Global Insight Perspective | |
Significance | The announcement has sent shockwaves through the local drug industry, and has naturally been met by vociferous criticism from the political opposition, patient advocacy groups and CSL itself. Funding for Gardasil had largely been considered a shoo-in, and CSL has commented to Global Insight that it will immediately seek to "renegotiate" with PBAC. |
Implications | The lack of a government subsidy for Gardasil will mean that girls and women will need to shell out the full A$460 (US$335) retail cost for the vaccination. It will severely limit the affordability and prevent widespread roll-out of Gardasil in Australia, where, ironically, the drug itself was developed. |
Outlook | Other pricing and immunisation agencies across the world that have acted on Gardasil so far have issued positive opinions, and for the moment we expect that the Pharmaceutical Benefits Advisory Committee's (PBAC) rejection will be an exception that is unlikely to influence other decision-makers. Because of the drug’s indisputable importance and value, we can only see a successful renegotiation, although there will now inevitably be a delay in Gardasil’s inclusion in national immunisation campaigns. |
No to Cancer Vaccine
Australian biotech and healthcare company CSL announced today that the Pharmaceutical Benefits Advisory Committee (PBAC), which issues recommendations on drug subsidisation in Australia, has rejected the company’s funding application for cervical cancer vaccine Gardasil (human papillomavirus). The decision is the first of its kind, in the very country where the vaccine was invented and developed. It follows a series of successful applications for funding in other markets by CSL’s global licensing partner Merck & Co (U.S.).
CSL had applied to PBAC for funding through the National Immunisation Programme, under which Gardasil would be used in three groups of women, in line with its approved indications from the Therapeutic Goods Administration (TGA). The programmes would involve an ongoing cohort of 11-12-year-old girls, delivered through school-based campaigns at the end of primary school; a catch-up campaign for high school girls aged 13-18, delivered through secondary schools; and a general practice (GP)-based scheme for women aged 19-26.
A CSL spokesperson told Global Insight that the company was both “surprised” and “disappointed” at the decision by PBAC, which maintains that CSL’s proposed price for Gardasil was too high. The retail price for Gardasil in Australia is A$460 (US$335) for the tri-dose administration, which is in itself lower than the prices in the United States and Europe. The retail price includes a number of mark-ups to account for wholesale and distribution, and CSL commented that the discounted price offered to the government was “generous”, although CSL would not specify the exact suggested subsidy price; given the estimated total population of two million who would have been part of the campaign in Australia, Global Insight estimates that the discounted price was probably around A$370, or nearly 20% below the list price. The company estimated that overall annual costs would stand at A$200 million in years one and two (compared to the A$97.2 million that has been allocated for cervical cancer screening in the 2006/07 budget), and A$340 million in total thereafter.
PBAC has yet to comment officially or justify its decision, beyond noting that it was currently “not cost-effective for taxpayers” to fund Gardasil; the body usually holds a 3-4 month delay before publishing its subsidy assessments. CSL maintains that pricing was the primary decision, although, perhaps more worryingly, a spokesperson at the federal Department of Health (DoH) claimed that there was also a lack of long-term efficacy data. There has been some debate over whether booster shots will be required, but thus far CSL and Merck’s research, and the TGA’s approved indications, appear to show no need for these.
Outlook and Implications
The comments from the DoH notwithstanding, Global Insight still suspects that pricing is the core issue here, and that more clinical data will not be necessary. As such, the delay in funding for Gardasil may not be so great; an immunisation scheme that included the vaccine was not expected to begin until February 2008, with full roll-out in 2009. However, it may mean that CSL loses its first-mover advantage over U.K. pharma giant GlaxoSmithKline (GSK), which has developed another cervical cancer vaccine. CSL has therefore already commenced a campaign to encourage women and families to make private purchases of the drug, which was launched in August. However, despite it being a one-time cost (spread across three administrations), the addition of A$460 to family healthcare costs is a highly significant financial burden that will severely limit Gardasil's initial market potential.
While the austerity measures that form Australia’s pricing and reimbursement environment are among the most stringent in the developed world, this is one of the most astonishing decisions the local drug market has ever seen. There is no doubt that CSL’s renegotiations will be backed by a wave of public opinion. The reaction in Australia has been a mixture of outrage and disbelief, and the issue has already entered the political arena; Health Minister Tony Abbott has been forced to step in and defend the “integrity” of PBAC. However, the decision will undoubtedly put the organisation under intense pressure; the compromise reforms which formed part of the U.S.-Australia free-trade agreement (FTA) last year provided the drug industry with an appeal process against Australia’s listing decisions, but there will now clearly be more calls for increased transparency in PBAC’s decision-making.
Related Articles:
- Australia: 6 October 2006: CSL Loses Bid to Prevent Early Marketing of GSK s Cervarix
- Australia: 29 September 2006: CSL Pushes Pharmacists to Sell Gardasil, as Public Awaits Subsidisation
- Australia: 29 August 2006: Merck & Co and CSL Launch Gardasil in Australia
- Australia: 22 August 2006: Ahead of Gardasil Launch, Australia Releases Cervical Cancer and Screening Rates
- Australia: 28 June 2006: Gardasil to Cost Around US$335 in Australia
- Australia: 16 June 2006: CSL Outlines Plan for Introduction of Gardasil in Australia