Tony Abbott's election victory in Australia's 7 September general election is likely to be cheered by innovative pharma firms, after election campaign promises to ensure an independent Pharmaceutical Benefit Advisory Committee, and faster reimbursement listings.
IHS Global Insight perspective | |
Significance | The centre-right Liberal-National Coalition party's election victory in Australia over the weekend will see Peter Dutton installed as health minister, and is likely to generally be welcomed by innovative pharma firms. |
Implications | The party's election campaign included promises of an independent Pharmaceutical Benefits Advisory Committee, and faster reimbursement listings will be offset by continued pressure on the price of generics, and the gradual restoration of the government's private health insurance rebate. |
Outlook | The new government will continue to target a budgetary surplus, but with what it describes as more realistic targets than the Labor government, with healthcare likely to benefit; it is hoped the promotion of private health insurance will ease pressure on the public system. |
The Liberal-National Coalition party's landslide victory in Australia's 7 September general election win means a change of government, with Prime Minister Tony Abbott set to install Peter Dutton as the new minister for health and ageing, replacing Tanya Plibersek. The centre-right party has pledged to lower overall government spending, but the healthcare budget was one of the few areas that the government guaranteed would be maintained at existing levels.
Key promises in the party's health policy include "restoring the independence" of the Pharmaceutical Benefits Advisory Committee (PBAC), and allowing faster reimbursement listings to the Pharmaceutical Benefits Scheme (PBS). As part of increasing speed of access to new medicines, the minister of health will be permitted to make listing decisions on medicines recommended by the PBAC that do not cost more than AUD20 million (USD18.6 million) during each of their first four years of listing. Previously, the Labor government required cabinet approval of all PBAC-recommended drugs costing more than AUD10 million.
The full 30% private health insurance rebate will be restored by the Coalition, at a total outlay of around AUD4 billion. Prime Minster Abbott has promised to implement restoration of the rebates as soon as fiscal conditions allow.
Other policies mentioned within the Coalition's health policy document include:
- Accelerating roll-out of a biennial National Bowel Cancer Screening Programme;
- Deliver a more efficient funding model for hospitals through activity-based funding; front-line primary care services will be bolstered with a total of AUD117.5 million going towards improving training for general practitioners (GPs);
- Chronic diseases, particularly diabetes, will be targeted; pre-diabetes will be a major focus at the primary/GP level, while AUD35 million will be donated towards finding a cure for type 1 diabetes.
- Industry association AusBiotech has stated that the Coalition will consider a tax incentive for Australia-researched therapies, with a lower manufacturing tax for products that are patented and manufactured in the country – a system in place in nine European countries.
Outlook and implications
The election promises will be welcomed by the innovative industry, addressing some of the industry's mounting frustrations, as constrained government spending in recent years has seen the PBAC issuing multiple rejections and delays for new medicines, while the numbers of new molecules being listed on the PBS have reached 20-year lows (see Australia: 21 May 2013: Australia's PBS drug additions reach 20-year low and Germany - Australia - Switzerland: 6 May 2013: Australian government continues Yervoy price negotiations, Roche gives up on Zelboraf PBS listing). The promised speedier access to new medicines will be offset by greater/continued price pressure on generic drugs, with savings made through the Expanded and Accelerated Price Disclosure (EAPD) scheme to be funnelled back into allowing more flexible PBS listings, which the Coalition states has not been the case under Labor.
The restoration of the 30% rebate for private health insurance would represent the most significant single item in terms of funding, with the Labor party estimating full restoration would cost AUD4 billion. The rebate has been rising at 6.3% over the previous decade – the fastest growing component of the health budget – and represents a significant commitment for the Coalition. Australia's mixed public and private healthcare provision sees around 47% of the populace choose to pay for private insurance, but government rebates were reduced under the previous Labor government, which added a controversial means-test to the rebate last year. Greater encouragement for Australians to take up private insurance will reduce the pressure on the public system.