only those new PBS listings with an
anticipated incremental cost to the PBS greater than $10 million in any of the
first four years of listing were, at that time, required to be considered by
Cabinet. As Targin® tablets do not fall into this definition; we respectfully
suggest that the company was entitled to anticipate a PBS listing date, as
planned, of 1st April 2011. In the event, Mundipharma was confounded by the
non-communicated change to the process whereby all recommended PBS listings
with a potential cost to the PBS are now referred to Cabinet for a decision. We
repeat that if we had received advanced notice of this critical change to the
PBS listing process Mundipharma would not have imported stock into Australia at
that time.[21]
6.17
The committee heard that where a product is listed for the treatment of
other indications, the stock will not go to waste. However, witnesses explained
the decision by Cabinet to defer the listing of certain medicines would impact
the stock that pharmaceutical companies have on hand in cases where the
medicine can only be used for a single indication, stating, 'where this is a
single product for a single indication there is nothing to be done other than
to write it off'.[22]
Dr John Whitlam, Medical Affairs Director of Mundipharma explained to the
committee that Targin®
falls into the latter category, as it is not listed on the PBS for other
indications:
Quite reasonably, we imported that stock on the assumption
that we were going to get PBS listed. In fact we cannot move that stock, because
we do not have the product listed on the PBS or another indication whereby we
can transfer that significant amount of stock.[23]
6.18
As a result, Mundipharma estimates that over 14 000 units of Targin
5/2.5mg tablets will need to be destroyed at the beginning of the second
quarter of 2011.[24]
6.19
The financial impact for companies will also be felt in terms of the
preparations made to launch a product, as the investment in people and training
is not recoverable.[25]
GlaxoSmithKline Australia (GSK) explained how this new uncertainty affects
business practice:
The uncertainty and unpredictability of when our medicines
might be listed makes it very difficult for GSK to plan manufacturing
production to meet stock requirements, recruitment and training of new staff
and investments in other local activities such as post marketing clinical
research or medical education.[26]
6.20
Mr Jose Vieira, Managing Director, AstraZeneca Australia further added:
All the launches that we are planning for new products in
Australia—all the decisions to start the launch—will be postponed by the date
in which the cabinet will take the final decision. We look at what happened in
other countries, the probability of success, understanding their rules, the
likelihood of approval. We need to hold back because we cannot allocate
resources to prepare my company to launch new products if we can end up with
decisions such as the one that I am describing...And it is clear: products that
could have been launched a few months after the cabinet decision will take much
longer because we will start to prepare our organisations just after that
decision and not before that.[27]
6.21
Mr Rob Baveystock of Mundipharma also explained that they have delayed a
significant amount of employment which was to take place on the basis of the PBS
listing of Targin®.[28]
6.22
These arguments were supported by evidence submitted by AstraZeneca
regarding the timelines by which commercial decisions were made prior to the
deferral announcement:
The PBAC issued a positive recommendation to list Symbicort® for
the treatment of COPD [chronic obstructive pulmonary disease] following
consideration at its November, 2010 meeting. AstraZeneca subsequently received
notification of the Pharmaceutical Benefits Pricing Authority’s (PBPA)
acceptance of our pricing proposal for Symbicort® for the COPD indication on
the 21st of December, 2010. The Listing Unit had previously confirmed (14
December, 2010) that all required documentation was in place to proceed with a
1st April 2011 listing, subject to pricing being agreed with the PBPA. On this
basis, launch activities were fully underway when we received notification via telephone
on the 24th February 2011 that the listing for COPD had been deferred. Figure 1
below presents a timeline of the chain of events leading up to the notification
of deferral.[29]
Source: AstraZeneca Australia,
Submission 47, pp 6–7.
6.23
Mr Learmonth, DoHA, noted that companies are still applying to have
products listed under the PBS, with no change in the total number of
submissions received by the PBAC in the last three months.[30]
However, witnesses argued that any impact of the Government's decision to
subject all PBAC recommendations to Cabinet review will not be immediately
clear, therefore it is not necessarily correct to surmise that business has
continued as usual without any repercussions. In light of this, industry is
hoping to work with government to prevent any adverse outcomes:
The process for making submissions and listings, starting
with the TGA and finishing with the PBAC, is an 18-month to two-year period. It
is not as if I am going to bring in a product tomorrow and make a submission
the next day. You cannot turn these things on and off. So the fact that he is
saying that everything is going okay is fine. It is like the clinical trials.
Clinical trials can stop. It takes time for clinical trials to turn around. The
fact that we are here talking to you means, hopefully, we are not going to be
pulling investments out of Australia or stopping clinical trials or research
and development. We are here to work with you...[31]
6.24
In response to the Consumer Health Forum of Australia's (CHF) survey,
some consumers raised concerns about possible flow-on effects if the products
of pharmaceutical companies are not listed on the PBS, as this may result in
not-for-profit (NFP) health organisations receiving less funding from
pharmaceutical companies. One respondent to the survey commented:
Because a particular drug has not been accepted, funding that
was to come to a NFP Health organisation from a pharmaceutical company to
deliver a national disease program will not be received, thereby adversely
impacting the Australian consumer who would have benefited from the delivery of
the national program.[32]
Committee comment
6.25
The committee holds significant concerns regarding the uncertainty which
has resulted from the Government's decision to defer the listing of medicines.
The committee notes that companies will always manage risk in making business
decisions, and prior to the Government's deferral decision, companies had a long-standing
understanding of the PBAC evaluation process and the criteria employed in the
assessment of a listing application, on which they based their risk
assessments. Now, however, companies are not aware of the criteria which
Cabinet is using to make decisions on deferrals, and the committee acknowledges
the evidence provided which indicates that this added layer of uncertainty will
undoubtedly impact on investment decisions, to the detriment of health
consumers in Australia.
Consequences for research and development
6.26
Pfizer Australia submitted that the cost of bringing a medicine from
development to the consumer can amount to $1.2 billion.[33]
As part of the development process, pharmaceutical companies conduct clinical
trials. Clinical trials are not only important for the development process, but
also provide access to new medicines for selected patients. This is a
significant benefit.
6.27
However, as noted by Medicines Australia, there has been a decline in industry
investment in Australian clinical trials and manufacturing. This decline will continue
as a consequence of 'the injection of further uncertainty into the business
environment'.[34]
Dr Brendan Shaw cited New Zealand as an example of where industry has reduced
the number of clinical trials due to cost-saving measures by government:
If you go to New Zealand, you will find that the industry has
basically given up on New Zealand. The number of clinical trials done in New
Zealand is very small. The industry has abandoned New Zealand. There is no
R&D. The industry has given up.[35]
6.28
Pharmaceutical companies also provided evidence of the potential impact
of the deferral decision on the investment in research and development (R&D)
and clinical trials in Australia. Mr Simon Fisher, AstraZeneca Australia,
stated:
...in Australia we are in a global competition for research
and development. Research and development can be placed in any country and it
is up to us to demonstrate why research and development at clinical trials
should come to Australia. With these types of deferral processes and ad hoc
policies it becomes more and more difficult to justify the bringing of R&D
into Australia.[36]
6.29
GSK Australia added:
GSK Australia must compete with other GSK local operating
companies for a share of the global investments in early phase clinical trials.
Many emerging markets are increasing their capability for high quality clinical
research and offering financial or market access incentives to attract
investment. Increased uncertainty about the eventual use of a medicine in Australia
will make it increasingly difficult for us to secure local sites as part of
global phase II and phase III clinical trials.[37]
6.30
Janssen-Cilag informed the committee that it is already reconsidering
clinical trial investments:
These significant impacts cannot be ignored. The deferral
decision has prompted Janssen to review its commitment to clinical programs and
other activities planned to support the introduction of new medicines in our
pipeline.[38]
6.31
Pfizer Australia further submitted that an indefinitely prolonged
listing consideration process will serve as a disincentive to invest in the
research and development of new medicines, as patent life continues to diminish
throughout the length of the approval process:
Companies whose multi-billion dollar research and development
investments result in the discovery of a medical application for new molecules
generally apply for patent protection. The rigorous and crucially important
testing regime usually consumes half of that patent life.
It is important to recognise that the patent clock continues
to tick while regulatory processes drag on. When Cabinet defers medicines which
have demonstrated their safety, efficacy and cost effectiveness, the patent
life of these medicines is effectively shortened. This further reduces the
appeal of investing in research and development for new medicines.[39]
6.32
Research Australia submitted that if pharmaceutical companies experience
difficulty in listing their medicines under the PBS, this could result in a
disincentive invest in research and development in the long-term, thereby
impacting on the development of new medicines:
The potential long term impact of PBS deferrals on the health
and medical R&D sector could be exponential. Australian research
discoveries leading to new medicines, cannot progress from 'bench to bedside'
without the support of the pharmaceutical industry. The industry directly
employees over 14,000 people in Australia; invests over $1 billion in research
and development every year; has exports totaling $4 billion in 2009 – 2010; and
supports clinical trial activity of more than $262 million in 2008 – 2009.[40]
6.33
Submitters representing health consumers voiced concern that reluctance
by pharmaceutical companies to invest in bringing new medicines and run clinical
trials in Australia will affect the access of Australian patients to the latest
treatments, and will put health outcomes at risk. Mr David Menadue, National
Association of People Living with HIV/AIDS (NAPWA), commented:
What I am saying is that it is a rapidly evolving process.
There is a conference being held in Rome at the moment where new therapies are
being discussed, so I would imagine the pressure will be on drug companies in
Australia—the Australian arms, anyway—to look to whether they should be, say,
trialled in Australia. Australia has a very good record, and that is partly
because of our stable regulatory processes. But also we have a Medicare system,
so people are able to come to the table and it is an even playing field for
people in the clinical trial area. It is regarded as a good place to do
clinical trials, so we often get some of the world's first treatments at the
moment, and that is partly to do with the fact that we have a good Medicare
system that allows doctors to do these trials and to run them fairly well. But
it is also a matter of the drug companies being able to see something for their
investment in the long term, and of course we are concerned about that being
put in jeopardy.[41]
6.34
In a similar vein, Cancer Voices Australia (CVA) noted concerns about
the possible downstream effects of the deferral decision particularly on small
patient groups, access to clinical trials and the availability of medicines in
Australia:
I have real concerns about the downstream effects of
something like this. I was a member of the clinical trials action group, which
looked at ways and means of getting people onto clinical trials, and one thing
is the availability or lack of availability of patient groups here...With a low
number of patients, we need to get clinical trials and we need to have the
drugs available in Australia. If the approval process is going to be seen to be
not transparent, and if it is stalled in any way, it could have real downstream
effects, especially for cancer patients in this country.[42]
6.35
However, Mr Learmonth, DoHA, did not support the view that the deferral
of listing would adversely affect clinical trials. Mr Learmonth noted that
running a clinical trial is a different decision to that of applying to access
the funded pharmaceutical market in a country:
Clinical trials are conducted as propositions
internationally. As I say, these are large multinational pharmaceutical
companies. On the innovative side, they will locate their clinical trials—and
they are often multisite clinical trials—in circumstances that most suit them
in terms of generating the evidence that they will use to claim reimbursement
all around the world in various markets and from various payers. Those will go
to a range of things, such as availability of populations, price and clinical
infrastructure. They will make a lot of judgments about where they locate
trials, having regard to how best and most cost-effectively to generate
evidence. That is an entirely separate matter from, having obtained that
evidence, how and where they choose to take that evidence and seek
reimbursement in particular markets.[43]
Committee comment
6.36
The committee notes the department's evidence, however considers that it
does not adequately address the concerns raised by the organisations which actually
invest in clinical trials. The department acknowledged that decisions on where
to run clinical trials will be based on how to 'best and most cost-effectively'
generate evidence. As demonstrated by the concerns raised by the pharmaceutical
companies who made submissions to this committee, this is the precise reason that
clinical trials in Australia are threatened by the Government's deferral decision.
Global companies have a range of options regarding the location of clinical
trials, and if the regulatory environment in Australia is viewed as unstable it
will act as a great disincentive to run any such trials in Australia. The
committee agrees that these repercussions will be felt most by Australian
health consumers who will be unable to access these innovative, and sometimes
life-saving trials — a most unsatisfactory outcome.
6.37
The Government's decision to defer the listing of medicines and subject
all future listing decisions to Cabinet consideration, could clearly have
significant implications for the discovery and development of new medicines,
and the access of Australian patients to important clinical trials. The
committee is very concerned that the Government's decision will subject
Australian health consumers to a situation similar to that currently faced by
patients in New Zealand who have limited access to clinical trials. In the
committee's view any such outcome is completely unacceptable for Australia.
Consequences for the availability of medicines in the Australian market
6.38
Submitters noted the need to ensure that improved drugs are available to
the patients who need them.[44]
Concerns were raised that the deferral decision may undermine the confidence of
the pharmaceutical industry in the stability of the Australian regulatory and
policy environment, and may affect decisions regarding whether companies will
bring medicines into Australia given the current arrangements.[45]
Submitters further argued that if pharmaceutical companies decide that they do
not want to risk their products being deferred, and therefore do not apply to
have their products listed on the PBS Schedule, medicines may simply not be
available to Australian consumers.[46]
6.39
AstraZeneca Australia outlined the processes by which it decides what
medicines will be marketed in a particular country:
Australian affiliates compete with other markets to secure
permission and resources to launch new products and indications. Cabinet
deferrals introduce significant commercial uncertainty which may drive
companies to preferentially devote resources to launching first in markets with
a greater degree of policy stability. 'Innovative' medicines in particular
require significant investment in production infrastructure. The commercial
uncertainty which accompanies the deferral policy makes it difficult for
companies to prioritise investment in production capacity for the Australian
market over other markets. Thus, the deferrals policy has the potential to delay
access to the 'innovative' medicines it is purportedly designed to support.[47]
6.40
Submitters explained that the PBS process is part of an intricate
framework which ensures that new and improved medicines reach the patients who
need them, and listing on the PBS is the last stage in the process which takes
research from the bench top to the consumer. NAPWA explained:
...a drug pipeline offering improvements in outcome and life
enabling responses for any patient group is only as good as the system ensuring
these drugs becoming available to the patients concerned. In Australia, the PBS
processes have been the enabling architecture for these advances to reach the
population, across all disease areas.[48]
6.41
Dr Shaw of Medicines Australia also noted that it takes a significant
length of time to get a medicine to patients, whether that is through clinical
development and research processes or the listing process. Dr Shaw added that companies
make commercial decisions about when they bring medicines to the market and
which ones they choose. These decisions are influenced by a range of factors,
including the cost of the listing process, how the medicine is going to be used
in the market and what is the likelihood of success. Dr Shaw concluded:
A company is not going to spend hundreds of thousands of
dollars of its own money to put a drug through the process if it does not think
it is going to get listed, when it has got other alternatives there. So this is
causing a lot of uncertainty for companies in terms of their ability to bring
new medicines. I will not name the companies but I have spoken with a number of
managing directors in industry and they are genuinely concerned because they
want to bring new medicines to the Australian public.[49]
6.42
This evidence was substantiated by Deakin Health Economics:
Furthermore, manufacturers are, in most cases, required to
pay substantial sums of money to have their drug considered by the PBAC. To
then have to negotiate a new hurdle (the approval of the drug by Cabinet according
to some undisclosed set of criteria) may mean that the consideration of the
benefit of having a drug available on the PBS is outweighed by the costs and
risks of achieving a PBS listing such that, over time, manufacturers may choose
to not engage with the process of trying to make drugs available on the PBS in Australia
such that drugs may be available in the private system but not the public
system. This will be detrimental to Australian patients as they will have to
bear the full cost of drugs and, in many cases, it is likely that the costs
associated with a drug will put the drug out of reach altogether. For drugs
with small markets where costs to patients are likely to be prohibitive,
manufacturers may not even make the drug available in the private market.[50]
6.43
Mr Mark Glover, Allergan Australia, explained that the major concern for
industry is the accessibility of medicines for patients, rather than the
availability of the medicines in Australia:
I do not think anybody is saying from the industry point of
view—and certainly I have not said it—that medicines are going to stop coming
to Australia as a result of this deferral policy.[51]
6.44
However, Mr Vieira, AstraZeneca Australia, commented that the deferral
decision will affect the decisions that pharmaceutical companies make, and as a
consequence, access to medicines for Australian patients will be delayed:
We need to put on hold some important decisions in terms of
investment to prepare our companies and therefore delay in launching new drugs
will come not only because of the deferral but because it is naturally delaying
access. But also it will take much longer for us as a company to prepare
ourselves to launch new drugs. Sometimes we need to make some investment to
expand production capacity and it takes time. The lead time to launch new drugs
is long. An important business decision will be taken only after the final
decision of cabinet.[52]
6.45
This view was also supported by Mr Andrew Bruce, Medicines Australia:
We surveyed our membership and we did it deliberately
anonymously. Companies are commercial entities. They have legal obligations.
They will not come out and signal to the market what their future plans are;
hence, we did it anonymously. Eleven of those companies came back and said they
were considering delaying seeking a listing through the TGA or the PBAC. Will
those companies come out and put their name to it? No. They would be highly
unlikely to do that. It is very risky for them to do it so that is why we did
it anonymously. I think it was instructive that, in two of the responses we
got, the companies specifically identified small products. Companies do not
want to go out there and say, 'We're going to not do this niche product, this
niche population,' but they will say it anonymously. I think what surprised us
was the number, so it is not rhetorical flourish.[53]
6.46
iNova Pharmaceuticals also noted that it is reconsidering whether to
apply for PBS listing for a new product:
...iNova is planning for PBS access to an in-house developed
therapy, which treats a certain type of skin cancer and represents an advance
over current treatments. However, we now question the worth of continuing to
invest in this new formulation for Australia since its potential PBS listing
could be placed on hold indefinitely.[54]
6.47
Janssen-Cilag explained that they are facing similar decisions about
introducing new medicines:
Janssen has several new medicines in its pipeline for which
there is a high clinical need. However, the current lack of predictability in
Australia's reimbursement system is likely to affect the priority given to
introducing new medicines in Australia compared with other nations.[55]
6.48
The committee was provided with evidence that companies do make decision
not to proceed with the listing of medicines due to cost considerations. Ms
Bulfone provided the committee with the following example:
I know of one drug that went through the PBS process, was
recommended and went to cabinet. It is a very old drug; it has been around for
many years. The manufacturer of the drug had discontinued the drug. Even though
it was not going to make a large company much money, it was going to make a
smaller company enough to survive. A very small company took this drug on and
they got a positive PBAC recommendation. After it went to cabinet they referred
it back to PBAC and they said that it needed to have cost effectiveness, but
because the drug is so old—and this just happened in this last week—the
evidence is not as strong as evidence that is generated in the current climate,
where there is a much better process for clinical trials and everything. That
company has decided not to make the drug available on the PBS or bothered to
apply again because it is unlikely to get a positive PBAC recommendation, again
because of the requirement...[56]
6.49
Dr Shaw cited New Zealand as an example of a health system in which
access to medications has been adversely affected due to the Government's focus
on cost-saving above health outcomes:
We have a case study of a health system that has been screwed
down in terms of costs savings so much so that industry has given up on it, and
it is just across the Tasman. It is in New Zealand. We have patients sometimes
approaching the companies here in Australia trying to get access to medicines
because they are not available in New Zealand.
As I say, the industry have given up. This is a case study of
what can happen when a government puts expenditure and costs ahead of the
broader health outcomes and the benefits that the health system brings. I do
not want to see that happen here.[57]
Committee comment
6.50
The committee is of the view that the uncertainty introduced as a result
of the Government's deferral decision will affect the investment decisions of
the pharmaceutical industry, including investment in research and development
and the running of clinical trials in Australia. The committee is concerned
that as a result of the impact on the pharmaceutical sector, and the chain of
processes which link to provide patients with medicines, ultimately, the access
of consumers to appropriate and effective medications will be delayed and
compromised.
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