Savings to be made from generics use in Australia

Increasing the use of generic drugs in Australia could generate ‘hundreds of millions of dollars in savings’ for Australia’s Pharmaceutical Benefits Scheme (PBS) in 2012, ‘eliminating the need for further PBS cuts’, according to Australia’s Generic Medicines Industry Association (GMiA).

Chairman of the GMiA, Dr Martin Cross, says that Australia should look to countries such as the UK and US, both of which ‘depend heavily upon the more cost-effective, high-quality generic medicines to create savings to the patient and drive savings to the countries’ respective health budgets’.

In the US, 78% of all medicines dispensed are generics. This is mainly due to patients being highly sensitive to the cost of drugs. In contrast, in Australia only 36% of dispensed medicines are generics.

‘Every time a consumer chooses a generic medicine, there are substantial benefits to national savings,’ says Dr Cross, adding that supporting the uptake of generics ‘provides a three-way win for the patient, the taxpayer and the economy’.

This year, a record number of drugs are coming off-patent in Australia. When the first generics are listed on the PBS, an automatic statutory 16% price reduction is applied to both the generic and the originator brand-name product. This generates an immediate and significant saving to both the PBS and government, says the GMiA.

This windfall needs to be better absorbed back into the health budget, says Dr Cross, adding that if the uptake of generics were boosted, the government would not need to cut into the PBS in order to get the budget into surplus by 2012–13.

A government-funded survey published in the Medical Journal of Australia, which looked into the increased use of medicines by the ageing population, has also shown the need to encourage the uptake of high quality generic medicines in Australia, especially blood pressure and cholesterol-lowering medicines.

An analysis of PBS expenditure from April 2005 to April 2009 by GMiA showed that generics have already saved the PBS at least A$1.4 billion over this four-year period, but further savings are clearly possible if generics use could be increased from the current 36%.

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