Issues with international comparisons of pharmaceutical pricing have been further exposed in a new analysis of PBS-listed statins.
The PharmaDispatch analysis shows that total PBS spending on four listed cholesterol-lowering statins - atorvastatin, rosuvastatin, simvastatin, pravastatin - would be around 50 per cent higher if Australia adopted UK prices.
International comparisons have become a key feature of the policy debate in recent years following a 2013 report from the Grattan Institute that claimed Australia could save as much as $1.3 billion annually by linking PBS prices to what some other countries paid, including the UK.
Yet comparisons between countries are problematic for a number of reasons, not least because of different patent laws, which mean that generics, one of the primary drivers of price reductions, are launched at different times in different jurisdictions.
As a result, an analysis can be based on a comparison that is not like-for-like because the relevant drugs could be at different points in their life cycle.
In a December 2013 media release marking the first price disclosure reduction for atorvastatin, the Grattan Institute said that if "the Government benchmarked the prices of generic drugs against prices paid overseas it could save more than $1 billion a year in payments to manufacturers."
It is a contentious and highly doubtful claim.
For a start, as PharmaDispatch has repeatedly identified, the analysis captured a moment in time - and it happened to be the moment immediately before the full impact of price disclosure was felt by many of the most commonly prescribed PBS medicines.
In relation to atorvastatin, the Grattan Institute said in December 2013 that: "Atorvastatin, a high cholesterol drug that is sold as Lipitor, reduced in price by about $7 today for a box of 30 40 milligram pills. But if Australia had the UK’s wholesale prices, patients would save up to $19 extra on each box."
As we now know, as of 1 April this year the post-patent PBS price of atorvastatin will have fallen by around 90 per cent - as PharmaDispatch highlights today, while it remains higher than the UK price, the absolute difference is now so low that any referencing would generate small and mostly insignificant savings. In addition, atorvastatin faces another price reduction on 1 October.
Today's analysis shows that PBS ex-manufacturer prices for drugs subject to multiple price disclosure reductions, such as simvastatin and pravastatin, are largely in line with those paid in the UK.
The analysis is based on current UK prices, converted into Australian dollars, and PBS ex-manufacturer prices from a combination of 1 October 2014 and 1 April this year. The PBS prices have been indexed to UK prices.
A second issue are the drugs included in any analysis.
The Grattan Institute's analyses have been based on comparing the PBS ex-manufacturer price with that paid by the UK's National Health Service through their 'Category M' list off-patent drugs.
The 'Category M' list includes three statins that are off-patent in the UK - atorvastatin, simvastatin and pravastatin. It does not include rosuvastatin, more commonly known as AstraZeneca's CRESTOR, because it is not off-patent in the UK.
Yet it is subject to generic competition in Australia. Consequently, the rosuvastatin price in Australia is significantly lower than that in the UK.
The Grattan Institute's analysis took the UK's 'Category M' list and applied the price to the identical list of drugs on the PBS. But why not do the reverse? Why not take the list of PBS drugs subject to price disclosure in Australia and apply them to the UK?
In fact, why limit the comparison to older off-patent drugs? A more meaningful analysis might include drugs earlier in their life cycle, such as those recently reimbursed.
The fundamental problem demonstrated in today's PharmaDispatch is that a limited analysis that includes only a selection of drugs can produce a particular result.
Comparing the ex-manufacturer price of the four PBS-listed statins to UK prices shows that, if they were linked, Australia would pay significantly more than it does now.
Based on December PBS data, the Australian Government paid around $25 million in benefits for the four statins. If UK prices were applied, this would have been around $38 million because of the comparatively high CRESTOR (rosuvastatin) price in that country.
