Sweeny, Kim (2005) Medicine prices in Australia: An international comparison. Working Paper. Victoria University, Melbourne, Australia.

Abstract

This paper reports on some of the findings to date of the Centre’s pharmaceuticals research program, drawing upon a number of research papers produced by the Centre and included within the package of resource papers provided (CSES 2003, 2004; Sweeny 2002, 2003, 2004). Section 2 describes the important features of the PBS and trends in the price and quantity of drugs available under the scheme using a detailed database covering the period 1991-92 to 2002-03. The PBS pricing system applies significant downward pressure on prices for both new and old drugs and this price suppression is illustrated for the case of angiotensin II receptor antagonists. The proportion of the PBS cost accounted for by generic suppliers is increasing but still low in comparison to other countries, such as the USA, Canada and Germany. One of the more promising avenues for meeting the needs of both the government and the manufacturers is through changing the ratio of prices of patent-protected and off-patent drugs. Some results of a recent analysis are presented. Section 3 situates Australian pharmaceutical prices in an international context by comparing price levels with those in 13 other countries having a variety of pharmaceutical insurance, cost-containment and regulatory schemes. Australia has low prices for both patent-protected and off-patent drugs, although the PBS price setting mechanism acts to limit the disparity between these two prices so that prices for generic drugs are lower in some other countries.

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