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Australian Journal of Pharmacy : September 2006
news news ECTIONS within the pharmaceuti- cal industry are growing increasingly sceptical about government rhetoric which argues that generics price cuts will create headroom for high-ticket drugs. With Federal Cabinet’s decision to fund Herceptin for HER-compromised women suffering from breast cancer on the PBS announced on 22 August, senior industry sources were sceptical as to whether the Government was committed to applying savings achieved as a result of generics price cuts to funding drugs like Herceptin. Government’s will to create headroom for PBS pricing questioned S The cost of Cabinet’s decision to fund Herceptin, according to Health Minister Tony Abbott, is $470m over three years. There are more high-ticket oncologicals coming, each of which target life-threat- ening diseases like colon cancer, renal cancer and other aggressive carcinomas. ‘The headroom pricing argument appears entirely political,’ sources within Medicines Australia told the AJP. ‘The more the PBS absorbs in terms of cost of drugs like Herceptin, the more the indus- try is going to get screwed through the application of cost-minimisation instead of cost-benefit decisions at PBAC [Pharma- ceutical Benefits Advisory Committee]. ‘All the Government is doing is trying on industry ahead of an election which it intends to win with the pharmaceutical industry accepting price cuts driven by the Health Department on the basis of so- called generic savings which, on the his- tory to date, don’t create headroom at all.’ The Government decided to fund a counter attack on the Latham Gold Card prior to the last election by imposing a 12.5 per cent price cut on generics cas- cading off patent. This was designed to take advantage of the impending patent expiry of 1980s pharmaceutical block- busters—including the statins, gastroin- testinal and cardiovascular drugs and oth- ers—which were nearing patent expiry early in the new millennium. ‘The fact that the 12.5 per cent saving went off-portfolio to seniors and carers after the election, rather than back into the PBS, creates a doubt that the Government is really serious about the rhetoric,’ a senior industry source said. ‘We aren’t certain the industry understands this, let alone the Government, in terms of what it will mean to patient access to new drugs in Australia. ‘We’re all on high alert about this. If Government can demonstrate it is com- mitted to savings achieved through gener- ics being applied back to the PBS to fund headroom pricing, we will back it, but there is a significant degree of scepticism in the industry at present. ‘Based on all the political rhetoric, it seems like another political rainbow.’ ¦ Ranbaxy PBS supply mystery I NDIAN-based generics pharmaceuti- cal manufacturer Ranbaxy is in trou- ble for failing to be able to supply four products listed on the Pharmaceutical Benefits Scheme this month. There are two issues involved: one is the company’s failure to supply as required; and the other is the embarrass- ment the failure has caused the Minister for Health, Tony Abbott, who is in the middle of sensitive negotiations with industry involving generics price cut pro- posals and PBS reform. Underpinning the price cuts are com- panies like Ranbaxy, a new entrant to the Australian market, but now one with acute credibility problems as a result of the supply debacle. Mr Abbott said he would consider delisting the products if they remained unavailable by a September 15 deadline. The products are two antibacterial antibiotics (cefaclor and cephalexin), an antiviral antibiotic (acyclovir), and an H2A antagonist. Patients will still have access to the drugs at the benchmark prices created by Ranbaxy—there are six brands of acy- clovir available at the benchmark price; and seven brands of cefalexin, cefaclor and ranitidine available at the benchmark price. There is further confusion over the Ranbaxy supply problem, as it now appears to be linked to a decision by the Therapeutic Goods Administration (TGA) to revoke approvals for any finished product emanating from the Paonta Sahib manufacturing facility pending an FDA inspection of its Good Manufactur- ing Processes (GMP), on the basis of which the FDA originally cleared the plant. Until the FDA issues a clearance certifi- cate, the TGA ban on Paonta Sahib- sourced product will remain in force. ¦ THE AUSTRALIAN JOURNAL OF PHARMACY VOL.87 SEPTEMBER 2006 ? 5