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[e-drug] Crisis in the Australian PBS (cont)

E-drug: Crisis in the Australian PBS (cont)

Editorial, Medical Journal of Australia 2001; 174: 209-210

By David Henry, Past Chair Economics Sub-Committee of the Pharmaceutical
Benefits Advisory Committee and Professor of Clinical Pharmacology,
University of Newcastle, NSW and Donald J Birkett, Past Chair,
Pharmaceutical Benefits Advisory Committee and Professor of Clinical
Pharmacology Flinders University of South Australia, SA.

Reprinted under the fair use doctrine of international copyright law:

On 31 December 2000, the Pharmaceutical Benefits Advisory Committee 
(PBAC) and its Economics and Drug Utilisation subcommittees were 
dissolved under legislation passed precipitately through the Federal 
Senate. PBAC members, the media and some politicians were surprised 
by this legislative haste;1,2 such urgency and resolve appeared 
incongruous for legislation of an
apparently routine nature.

A review group (including PBAC representatives), convened by the
Parliamentary Secretary for Health to review aspects of the Committee's
operations, had recommended that PBAC members should come from a broader
range of constituencies, and that membership tenure should be limited. To
ensure the continued effectiveness of the Committee, they also recommended a
transitional phase for implementing the changes. Thus, the legislative
amendment appeared innocuous and the principles had been agreed to.

The legislation initially proposed clauses setting maximum terms of
membership, and making this retrospective. This was a key issue -- it had
the effect of making some members ineligible for further membership,
including the chairs of the PBAC and its two subcommittees. These amendments
were withdrawn after opposition in the Senate. Unexpectedly, the Government
used the surviving amendment concerning membership to spill the committees.
In the weeks that followed, the Government appointed a pharmaceutical
industry lobbyist to the PBAC.

So what is going on? Why would a government move against its own advisory
committee in this way? Had the committees not been performing their
legislated functions satisfactorily?

No one has claimed that the committees did not perform adequately. The PBAC
received a supportive review by the Australian National Audit Office, and
international commentaries have been generally favourable.3-5 A recent
independent review, part-funded by the pharmaceutical industry, commented
positively on the general approach to the operation of the Pharmaceutical
Benefits Scheme (PBS).6

A striking feature of the relationship between the present Government and
the PBAC has been the Government's ambiguity. The committee chairs have been
informed that the Government is concerned about the rising costs of the PBS
($3.2 billion in the 1999-2000 financial year, a 14% rise over the previous
year7), but, at the same time, wishes to support the pharmaceutical

The roles of the PBAC are spelled out in the National Health Act 1953
(Cwlth) (amended 1987).8 The principal task of the committee is to make
recommendations regarding the listing of new drugs on the PBS. The PBAC is
required by law to consider both "the effectiveness and cost of therapy
involving the use of the drug"; the committee can not list a pharmaceutical
product that is substantially more costly than alternatives unless it
provides "a significant improvement in efficacy or reduction of toxicity
over the alternative therapy". The current interpretation of the Act by the
Federal Court allows a role for the PBAC in considering total costs to the
community, including the financial impact of "leakage" (wide prescribing for
patients not covered by the listed indications).9 The Act does not provide a
mechanism for companies to appeal the substance of PBAC decisions, but they
may seek a judicial review of the decision (as in the case brought by Pfizer
Pty Ltd when sildenafil [Viagra] was not listed).9 Importantly, the PBAC
places no limits on the number of resubmissions that it will consider. The
evaluation methodology developed by the committees, with the strong support
of the Department of Health and Aged Care, is rigorous in its evidentiary
demands, and has withstood both administrative scrutiny and legal

Why has the Government sent mixed messages to the PBAC? A possible
explanation is that it was under pressure from the international
pharmaceutical manufacturers lobbying to have their products listed at
higher prices on the PBS.10 Perhaps the PBAC is viewed as being too
demanding, making recommendations that result in prices that set
"undesirable" international precedents? It is difficult to get accurate
information on the level of contact between the present Government and the
pharmaceutical industry. However, in 1998, a Pharmaceutical Industry Working
Group was formed, comprising the ministers of Health and Aged Care, and
Industry, Science and Resources, and senior staff from the Australian
Pharmaceutical Manufacturers' Association. This group has met regularly and
been responsible for initiating reviews of PBAC activities.

Worldwide, the pharmaceutical industry has enjoyed a period of unparalleled
profitability and influence. It has been among the best performers in the
share market. Unlike other products of technology-based industries (eg,
computers), the medicinal drug market has become a "sellers' market", with
some new products offering only marginal clinical benefits at much higher
prices than the agents they replace.

It may be difficult for the industry to sustain recent levels of growth in
the face of increasingly critical purchasers around the world.
Pharmaceutical benefits schemes like the one in Australia are being
considered, or have been adopted, in other countries, including Canada,
United Kingdom, Netherlands, Italy, Portugal, Sweden, Norway and
Finland.12,13 In response, some sections of the pharmaceutical industry have
aggressively defended their positions, with tactics that have been widely
criticised.14-17 These have included legal challenges and threats to
governments, advisory bodies and individuals in Canada, United States,
United Kingdom and Australia.9,18-23 In developing countries, the relentless
pursuit of intellectual property rights has denied the rights of local
manufacturers to produce much-needed drugs.11,15-17,24,25 The health needs
of these countries receive scant attention, as companies prefer the more
secure business of developing "me too" drugs, fixed combinations of existing
agents, or drugs for the "problems" of affluent societies, such as hair loss
or obesity.11,14,24,25 It is significant that criticism has come, not from
radical sources, but from conservative journals, such as The Wall Street
Journal and the New England Journal of Medicine.11,14 These are not
judgements on the morals of the individuals who work for the companies, but
rather the corporate culture that develops when there is widespread market
failure and weak intervention by governments.26

When faced with the lobbying powers of pharmaceutical companies with market
values of hundreds of billions of dollars, advisory bodies such as the PBAC
need the strong and unambiguous support of government, and a guarantee of
independence. The Department of Industry, Science and Resources has a degree
of responsibility to support the pharmaceutical industry, but many would
consider that the Department of Health and Aged Care does not. The members
of the PBAC deserve and need the Health Minister's support, even though
their recommendations may sometimes be unpopular with the pharmaceutical

But the Government can do even more. The reasons for the PBAC's decisions
(positive and negative) should be available to everyone. Information that is
truly sensitive, such as manufacturing details, should be protected, but a
summary of data forming the clinical and economic case for listing, or not
listing, a drug (with the arguments and reasoning behind the PBAC's final
recommendation) should be placed on the PBS website.27 Interested parties
should be free to criticise these decisions, and the PBAC should be able to
respond publicly and, if justified, to modify its recommendations.
Presently, such openness is prevented by secrecy provisions in the National
Health Act and has been opposed by industry.

Where should the medical profession stand on these issues? The PBAC
committees' roles and activities need to be better communicated to health
professionals and consumers. Doctors should be well represented on the "new"
PBAC through nominations from the Colleges, the Australian Medical
Association and the Doctors' Reform Society. Doctors, particularly
specialists, sometimes lobby the PBAC to have new drugs listed. When
unsolicited and motivated by concern for patients such approaches are
welcome, particularly if they contain arguments based on evidence and
experience. However, some letters appear to have ghost authors; this is
inappropriate, particularly if the issue is a dispute over pricing rather
than interpretation of clinical data. Some doctors may perceive their
responsibility to patients as consistent with a close relationship with
industry, for instance through membership of "advisory panels". In reality
these roles are often in conflict.

In the past decade the medical profession has become enmeshed to an
unprecedented extent in the affairs of the drug manufacturers. This was
exemplified by the difficulty experienced recently by the New England
Journal of Medicine in locating an independent editorialist to comment on a
therapeutic trial.28 Perhaps the time has come for a searching review of the
ethics of relationships between the medical profession and the health
industry in Australia. Perhaps, if the profession develops a different view
of its responsibilities to the community, we may read letters from doctors
criticising the inordinate prices requested by drug companies, rather than
complaining when the PBAC does not accede immediately to their demands for a
drug's listing on the PBS. Considering the recent imbroglios accompanying
the changes to the PBAC, the Government might wish to more fully inform the
medical profession and the community on the reasons for these changes and
whether it wants a fundamental change in the Committee's role.

For references, see original article. For more material see:
The Copyright Amendment (Digital Agenda) Bill 2000 became effective in
Australia on 4 March 2001. The views expressed in this email are copyleft
and may be widely disseminated around the universe.

Dr. Ken Harvey, Senior Lecturer, School of Public Health,
Room 221, Building HS1 (NW9),
La Trobe University, Bundoora, 3086, Australia,
Telephone +61 3 9479 5773,
Facsimile +61 3 9479 1783,
Personal mobile 0419 181910,
Internet: http://www-sph.health.latrobe.edu.au/kharvey/
"Ken Harvey" <k.harvey@latrobe.edu.au>
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