Poor pricing progress: price disclosure isn’t the answer to high drug prices

by Stephen Duckett and Peter Breadon


While the wholesale price of seven medicines fell by about a third today, Australia has a long way to go before consumers pay fair prices for pharmaceuticals.

Even after today’s reductions, Australian prices for the seven drugs are on average 14 times higher than prices for the same medicines in the United Kingdom.

Australia’s “price disclosure” policy was introduced in 2007 in a bid to cut costs. But drugs that have just been through this process have wholesale prices that are on average over 16 times the lowest price in New Zealand, the UK and the Canadian province of Ontario.

Under price disclosure, pharmacies are forced to reveal discounts on drug prices that manufacturers provide them, and the Government accordingly reduces the amount paid to pharmacies for each drug.

But Grattan Institute’s earlier report, Australia’s bad drug deal, revealed that if the Government benchmarked the prices of generic drugs against prices paid overseas it could save more than $1 billion a year in payments to manufacturers.

The Government’s purchasing policy needs to be much tougher on manufacturers and much fairer for consumers. It is not just a matter of saving money: nearly one in 10 Australians doesn’t take medicines a doctor prescribes because of cost.

For six of the seven drugs with price cuts today, benchmarking would save patients nearly $20 more for each box of pills, on average.

Atorvastatin, a high cholesterol drug that is sold as Lipitor, reduced in price by about $7 today for a box of 30 40 milligram pills. But if Australia had the UK’s wholesale prices, patients would save up to $19 extra on each box.

Any smart business would look around to check the market price, and the Commonwealth should do the same. There is simply no reason why Australians shouldn’t get a better deal on medicines.

Download Report

Download Media Release

Related Articles

news

11 May 2017

Canada should take health care lessons from Australia

Published by The Globe and Mail, Thursday 11 May Australia and Canada share many characteristics, but Canadians may not know one of them is that Australia's universal health insurance scheme, Medicar…

report

05 March 2017

Cutting a better drug deal

Australians pay more than $500 million a year too much for their prescription drugs. Taxpayers and patients would pay less if the Federal Government made some simple changes to the way prices are s…

news

31 March 2017

Different drugs, same benefits

Published by Inside Story, Friday 31 March On 1 April a series of new drugs will be added to the Pharmaceutical Benefits Scheme, or PBS, and prices for some old drugs drop. But the news could and s…