The government will bank $3.7 billion in savings from its reforms to the Pharmaceutical Benefits Scheme, arguing that the drive to encourage Australians to switch to generic drugs is part of the push to make medicines more affordable.

Health Minister Sussan Ley, who has now finalised the $18.9bn sixth community pharmacy agreement, said the package would deliver $6.6bn in savings over five years but $2.8bn would be reinvested in the pharmacy sector, including pharmacy-run primary care programs.

The agreement, which was revealed by The Australian, averts a war with powerful drug companies, which have agreed to a one-off 5 per cent discount on the price paid by the government after a medicine has been on the PBS for five years.

Medicines Australia chief executive Tim James said “in response to the government’s budgetary challenges, we have agreed to meet all of the government’s saving targets."

For more details, go to: http://www.theaustralian.com.au/national-affairs/health/new-drug-deal-will-sweeten-pbs-fix/story-fn59nokw-1227371877179