Posted by Michael Wonder on 03 Mar 2017
How to slash half a billion dollars a year from Australia’s drugs bill
3 March 2017 - Australia is spending more than A$500 million a year too much for pharmaceuticals because of a little known loophole that allows drug companies to overcharge the government for a wide range of drugs.
The loophole results in the government paying different prices through the Pharmaceutical Benefits Scheme for different drugs that work as well as each other to treat a given medical condition. The problem occurs when the price of one drug drops but the prices of other, newer drugs with equivalent effects do not.
Our recent paper suggests that by closing this loophole – so the price of these newer but equivalent drugs drops to those of existing, equally beneficial drugs – the government could save more than A$500m a year on its drugs bill.
