Australian PBS changes could hit biotechs

Proposed changes to the Pharmaceutical Benefits Scheme (PBS) could, if approved, cost Australian biotechnology companies millions of dollars in investments according to industry body AusBiotech chief executive Anna Lavelle, who said the fledgling sector fears a widespread revolt by world pharmaceutical companies as the changes threaten to widen the gap between branded and generic medicines. Under the existing system, drugs in the same class are typically listed at the like price, which made generics relatively expensive compared to international standards, and kept down the price of branded drugs.

One proposed change recommends the introduction of a tender system for drugs that are no longer on patent and a generic version available. Another requires drugmakers to compete for the right to offer the lowest price for their own versions of a branded medicine. Also, all manufacturers would be forced to match the lowest tendered price for a particular class of drug, while the winning tenderer would gain the right to offer a discount for an exclusive period. The plan will reportedly save the PBS at least A$800.0 million ($599.2 million) annually.

Dr Lavelle said in an interview: "the proposed changes would drag the price of branded medicines down and cause drug companies to reconsider costly development programs for innovative medicines. These companies contribute about A$300.0 million a year to local R&D. The government must look at the bigger picture, and any measures that discourage international venture capital would see the loss of Australia's ranking as a world bioech leader." She added that "similar changes introduced in New-Zealand in the early 1990s resulted in a significant drop in the development of new drugs."