Government Wasting $120 Million

News Info - Health economists say the Federal Government is losing millions of dollars each year because of a loophole in the Pharmaceutical Benefits Scheme (PBS).

A study published today in the Medical Journal of Australia (MJA) says the Government unnecessarily spent an extra $120 million on "combination medications".

The loophole allows the drugs, which combine two drugs into one pill, to be sold to the Government at full price, even though they contain off-patent generic ingredients.

fastest land animals - The Federal Government says it is now giving the issue "serious consideration".

The study's author, Melbourne University's Professor Philip Clarke, says the most common combination drug mixes a cholesterol-lowering drug and a blood pressure drug.

"That combination would cost the Government each time it's dispensed around $70, but if you were to purchase the drugs individually it would only cost $40," he said.

"On that drug alone it costs an additional $30 million a year for the Government to pay for these combination therapies."

In the United Kingdom the government has stopped purchasing combination drugs because of the price discrepancies.

Dr Brendan Shaw from Medicines Australia says combination products provide a range of benefits to patients.

"They are more convenient, they help in compliance. It's easier to take them and the big saving for patients is they get one co-payment, not two," he said.

His organisation believes the Government undervalues the benefits combination products provide.

Pursue PBS efficiencies first: Clarke

Professor Clarke says the Government needs to look at ways to reduce waste and improve efficiency in the health system.

"I would argue that we should probably be looking at these issues first, before looking at more substantive changes that affect consumers such as a Medicare co-payment," he said.

The Federal Government says drugs are approved for PBS subsidy on a case-by-case basis, which includes cost-effectiveness.

"Efforts have been made when implementing new pricing policy to ensure companies are not disadvantaged," a Health Department spokeswoman said.

"Over time it has become evident that, in some cases, arrangements put in place to avoid disadvantage can provide a windfall advantage to companies. The issue referred to in the MJA article appears to be such an instance."

It says the prices on some combination drugs such as those for heart conditions and cholesterol are more closely linked to price disclosure policies than the price of ingredients.