Could the DPP-4 inhibitors, or gliptins, be the first in a number of new therapeutic groups?
While the research-based industry is unlikely to welcome any return of the hated pricing policy, continued references to the interchangeability of all five gliptins suggests the idea may have crossed the minds of some people in Canberra.
The controversy over the pricing of the popular PBS-listed medicines for the treatment of type 2 diabetes could come to a head this week as the PBAC considers the delisting of any gliptins where a sponsor company has refused the Health Department's request for a 40 per cent price cut.
MSD Australia, the sponsor of the market leader JANUVIA (sitagliptin), is the only company to publicly confirm its rejection of the requested price cut.
Correspondence from the Secretary of the Department of Health, Professor Jane Halton PSM, to Medicines Australia includes several references to the PBAC's finding that all five PBS-listed gliptins are interchangeable at the patient level.
In the letter, dated 24 December 2013, Halton says, "PBAC has also advised that all five gliptin medicines should be treated as interchangeable on an individual patient basis' (s101(3BA) of the National Health Act 1953 (Act)). PBAC has never been satisfied, based on evidence available to it, that any gliptin medicine provides a significant improvement in efficacy or reduction in toxicity over any other gliptin medicine (see s101(3B) of the Act).
Interchangeability at the patient level is the key criteria for the formation of a therapeutic group. Under the policy, the Government provides a subsidy up to the lowest priced medicine in a group, with patients paying any additional amount through a Therapeutic Group Premium.
There are currently five therapeutic groups: angiotensin 2 antagonists, H2-antagonists, high-potency statins, proton pump inhibitors, and venlafaxine and venlafaxine derivative antidperessants.
Under the Memorandum of Understanding (MoU) signed in 2010 between the former government and Medicines Australia, the Commonwealth gave a conditional commitment not to form any new therapeutic groups during the period of the MoU. Setting aside doubts regarding the status of the MoU under the recently elected Abbott Government, the agreement formally expires in June.
Since the MoU was put in place, the PBAC has identified literally dozens of medicines that are interchangeable at the patient level, meaning that a plethora of new therapeutic groups could be formed in July. Their formation could even be announced in May's Budget.
In the letter to Medicines Australia, Halton makes several references to the PBAC's finding of interchangeability in relation to the gliptins. She also rejects any proposed Special Patient Contribution (SPC), describing it as "circumstances outside those in which current policy would allow for such a contribution (namely, as a Brand Premium of Therapeutic Group Premium)."
It is not clear how any proposed SPC would be outside current policy, however, the manual of 'policies, procedures and methods' for the Pharmaceutical Benefits Pricing Authority does shed some light on the issue.
According to the manual, "Special patient contributions may apply to some drugs when the responsible person and the Commonwealth Government do not agree on a price for subsidy purposes. Should the Minister determine that the drug should continue to be listed and subsidised on the PBS, the patient must pay an additional amount on top of the normal patient co-payment."
In other words, a key consideration in granting a Special Patient Contribution is whether the Minister determines that a drug should be listed on the PBS. Presumably, this would be based on advice from the PBAC.
The Minister for Health is seeking advice from the PBAC at its special meeting this week as to whether gliptins with sponsor companies that have rejected the price cut should remain on the PBS. If the PBAC recommend any de-listings, and the Minister accepts that recommendation, the manual suggests that a Special Contribution would be, as Halton says, outside the current policy.
The manual goes on to make specific reference to the application of Special Patient Contributions in circumstances where "Some medicines in reference pricing groups may not be interchangeable for patients."
As Halton tells Medicines Australia in her letter, the PBAC has advised that all five gliptin medicines should be treated as interchangeable at the patient level.
While the Act gives the Minister wide discretion to approve a Special Patient Contribution, it appears unlikely to be granted in circumstances where a drug within a reference pricing group is considered interchangeable at the patient level, such as the gliptins, and the Minister does not believe it should be listed on the PBS.
One alternative would be for the gliptins to be formed into a therapeutic group, which would allow for companies to apply a Therapeutic Group Premium.
According to one senior industry source, "The Department's coyness on the special patient contribution, and constant references to interchangeability, might be a hint about a therapeutic group."
