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The Pharmaceutical Benefits Scheme 2003–2004

The Pharmaceutical Benefits Scheme 2003–2004 The Pharmaceutical Benefits Scheme (PBS) grew by 8% in 2003–04; a slower rate than the 12.0% pa average growth over the last decade. Nevertheless, the sustainability of the Scheme remained an ongoing concern given an aging population and the continued introduction of useful (but increasingly expensive) new medicines. There was also concern that the Australia-United States Free Trade Agreement could place further pressure on the Scheme. In 2003, as in 2002, the government proposed a 27% increase in PBS patient co-payments and safety-net thresholds in order to transfer more of the cost of the PBS from the government to consumers. While this measure was initially blocked by the Senate, the forthcoming election resulted in the Labor Party eventually supporting this policy. Recommendations of the Pharmaceutical Benefits Advisory Committee to list, not list or defer a decision to list a medicine on the PBS were made publicly available for the first time and the full cost of PBS medicines appeared on medicine labels if the price was greater than the co-payment. Pharmaceutical reform in Victorian public hospitals designed to minimise PBS cost-shifting was evaluated and extended to other States and Territories. Programs promoting the quality use of medicines were further developed coordinated by the National Prescribing Service, Australian Divisions of General Practice and the Pharmacy Guild of Australia. The extensive uptake of computerised prescribing software by GPs produced benefits but also problems. The latter included pharmaceutical promotion occurring at the time of prescribing, failure to incorporate key sources of objective therapeutic information in the software and gross variation in the ability of various programs to detect important drug-drug interactions. These issues remain to be tackled. PBS. Of this, $4.89 billion (84%) was paid by the Com- Review This paper reviews the growth of the Pharmaceutical Ben- monwealth, the remaining $0.91 billion through patient efits Scheme (PBS) during 2002–03; concerns about the co-payments [1]. In comparison, in 2002–03, the Com- sustainability of the Scheme, the government's response, monwealth spent $7.24 billion on public hospital services a potential new threat that emerged and issues that [2] and $8.17 billion on medical and diagnostic services remain to be tackled. (through Medicare benefits) [3]. Although the PBS is the smallest of these components of Commonwealth expend- The growth and sustainability of the PBS iture, it has the highest average annual growth rate over From March 2003 to March 2004, a total of $5.8 billion the last decade (around 12% pa), compared to 6% pa for was spent on prescription medicines subsidised under the public hospital services, and 5% pa for medical services. Page 1 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2005, 2:2 http://www.anzhealthpolicy.com/content/2/1/2 At these rates, by 2011 the Commonwealth would be concerns of pharmaceutical manufacturers precluded spending more on subsidised pharmaceuticals than it making more detailed information available, such as cost- would spend on either public hospital or medical services, effectiveness data, on which PBAC based its decision. and by 2022, more on pharmaceuticals than both public hospital and medical services together. Such projections From 1 August 2003 the full cost of PBS medicines make the sustainability of the PBS a major concern, espe- appeared on medicine labels if the price was greater than cially given an aging population and the continued intro- the co-payment. The full cost included what the consumer duction of useful (but increasingly expensive) new has paid and the amount that is paid through the PBS. The medicines [4]. While the growth rate of the PBS has aim was to help people understand what medicines really slowed over the last two years (10% during March 2002– cost and how the PBS helps make medicines affordable 03 and 8% from March 2003–04) the past history of PBS for all. In addition, the government commissioned a $24 expenditure shows considerable fluctuations over the million advertising campaign that emphasised that years. These fluctuations are caused by expensive but val- patient responsibility was, "the prescription for a healthy uable new drugs coming onto the Scheme, more cost- PBS". Critics noted that by neglecting to inform the public effective generic drugs replacing older drugs whose patent that pharmaceutical marketing and inappropriate pre- has expired and administrative changes, such as increased scribing habits of doctors also produced pressures on the patient co-payments, transiently reducing usage. PBS, the campaign missed an opportunity to initiate a more balanced and constructive debate about the viability The government's response of the PBS [10]. In 2003, as in 2002, the government proposed a 27% increase in PBS patient co-payments and safety-net thresh- During the year under review, pharmaceutical reforms olds in order to transfer more of the cost of the PBS from designed to stop PBS cost-shifting in Victorian public hos- the government to consumers. Once again this measure pitals were evaluated [11]. The reforms were a joint initia- was rejected by Labor and other opposition parties in the tive of Victorian Department of Human Services (DHS) Senate because of concern that such increases would and the Australian Government Department of Health impact on equitable access to necessary medicines [5]. and Ageing (DoHA). Since the early 1990s there had been Regardless, the government continued to argue that with- increasing cost pressures on State and Territory funded out increased patient contributions (and patient restraint) public hospitals. Their response included restricting drug the PBS would become unsustainable. supplies to discharged patients, often to only two or three days of treatment. Patients then needed to see their GP to By mid 2004, the Labor party was faced with an impend- obtain a PBS prescription to cover their needs. The effect ing Federal election and had serious trouble costing its tax was to "cost shift" pharmaceutical supplies from the State and spending promises. As a consequence, Labor aban- and Territories to the Australian Government. The reforms doned their previous principled stand in the Senate of trialed in Victoria allowed public hospital doctors to write blocking the government's proposed increase in PBS PBS prescriptions for both outpatients and discharged copayments and safety-net thresholds [6] arguing that inpatients. They also allowed PBS access to a group of can- they needed the additional $1.1 billion to spend on elec- cer chemotherapy drugs for use by day-admitted patients tion promises [7]. They also stated that, if returned to gov- and outpatients. The qualitative evaluation undertaken ernment, a substantial proportion of the $1.1 billion was generally positive although it noted the reforms had might be achieved through administrative reforms to the increased the administrative work of both doctors and PBS and savings achieved by the use of cheaper generic pharmacists. There was also concern that PBS rules drugs as expensive drugs moving off patent. Not surpris- (designed for general practice) were not always appropri- ingly, consumer and public health groups were appalled ate for specialised public hospitals. The Society of Hospi- with this Labor "back-flip" while the Greens and Demo- tal Pharmacists of Australia supported the need to modify crats said the decision was a disgrace [8]. Labor said the PBS procedures to take into account public hospital exper- decision was difficult but necessary. tise but also noted the need for more integration of med- icines funding [12,13]. Subsequently, the Victorian Several other measures were introduced by the govern- reforms are being implemented in other States and Terri- ment in order to improve the community's understanding tories. of PBS processes and costs. From June 2003, all recom- mendations of the Pharmaceutical Benefits Advisory Programs promoting the quality use of medicines (QUM) Committee (PBAC) to list, not list or defer a decision to were further developed throughout 2002–03. Specific list a medicine on the PBS were made publicly available programs were coordinated by the National Prescribing on the PBS website [9]. Unfortunately, only summary Service (NPS), Australian Divisions of General Practice information was provided; commercial-in-confidence and the Pharmacy Guild of Australia. Page 2 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2005, 2:2 http://www.anzhealthpolicy.com/content/2/1/2 The NPS was set up in 1999 with government funding but tiatives (due to the absence of up-front funding) which with an independent Board of Directors in order to pro- limited their capacity to systematically implement a com- vide unbiased educative activities to assist health practi- prehensive range of strategies. Program achievements tioners (and more recently consumers) to use medicines included the development of a wide range of shared wisely. Evaluation of NPS activities has consistently resource material [18] and the creation (by some Divi- shown that spending money on targeted QUM interven- sions in association with software vendors) of data extrac- tions can save considerably more money on the PBS by tion tools. The latter have allowed a small number of reducing inappropriate prescribing. It was estimated that practices to gain access to comprehensive information NPS activities during the period 1 July 2000 to 30 June from which further initiatives to improve quality or 2002 generated PBS savings in the range of $55.6 million change practices can evolve. The evaluation report recom- to $83.9 million through the following prescribing inter- mended that standards should be established for prescrib- vention programs: antibiotics in primary care; peptic ulcer ing software so that comparable data could be extracted management; management of dyspepsia; COX-2 selective from different systems to facilitate comparison of individ- NSAIDs; managing hypertension; and managing dyslipi- ual prescribing practice with evidence based guidelines. It daemia [14]. also noted the difficulties of attributing any cost-savings in the PBS to Divisional activities. Following this report, In 2003, the NPS received an additional allocation of gov- the Government supported a four year extension to the ernment money to provide educational material about EDQUM program in the 2003–2004 Budget. drugs newly listed on the PBS (the RADAR project). The latter was in response to considerable evidence that inten- The Third Community Pharmacy Agreement between the sive pharmaceutical promotion at the time of PBS listing Government and the Pharmacy Guild of Australia (1 July was associated with drugs being prescribed for broader 2000 to 30 June 2005) also provided a range of QUM indications than those indicated in the PBS listing (caus- activities over the year in question including medication ing so-called PBS "leakage" or "blow-outs") [15]. How- reviews of problem patients (conducted at the request of ever, the 2003 NPS educational budget of $12.5 million GPs), quality care pharmacy programs and the provision needs to be compared with the estimated $1.0 billion pro- of consumer medicine information [19]. motional budget of the Australian pharmaceutical indus- try [16]. A potential new threat that emerged In 2003–2004 the PBS became caught up in negotiations The Enhanced Divisional Quality Use of Medicines concerning the Australia-United States Free Trade Agree- (EDQUM) program was a 1999–2000 Federal Budget ini- ment (AUSFTA). This saga has been extensively reported tiative, originally announced as the Incentives for Quality elsewhere [20,21]. The government remained adamant Prescribing (IQP) program. The program offered Divi- that the AUSFTA provisions concerning the PBS were sions of General Practice (Divisions) a proportion of benign and would also increase the transparency of PBAC monies saved if Divisional QUM activities improved pre- decision-making. Others were concerned that the AUSFTA scribing and lowered PBS costs. The Divisions were contained major concessions to the US pharmaceutical allowed to use any savings made for a range of primary industry that undermined the egalitarian principles and health care activities. The program evolved significantly operation of the PBS and had the potential to increase the due to feedback from the medical profession. It was costs of medicinal drugs to Australian consumers. Time implemented on a pilot basis in thirteen Divisions on 1 will tell who is right. July 2002. Under the program, Divisions were encouraged to invest their own resources in a range of drug utilisation Issues still to be tackled data collection and/or education related activities. Activi- The EDQUM project highlighted the needs for software ties were implemented in close consultation with the NPS standards in order to extract comparable drug utilisation and focused on one or more of the following target drug data from different prescribing systems. The need for pre- groups: antibiotics, peptic ulcer drugs and cardiovascular scribing software standards has also been raised in con- drugs. nection with three other issues of relevance to the PBS: pharmaceutical promotion, independent therapeutic An evaluation of the pilot EDQUM project was under- information and drug-drug interaction checking. taken in early 2004 [17]. Barriers to implementation included perceptions that the program was primarily The uptake of computers by Australian general practition- focused on reducing pharmaceutical costs to government; ers (GPs) was stimulated by the Australian government in limited capacity of existing prescribing software systems 1999. A one-off grant of around $10,000 was offered to to extract drug utilisation data; and the need for Divisions those practices that purchased a computer, acquired inter- to take a commercial risk in developing their EDQUM ini- net connectivity (an E-mail address) and promised to use Page 3 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2005, 2:2 http://www.anzhealthpolicy.com/content/2/1/2 computer prescribing software to write the majority of tion, such as the Australian Medicines Handbook and their prescriptions. This increased the numbers of GPs Therapeutic Guidelines, are incorporated in prescribing writing prescriptions with the aid of a computer from software. The provision of objective therapeutic informa- around 50% in 1999 to more than 90% in 2004 [22]. Leg- tion is an important strategy of the QUM component of ible, printed prescriptions have been one of a number of Australian National Medicinal Drug Policy [27]. Ironi- positive outcomes of this initiative. However, new prob- cally, while both the Australian Medicines Handbook and lems emerged. Therapeutic Guidelines have been converted into elec- tronic formats they are not yet included in computerised One software vendor (Health Communication Network prescribing software. The problems have included argu- Ltd.) became the dominant market leader because its ments between software vendors and guideline producers business model relied on pharmaceutical promotion to over who should pay for the integration and a lack of heavily subsidise the cost of GPs purchasing and updating defined standards for electronic information representa- its prescribing software (Medical Director™). This business tion and interfacing. model facilitated software uptake but also resulted in advertisements for the latest and most expensive drugs More recently, the NPS RADAR project has shown the way appearing on the computer screen at the time of prescrib- forward. RADAR provides independent information to ing (and elsewhere). GPs using this software package were health professionals about medicines that have a new or a shown to prescribe more antibiotics per patient than changed listing on the PBS. RADAR drug monographs those who wrote 'scripts manually. It was suggested that have recently been incorporated in four leading GP pre- this may have been due to default settings in the software scribing packages using an open standard interface. This automatically writing in the maximum number of repeat project has moved ahead because the Australian govern- prescriptions allowed.[23] Another default option in this ment provided financial support to both the NPS and soft- software was the automatic production of a, "Do not sub- ware vendors to enable the RADAR integration to take stitute generic drugs" message on the prescription. The lat- place. ter was eventually changed by the government amending regulation 19(5) of the National Health (Pharmaceutical Following a workshop on electronic decision support, Benefits) Regulations 1960 [24]. HL7 Australia has presented a work plan to the Australian Health Information Council Electronic Decision Support However, the issue of pharmaceutical promotion in pre- Steering Committee that would build on the RADAR scribing software has yet to be tackled. Pharmaceutical project by incorporating the Australian Medicines Hand- promotion has never been allowed on government sup- book and Therapeutic Guidelines into clinical software in plied 'script pads. It is hard to understand why it was a standard manner [28]. However, this plan has yet to pro- allowed on the computerised equivalent. Pharmaceutical ceed because of a current review of E-Health policy and promotion distorts the information flow to physicians by reorganisation of its governance [29]. selectively promoting the benefits of the latest and most expensive drugs. It provides minimal information about The third area of prescribing software requiring govern- drug side-effects, contra-indications and opportunity ment intervention is standards for drug-drug interaction costs. Cost-effective generic drugs are rarely promoted and checking. The NPS tested four popular GP software pack- non-drug solutions usually not at all. Pharmaceutical pro- ages by entering a common set of elderly patients on mul- motion has clearly been shown to influence physician's tiple medications [30]. This revealed very different prescribing [25] and has resulted in cost-blow outs on the behaviour by different software packages; some missed PBS due to "leakage" of prescribing away from cost-effec- serious drug-drug interactions, others produced numer- tive indications approved by PBAC [26]. In addition, ous trivial and clinical unimportant alerts. GPs noted that pharmaceutical promotion in prescribing software, occur- the latter behaviour caused them to turn off all alerts [31]. ring at the time of physician decision making, is likely to There is an urgent need for standards concerning accepta- be much more influential than promotion in medical ble drug-drug interaction detection &/or external assess- journals, gimmicks and give-ways. As a consequence, sev- ment of prescribing software, another item on the HL7 eral medical and consumer organisations have advocated Australia work plan. further amendment of the National Health (Pharmaceuti- cal Benefits) Regulations 1960, Part V, Regulation 19, to Conclusions prohibit prescribing software from displaying pharmaceu- The PBS remained in the media and policy spotlight dur- tical advertisements. ing 2003–04. While the growth rate of the PBS has slowed during the year under review the sustainability of the Government intervention is also required to ensure that Scheme remains an ongoing concern. One strategy key national resources of objective therapeutic informa- adopted by the government was to transfer more of the Page 4 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2005, 2:2 http://www.anzhealthpolicy.com/content/2/1/2 5. Harvey K, Symposium: The 2002–03 Federal Budget – Securing cost of medicines to consumers through higher PBS co- the future of the PBS? (June 3 2002) Digest. [http:// payments and increased safety-net thresholds. However, www.econ.usyd.edu.au/drawingboard/digest/0206/harvey.html]. such measures can result in higher costs elsewhere if 6. Smith S: PBS Increases Would Hurt Those Least Able To Pay. ALP News Statement – Shadow Minister for Health and poorer patients forgo necessary medicines and end up Ageing, Media Statement – 2 August 2002. [http:// being hospitalised with uncontrolled disease. www.alp.org.au/media/0802/20001731.html]. 7. McMullan B: Joint Statement on 2002 PBS Budget measure- Shadow Minister for Finance, Shadow Minister for Small Cost-shifting (and patient inconvenience) was reduced by Business – Media Statement – 22 June 2004. [http:// allowing State and Territory public hospitals limited www.alp.org.au/media/0604/20007784.html]. 8. Ballenden N: ALP PBS backflip will punish families and sick access to the PBS but these reforms also showed the need consumers. Australian Consumers Association Press for changes in the PBS to make it more suitable for hospi- Release, 22/06/2004. [http://www.choice.com.au/viewPressRe tal practice and the desirability of further integrating lease.aspx?id=104364&catId=100202&tid=100010&p=1]. 9. [http://www.health.gov.au/internet/wcms/publishing.nsf/Content/ health funding systems. PBAC+Outcomes-1]. 10. Doran E, Henry DA: [Viewpoint] The PBS community aware- ness campaign: how helpful is blaming patients? MJA 2003, Educational strategies focusing on the quality use of PBS 179:544-545. medicines were successfully pursued but would benefit 11. Healthcare Management Advisors: Pharmaceutical Reforms in from increased funding. In addition, there was an explor- Victorian Public Hospitals: Evaluation of Impacts on Service Providers and Patients. Final Report. Department of Human atory attempt to focus the attention of Divisions on PBS Services Victoria, May 2004. [http://www.health.vic.gov.au/ costs by rewarding them with a moiety of any money pbsreform/report.htm]. 12. The Society of Hospital Pharmacists of Australia: Response to the saved by their members through more cost-effective pre- Victorian pharmaceutical reforms report. Letter to all Aus- scribing. However, the difficulties experienced by the tralian Health Ministers, SHPA, Melbourne, 11 June 2004. EDQUM project in extracting useful drug utilisation data [http://www.shpa.org.au/documents/pbs_reforms_resp.pdf]. 13. The Society of Hospital Pharmacists of Australia: Discussion paper: from computerised prescribing systems highlighted the "Moving forward – The funding of medicines in Australia's need for prescribing software standards as did other prob- hospitals". SHPA, Melbourne, May 2004. [http:// lems with such software. www.shpa.org.au/documents/move_forward.pdf]. 14. National Prescribing Service: Evaluation Report No. 6 2002–03 Progress, achievements and future directions December Information communication technology and information 2003. [http://www.nps.org.au/site.php?content=/resources/content/ nps_evaluation.html]. management (ICT/IM) has the potential to allow individ- 15. Kerr SJ, Mant A, Horn FE, McGeechan K, Sayer GP: Lessons from ual health practitioners, Divisions and governments to early large-scale adoption of celecoxib and rofecoxib by Aus- compare what is being done with what is recommended tralian general practitioners. MJA 2003, 179(8):403-407. 16. Woodruff TG: Pharmaceutical marketing, the PBS, and best-practice, highlight major discrepancies, and provide patient care. New Doctor 2004, 81:21-22. targeted education and appropriate incentives to reduce 17. Healthcare Management Advisors: Evaluation of the Enhanced the gap. However, as the events of 2003–04 show, this Divisional Quality Use of Medicines Pilot Program – Final Report. Commonwealth Department of Health and Ageing potential is unlikely to be realised if the development of 2004. [http://www.adgp.com.au/client_images/13694.pdf]. clinical computer systems is left solely to market forces. 18. [http://www.adgp.com.au/site/index.cfm?display=2422]. 19. Third Community Pharmacy Agreement between The Commonwealth of Australia and The Pharmacy Guild of Competing interests Australia 2000 [http://www.guild.org.au/public/cpa/thirdagree Dr. Harvey is a past Board member of Therapeutic Guide- ment.pdf]. 20. Drahos P, Henry D: [Editorial] The free trade agreement lines Limited, Co-Chair of HL7 Australia's Decision Sup- between Australia and the United States. BMJ 2004, port Technical Committee, a Councillor of the Australia 328:1271-1272. Consumer's Association and a member of the Australian 21. Harvey K: Patents, pills and politics: the Australia-United States Free Trade Agreement and the Pharmaceutical Ben- Labor Party. efits Scheme. Aust Health Rev 2004, 28:218-226. 22. General Practice Computing Group, Practice Incentives Program (PIP) statistics [http://www.gpcg.org/topics/pip.html] References 23. Newby DA, Fryer JL, Henry DA: Effect of computerised pre- 1. Australian Government: PBS Expenditure and Prescriptions for scribing on use of antibiotics. MJA 2003, 178:210-21. Twelve Months to 31 March 2004. Department of Health and 24. National Health (Pharmaceutical Benefits) Amendment Ageing. [http://www.health.gov.au/pbs/general/pubs/pbbexp/ Regulations 2002 (No. 1) [http://frli.law.gov.au/s97.vts?VdkVg pbmar04/index.htm]. wKey=2002B00240&ViewTemplate=frliview.hts&action=View] 2. Australian Government: Department of Health and Ageing, 25. Avorn J, Chen M, Hartley R: Scientific versus commercial Annual Report 2002–03, Canberra. [http:// sources of influence on the prescribing behaviour of physi- www.health.gov.ainternet/wcms/publishing.nsf/Content/Austral cians. Am J Med 1982, 73:4-8. ian+Health+Care+Agreements-1]. 26. Dowden J: Coax, COX and cola. MJA 2003, 179(8):397-398. 3. Health Insurance Commission, Annual Report 2002–03 27. Commonwealth of Australia: The National Strategy for Quality [http://www.hic.gov.au/abouthic/our_organisation/annual_report/ Use of Medicines: Plain English Edition. Commonwealth of 02_03/index.htm] Australia 2002. [http://www.health.gov.au/internet/wcms/publish 4. Rickard M: How Much Will the PBS Cost? Projected Trends in ing.nsf/Content/nmp-pdf-natstrateng-cnt.htm/$FILE/natstrateng.pdf]. Commonwealth Expenditure. Parliamentary Library, Social 28. HL7 Australia: EDS Refined Workplan (presented to Austral- Policy Group, Research Note no. 29 2003–04. [http:// ian Health Information Council EDS Steering Committee, www.aph.gov.au/library/pubs/rn/2003-04/04rn29.htm]. 25 June 2004). [http://www.hl7.org.au/CDSS.htm#Additionals]. Page 5 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2005, 2:2 http://www.anzhealthpolicy.com/content/2/1/2 29. The Boston Consulting Group: National Health Information Management and Information and Communications Tech- nology Strategy. Commonwealth Department of Health & Aging, 2004. [http://www.ahic.org.au/downloads/bcg.pdf]. 30. Liaw S-T, Kerr S: Computer aided prescribing: Decision sup- port needs to be evidence based [letter]. BMJ 2004, 328:1566. 31. Ahearn MD, Kerr SJ: General practitioners' perceptions of the pharmaceutical decision-support tools in their prescribing software. MJA 2003, 179:34-37. Publish with Bio Med Central and every scientist can read your work free of charge "BioMed Central will be the most significant development for disseminating the results of biomedical researc h in our lifetime." Sir Paul Nurse, Cancer Research UK Your research papers will be: available free of charge to the entire biomedical community peer reviewed and published immediately upon acceptance cited in PubMed and archived on PubMed Central yours — you keep the copyright BioMedcentral Submit your manuscript here: http://www.biomedcentral.com/info/publishing_adv.asp Page 6 of 6 (page number not for citation purposes) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Australia and New Zealand Health Policy Springer Journals

The Pharmaceutical Benefits Scheme 2003–2004

Australia and New Zealand Health Policy , Volume 2 (1) – Jan 12, 2005

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Copyright © 2005 by Harvey; licensee BioMed Central Ltd.
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Medicine & Public Health; Public Health; Social Policy
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Abstract

The Pharmaceutical Benefits Scheme (PBS) grew by 8% in 2003–04; a slower rate than the 12.0% pa average growth over the last decade. Nevertheless, the sustainability of the Scheme remained an ongoing concern given an aging population and the continued introduction of useful (but increasingly expensive) new medicines. There was also concern that the Australia-United States Free Trade Agreement could place further pressure on the Scheme. In 2003, as in 2002, the government proposed a 27% increase in PBS patient co-payments and safety-net thresholds in order to transfer more of the cost of the PBS from the government to consumers. While this measure was initially blocked by the Senate, the forthcoming election resulted in the Labor Party eventually supporting this policy. Recommendations of the Pharmaceutical Benefits Advisory Committee to list, not list or defer a decision to list a medicine on the PBS were made publicly available for the first time and the full cost of PBS medicines appeared on medicine labels if the price was greater than the co-payment. Pharmaceutical reform in Victorian public hospitals designed to minimise PBS cost-shifting was evaluated and extended to other States and Territories. Programs promoting the quality use of medicines were further developed coordinated by the National Prescribing Service, Australian Divisions of General Practice and the Pharmacy Guild of Australia. The extensive uptake of computerised prescribing software by GPs produced benefits but also problems. The latter included pharmaceutical promotion occurring at the time of prescribing, failure to incorporate key sources of objective therapeutic information in the software and gross variation in the ability of various programs to detect important drug-drug interactions. These issues remain to be tackled. PBS. Of this, $4.89 billion (84%) was paid by the Com- Review This paper reviews the growth of the Pharmaceutical Ben- monwealth, the remaining $0.91 billion through patient efits Scheme (PBS) during 2002–03; concerns about the co-payments [1]. In comparison, in 2002–03, the Com- sustainability of the Scheme, the government's response, monwealth spent $7.24 billion on public hospital services a potential new threat that emerged and issues that [2] and $8.17 billion on medical and diagnostic services remain to be tackled. (through Medicare benefits) [3]. Although the PBS is the smallest of these components of Commonwealth expend- The growth and sustainability of the PBS iture, it has the highest average annual growth rate over From March 2003 to March 2004, a total of $5.8 billion the last decade (around 12% pa), compared to 6% pa for was spent on prescription medicines subsidised under the public hospital services, and 5% pa for medical services. Page 1 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2005, 2:2 http://www.anzhealthpolicy.com/content/2/1/2 At these rates, by 2011 the Commonwealth would be concerns of pharmaceutical manufacturers precluded spending more on subsidised pharmaceuticals than it making more detailed information available, such as cost- would spend on either public hospital or medical services, effectiveness data, on which PBAC based its decision. and by 2022, more on pharmaceuticals than both public hospital and medical services together. Such projections From 1 August 2003 the full cost of PBS medicines make the sustainability of the PBS a major concern, espe- appeared on medicine labels if the price was greater than cially given an aging population and the continued intro- the co-payment. The full cost included what the consumer duction of useful (but increasingly expensive) new has paid and the amount that is paid through the PBS. The medicines [4]. While the growth rate of the PBS has aim was to help people understand what medicines really slowed over the last two years (10% during March 2002– cost and how the PBS helps make medicines affordable 03 and 8% from March 2003–04) the past history of PBS for all. In addition, the government commissioned a $24 expenditure shows considerable fluctuations over the million advertising campaign that emphasised that years. These fluctuations are caused by expensive but val- patient responsibility was, "the prescription for a healthy uable new drugs coming onto the Scheme, more cost- PBS". Critics noted that by neglecting to inform the public effective generic drugs replacing older drugs whose patent that pharmaceutical marketing and inappropriate pre- has expired and administrative changes, such as increased scribing habits of doctors also produced pressures on the patient co-payments, transiently reducing usage. PBS, the campaign missed an opportunity to initiate a more balanced and constructive debate about the viability The government's response of the PBS [10]. In 2003, as in 2002, the government proposed a 27% increase in PBS patient co-payments and safety-net thresh- During the year under review, pharmaceutical reforms olds in order to transfer more of the cost of the PBS from designed to stop PBS cost-shifting in Victorian public hos- the government to consumers. Once again this measure pitals were evaluated [11]. The reforms were a joint initia- was rejected by Labor and other opposition parties in the tive of Victorian Department of Human Services (DHS) Senate because of concern that such increases would and the Australian Government Department of Health impact on equitable access to necessary medicines [5]. and Ageing (DoHA). Since the early 1990s there had been Regardless, the government continued to argue that with- increasing cost pressures on State and Territory funded out increased patient contributions (and patient restraint) public hospitals. Their response included restricting drug the PBS would become unsustainable. supplies to discharged patients, often to only two or three days of treatment. Patients then needed to see their GP to By mid 2004, the Labor party was faced with an impend- obtain a PBS prescription to cover their needs. The effect ing Federal election and had serious trouble costing its tax was to "cost shift" pharmaceutical supplies from the State and spending promises. As a consequence, Labor aban- and Territories to the Australian Government. The reforms doned their previous principled stand in the Senate of trialed in Victoria allowed public hospital doctors to write blocking the government's proposed increase in PBS PBS prescriptions for both outpatients and discharged copayments and safety-net thresholds [6] arguing that inpatients. They also allowed PBS access to a group of can- they needed the additional $1.1 billion to spend on elec- cer chemotherapy drugs for use by day-admitted patients tion promises [7]. They also stated that, if returned to gov- and outpatients. The qualitative evaluation undertaken ernment, a substantial proportion of the $1.1 billion was generally positive although it noted the reforms had might be achieved through administrative reforms to the increased the administrative work of both doctors and PBS and savings achieved by the use of cheaper generic pharmacists. There was also concern that PBS rules drugs as expensive drugs moving off patent. Not surpris- (designed for general practice) were not always appropri- ingly, consumer and public health groups were appalled ate for specialised public hospitals. The Society of Hospi- with this Labor "back-flip" while the Greens and Demo- tal Pharmacists of Australia supported the need to modify crats said the decision was a disgrace [8]. Labor said the PBS procedures to take into account public hospital exper- decision was difficult but necessary. tise but also noted the need for more integration of med- icines funding [12,13]. Subsequently, the Victorian Several other measures were introduced by the govern- reforms are being implemented in other States and Terri- ment in order to improve the community's understanding tories. of PBS processes and costs. From June 2003, all recom- mendations of the Pharmaceutical Benefits Advisory Programs promoting the quality use of medicines (QUM) Committee (PBAC) to list, not list or defer a decision to were further developed throughout 2002–03. Specific list a medicine on the PBS were made publicly available programs were coordinated by the National Prescribing on the PBS website [9]. Unfortunately, only summary Service (NPS), Australian Divisions of General Practice information was provided; commercial-in-confidence and the Pharmacy Guild of Australia. Page 2 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2005, 2:2 http://www.anzhealthpolicy.com/content/2/1/2 The NPS was set up in 1999 with government funding but tiatives (due to the absence of up-front funding) which with an independent Board of Directors in order to pro- limited their capacity to systematically implement a com- vide unbiased educative activities to assist health practi- prehensive range of strategies. Program achievements tioners (and more recently consumers) to use medicines included the development of a wide range of shared wisely. Evaluation of NPS activities has consistently resource material [18] and the creation (by some Divi- shown that spending money on targeted QUM interven- sions in association with software vendors) of data extrac- tions can save considerably more money on the PBS by tion tools. The latter have allowed a small number of reducing inappropriate prescribing. It was estimated that practices to gain access to comprehensive information NPS activities during the period 1 July 2000 to 30 June from which further initiatives to improve quality or 2002 generated PBS savings in the range of $55.6 million change practices can evolve. The evaluation report recom- to $83.9 million through the following prescribing inter- mended that standards should be established for prescrib- vention programs: antibiotics in primary care; peptic ulcer ing software so that comparable data could be extracted management; management of dyspepsia; COX-2 selective from different systems to facilitate comparison of individ- NSAIDs; managing hypertension; and managing dyslipi- ual prescribing practice with evidence based guidelines. It daemia [14]. also noted the difficulties of attributing any cost-savings in the PBS to Divisional activities. Following this report, In 2003, the NPS received an additional allocation of gov- the Government supported a four year extension to the ernment money to provide educational material about EDQUM program in the 2003–2004 Budget. drugs newly listed on the PBS (the RADAR project). The latter was in response to considerable evidence that inten- The Third Community Pharmacy Agreement between the sive pharmaceutical promotion at the time of PBS listing Government and the Pharmacy Guild of Australia (1 July was associated with drugs being prescribed for broader 2000 to 30 June 2005) also provided a range of QUM indications than those indicated in the PBS listing (caus- activities over the year in question including medication ing so-called PBS "leakage" or "blow-outs") [15]. How- reviews of problem patients (conducted at the request of ever, the 2003 NPS educational budget of $12.5 million GPs), quality care pharmacy programs and the provision needs to be compared with the estimated $1.0 billion pro- of consumer medicine information [19]. motional budget of the Australian pharmaceutical indus- try [16]. A potential new threat that emerged In 2003–2004 the PBS became caught up in negotiations The Enhanced Divisional Quality Use of Medicines concerning the Australia-United States Free Trade Agree- (EDQUM) program was a 1999–2000 Federal Budget ini- ment (AUSFTA). This saga has been extensively reported tiative, originally announced as the Incentives for Quality elsewhere [20,21]. The government remained adamant Prescribing (IQP) program. The program offered Divi- that the AUSFTA provisions concerning the PBS were sions of General Practice (Divisions) a proportion of benign and would also increase the transparency of PBAC monies saved if Divisional QUM activities improved pre- decision-making. Others were concerned that the AUSFTA scribing and lowered PBS costs. The Divisions were contained major concessions to the US pharmaceutical allowed to use any savings made for a range of primary industry that undermined the egalitarian principles and health care activities. The program evolved significantly operation of the PBS and had the potential to increase the due to feedback from the medical profession. It was costs of medicinal drugs to Australian consumers. Time implemented on a pilot basis in thirteen Divisions on 1 will tell who is right. July 2002. Under the program, Divisions were encouraged to invest their own resources in a range of drug utilisation Issues still to be tackled data collection and/or education related activities. Activi- The EDQUM project highlighted the needs for software ties were implemented in close consultation with the NPS standards in order to extract comparable drug utilisation and focused on one or more of the following target drug data from different prescribing systems. The need for pre- groups: antibiotics, peptic ulcer drugs and cardiovascular scribing software standards has also been raised in con- drugs. nection with three other issues of relevance to the PBS: pharmaceutical promotion, independent therapeutic An evaluation of the pilot EDQUM project was under- information and drug-drug interaction checking. taken in early 2004 [17]. Barriers to implementation included perceptions that the program was primarily The uptake of computers by Australian general practition- focused on reducing pharmaceutical costs to government; ers (GPs) was stimulated by the Australian government in limited capacity of existing prescribing software systems 1999. A one-off grant of around $10,000 was offered to to extract drug utilisation data; and the need for Divisions those practices that purchased a computer, acquired inter- to take a commercial risk in developing their EDQUM ini- net connectivity (an E-mail address) and promised to use Page 3 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2005, 2:2 http://www.anzhealthpolicy.com/content/2/1/2 computer prescribing software to write the majority of tion, such as the Australian Medicines Handbook and their prescriptions. This increased the numbers of GPs Therapeutic Guidelines, are incorporated in prescribing writing prescriptions with the aid of a computer from software. The provision of objective therapeutic informa- around 50% in 1999 to more than 90% in 2004 [22]. Leg- tion is an important strategy of the QUM component of ible, printed prescriptions have been one of a number of Australian National Medicinal Drug Policy [27]. Ironi- positive outcomes of this initiative. However, new prob- cally, while both the Australian Medicines Handbook and lems emerged. Therapeutic Guidelines have been converted into elec- tronic formats they are not yet included in computerised One software vendor (Health Communication Network prescribing software. The problems have included argu- Ltd.) became the dominant market leader because its ments between software vendors and guideline producers business model relied on pharmaceutical promotion to over who should pay for the integration and a lack of heavily subsidise the cost of GPs purchasing and updating defined standards for electronic information representa- its prescribing software (Medical Director™). This business tion and interfacing. model facilitated software uptake but also resulted in advertisements for the latest and most expensive drugs More recently, the NPS RADAR project has shown the way appearing on the computer screen at the time of prescrib- forward. RADAR provides independent information to ing (and elsewhere). GPs using this software package were health professionals about medicines that have a new or a shown to prescribe more antibiotics per patient than changed listing on the PBS. RADAR drug monographs those who wrote 'scripts manually. It was suggested that have recently been incorporated in four leading GP pre- this may have been due to default settings in the software scribing packages using an open standard interface. This automatically writing in the maximum number of repeat project has moved ahead because the Australian govern- prescriptions allowed.[23] Another default option in this ment provided financial support to both the NPS and soft- software was the automatic production of a, "Do not sub- ware vendors to enable the RADAR integration to take stitute generic drugs" message on the prescription. The lat- place. ter was eventually changed by the government amending regulation 19(5) of the National Health (Pharmaceutical Following a workshop on electronic decision support, Benefits) Regulations 1960 [24]. HL7 Australia has presented a work plan to the Australian Health Information Council Electronic Decision Support However, the issue of pharmaceutical promotion in pre- Steering Committee that would build on the RADAR scribing software has yet to be tackled. Pharmaceutical project by incorporating the Australian Medicines Hand- promotion has never been allowed on government sup- book and Therapeutic Guidelines into clinical software in plied 'script pads. It is hard to understand why it was a standard manner [28]. However, this plan has yet to pro- allowed on the computerised equivalent. Pharmaceutical ceed because of a current review of E-Health policy and promotion distorts the information flow to physicians by reorganisation of its governance [29]. selectively promoting the benefits of the latest and most expensive drugs. It provides minimal information about The third area of prescribing software requiring govern- drug side-effects, contra-indications and opportunity ment intervention is standards for drug-drug interaction costs. Cost-effective generic drugs are rarely promoted and checking. The NPS tested four popular GP software pack- non-drug solutions usually not at all. Pharmaceutical pro- ages by entering a common set of elderly patients on mul- motion has clearly been shown to influence physician's tiple medications [30]. This revealed very different prescribing [25] and has resulted in cost-blow outs on the behaviour by different software packages; some missed PBS due to "leakage" of prescribing away from cost-effec- serious drug-drug interactions, others produced numer- tive indications approved by PBAC [26]. In addition, ous trivial and clinical unimportant alerts. GPs noted that pharmaceutical promotion in prescribing software, occur- the latter behaviour caused them to turn off all alerts [31]. ring at the time of physician decision making, is likely to There is an urgent need for standards concerning accepta- be much more influential than promotion in medical ble drug-drug interaction detection &/or external assess- journals, gimmicks and give-ways. As a consequence, sev- ment of prescribing software, another item on the HL7 eral medical and consumer organisations have advocated Australia work plan. further amendment of the National Health (Pharmaceuti- cal Benefits) Regulations 1960, Part V, Regulation 19, to Conclusions prohibit prescribing software from displaying pharmaceu- The PBS remained in the media and policy spotlight dur- tical advertisements. ing 2003–04. While the growth rate of the PBS has slowed during the year under review the sustainability of the Government intervention is also required to ensure that Scheme remains an ongoing concern. One strategy key national resources of objective therapeutic informa- adopted by the government was to transfer more of the Page 4 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2005, 2:2 http://www.anzhealthpolicy.com/content/2/1/2 5. Harvey K, Symposium: The 2002–03 Federal Budget – Securing cost of medicines to consumers through higher PBS co- the future of the PBS? (June 3 2002) Digest. [http:// payments and increased safety-net thresholds. However, www.econ.usyd.edu.au/drawingboard/digest/0206/harvey.html]. such measures can result in higher costs elsewhere if 6. Smith S: PBS Increases Would Hurt Those Least Able To Pay. ALP News Statement – Shadow Minister for Health and poorer patients forgo necessary medicines and end up Ageing, Media Statement – 2 August 2002. [http:// being hospitalised with uncontrolled disease. www.alp.org.au/media/0802/20001731.html]. 7. McMullan B: Joint Statement on 2002 PBS Budget measure- Shadow Minister for Finance, Shadow Minister for Small Cost-shifting (and patient inconvenience) was reduced by Business – Media Statement – 22 June 2004. [http:// allowing State and Territory public hospitals limited www.alp.org.au/media/0604/20007784.html]. 8. Ballenden N: ALP PBS backflip will punish families and sick access to the PBS but these reforms also showed the need consumers. Australian Consumers Association Press for changes in the PBS to make it more suitable for hospi- Release, 22/06/2004. [http://www.choice.com.au/viewPressRe tal practice and the desirability of further integrating lease.aspx?id=104364&catId=100202&tid=100010&p=1]. 9. [http://www.health.gov.au/internet/wcms/publishing.nsf/Content/ health funding systems. PBAC+Outcomes-1]. 10. Doran E, Henry DA: [Viewpoint] The PBS community aware- ness campaign: how helpful is blaming patients? MJA 2003, Educational strategies focusing on the quality use of PBS 179:544-545. medicines were successfully pursued but would benefit 11. Healthcare Management Advisors: Pharmaceutical Reforms in from increased funding. In addition, there was an explor- Victorian Public Hospitals: Evaluation of Impacts on Service Providers and Patients. Final Report. Department of Human atory attempt to focus the attention of Divisions on PBS Services Victoria, May 2004. [http://www.health.vic.gov.au/ costs by rewarding them with a moiety of any money pbsreform/report.htm]. 12. The Society of Hospital Pharmacists of Australia: Response to the saved by their members through more cost-effective pre- Victorian pharmaceutical reforms report. Letter to all Aus- scribing. However, the difficulties experienced by the tralian Health Ministers, SHPA, Melbourne, 11 June 2004. EDQUM project in extracting useful drug utilisation data [http://www.shpa.org.au/documents/pbs_reforms_resp.pdf]. 13. The Society of Hospital Pharmacists of Australia: Discussion paper: from computerised prescribing systems highlighted the "Moving forward – The funding of medicines in Australia's need for prescribing software standards as did other prob- hospitals". SHPA, Melbourne, May 2004. [http:// lems with such software. www.shpa.org.au/documents/move_forward.pdf]. 14. National Prescribing Service: Evaluation Report No. 6 2002–03 Progress, achievements and future directions December Information communication technology and information 2003. [http://www.nps.org.au/site.php?content=/resources/content/ nps_evaluation.html]. management (ICT/IM) has the potential to allow individ- 15. Kerr SJ, Mant A, Horn FE, McGeechan K, Sayer GP: Lessons from ual health practitioners, Divisions and governments to early large-scale adoption of celecoxib and rofecoxib by Aus- compare what is being done with what is recommended tralian general practitioners. MJA 2003, 179(8):403-407. 16. Woodruff TG: Pharmaceutical marketing, the PBS, and best-practice, highlight major discrepancies, and provide patient care. New Doctor 2004, 81:21-22. targeted education and appropriate incentives to reduce 17. Healthcare Management Advisors: Evaluation of the Enhanced the gap. However, as the events of 2003–04 show, this Divisional Quality Use of Medicines Pilot Program – Final Report. Commonwealth Department of Health and Ageing potential is unlikely to be realised if the development of 2004. [http://www.adgp.com.au/client_images/13694.pdf]. clinical computer systems is left solely to market forces. 18. [http://www.adgp.com.au/site/index.cfm?display=2422]. 19. Third Community Pharmacy Agreement between The Commonwealth of Australia and The Pharmacy Guild of Competing interests Australia 2000 [http://www.guild.org.au/public/cpa/thirdagree Dr. Harvey is a past Board member of Therapeutic Guide- ment.pdf]. 20. Drahos P, Henry D: [Editorial] The free trade agreement lines Limited, Co-Chair of HL7 Australia's Decision Sup- between Australia and the United States. BMJ 2004, port Technical Committee, a Councillor of the Australia 328:1271-1272. Consumer's Association and a member of the Australian 21. Harvey K: Patents, pills and politics: the Australia-United States Free Trade Agreement and the Pharmaceutical Ben- Labor Party. efits Scheme. Aust Health Rev 2004, 28:218-226. 22. General Practice Computing Group, Practice Incentives Program (PIP) statistics [http://www.gpcg.org/topics/pip.html] References 23. Newby DA, Fryer JL, Henry DA: Effect of computerised pre- 1. Australian Government: PBS Expenditure and Prescriptions for scribing on use of antibiotics. MJA 2003, 178:210-21. Twelve Months to 31 March 2004. Department of Health and 24. National Health (Pharmaceutical Benefits) Amendment Ageing. [http://www.health.gov.au/pbs/general/pubs/pbbexp/ Regulations 2002 (No. 1) [http://frli.law.gov.au/s97.vts?VdkVg pbmar04/index.htm]. wKey=2002B00240&ViewTemplate=frliview.hts&action=View] 2. Australian Government: Department of Health and Ageing, 25. Avorn J, Chen M, Hartley R: Scientific versus commercial Annual Report 2002–03, Canberra. [http:// sources of influence on the prescribing behaviour of physi- www.health.gov.ainternet/wcms/publishing.nsf/Content/Austral cians. Am J Med 1982, 73:4-8. ian+Health+Care+Agreements-1]. 26. Dowden J: Coax, COX and cola. MJA 2003, 179(8):397-398. 3. Health Insurance Commission, Annual Report 2002–03 27. Commonwealth of Australia: The National Strategy for Quality [http://www.hic.gov.au/abouthic/our_organisation/annual_report/ Use of Medicines: Plain English Edition. Commonwealth of 02_03/index.htm] Australia 2002. [http://www.health.gov.au/internet/wcms/publish 4. Rickard M: How Much Will the PBS Cost? Projected Trends in ing.nsf/Content/nmp-pdf-natstrateng-cnt.htm/$FILE/natstrateng.pdf]. Commonwealth Expenditure. Parliamentary Library, Social 28. HL7 Australia: EDS Refined Workplan (presented to Austral- Policy Group, Research Note no. 29 2003–04. [http:// ian Health Information Council EDS Steering Committee, www.aph.gov.au/library/pubs/rn/2003-04/04rn29.htm]. 25 June 2004). [http://www.hl7.org.au/CDSS.htm#Additionals]. Page 5 of 6 (page number not for citation purposes) Australia and New Zealand Health Policy 2005, 2:2 http://www.anzhealthpolicy.com/content/2/1/2 29. The Boston Consulting Group: National Health Information Management and Information and Communications Tech- nology Strategy. Commonwealth Department of Health & Aging, 2004. [http://www.ahic.org.au/downloads/bcg.pdf]. 30. Liaw S-T, Kerr S: Computer aided prescribing: Decision sup- port needs to be evidence based [letter]. BMJ 2004, 328:1566. 31. Ahearn MD, Kerr SJ: General practitioners' perceptions of the pharmaceutical decision-support tools in their prescribing software. MJA 2003, 179:34-37. Publish with Bio Med Central and every scientist can read your work free of charge "BioMed Central will be the most significant development for disseminating the results of biomedical researc h in our lifetime." Sir Paul Nurse, Cancer Research UK Your research papers will be: available free of charge to the entire biomedical community peer reviewed and published immediately upon acceptance cited in PubMed and archived on PubMed Central yours — you keep the copyright BioMedcentral Submit your manuscript here: http://www.biomedcentral.com/info/publishing_adv.asp Page 6 of 6 (page number not for citation purposes)

Journal

Australia and New Zealand Health PolicySpringer Journals

Published: Jan 12, 2005

References