AUSFTA & medicines in Australia A methodology for identifying and measuring the impact of the...
Transcript of AUSFTA & medicines in Australia A methodology for identifying and measuring the impact of the...
AUSFTA & medicines in Australia
A methodology for identifying and measuring the impact of the Australia - United States Free Trade Agreement (AUSFTA) on the price, demand and
supply of pharmaceuticals in Australia
Andrew Searles
PhD Scholar
Discipline of Clinical Pharmacology
University of Newcastle
Australia
AUSFTA & medicines in Australia
The study
• One component of a larger project that is examining the impact of trade agreements on medicines in Australia
• Collaboration of seven researchers at the Australian National University & University of Newcastle – Dr Tom Faunce– Professor David Henry– Professor Peter Drahos– Dr Evan Doran– Ms Brita Pekarsky – Mr Warwick Neville– Mr Andrew Searles– Backgrounds in medicine, pharmacology, sociology, law,
economics and statistics• The component being outlined today focuses on
AUSFTA
AUSFTA & medicines in Australia
Background - AUSFTA
• AUSFTA - January 2005
• Sharing skills & technology
• Comparative advantage – lower prices for many goods and services
• In Australia – concern over the inclusion of pharmaceuticals
• Particular concern that AUSFTA might impact on the operation of the “PBS”
AUSFTA & medicines in Australia
Background - PBS
• Pharmaceutical Benefits Scheme (PBS)– Set up about 50 years ago under the National Health Act (1953)
– Enables medicines to be supplied to Australians under a Commonwealth subsidy
• About A$28 …. to A$3 a script• Ensures access to affordable essential medicines for all
Australians
– Listing on the PBS• Pharmaceutical Benefits Advisory Committee (PBAC) must
recommend to the Minister that a new medicine be listed.• Ultimately the Health Minister must approve the listing, but it
can only get to the Minister IF PBAC approves listing• PBAC is a lynchpin of Australia’s medicine’s policy
AUSFTA & medicines in Australia
Background - PBS
• PBAC considers – cost and effectiveness of a medicine – including a comparison with the cost and effectiveness of a new medicine with alternative therapies
– PBAC can also recommend listing in other special circumstances (e.g. rule of rescue)
AUSFTA & medicines in Australia
Background - PBS
• Monopsony buying power– Single buyer
• Without a listing on the PBS, there is an extremely limited market in Australia
• Limited to those who are willing to pay the unsubsidised price
AUSFTA & medicines in Australia
Concerns with AUSFTA
• Free trade agreement contains provisions that:– Directly impact on PBS processes– Entrenching existing Australian intellectual property (IP) law– Extending existing Australian IP law– Entrench Australian law on web based medicine information
(provided by pharmaceutical companies)– Contain dispute resolution procedures that allow damages
should a benefit, reasonably expected to accrue to party, not eventuate
• Published prior to signing• Prior to signing – strong feeling that medicines are such
an important component of society, they should not be included in trade agreements
AUSFTA & medicines in Australia
Implications of AUSFTA
• Weaken Australian regulatory controls
• Increase manufacturers’ ability to exploit their market power
• Increase in medicines prices
• More R & D in Australia
• Potential for generic prices to fall
• If prices rise => burden directed to elderly
AUSFTA & medicines in Australia
Out of pocket monthly expenditure for prescription medicines by the elderly
10%
24%16%
82%
20%
0% 4% 2% 0%
16%
0%
20%
40%
60%
80%
100%
AustCanada
NZ UKUSA Aust
Canada
NZ UKUSA
Nothing More than $100
Source: Commonwealth Health Fund
AUSFTA & medicines in Australia
Research question
• From the perspective of the Australian community, has AUSFTA impacted on the demand, supply and/or price of pharmaceuticals in Australia?
AUSFTA & medicines in Australia
Objectives
• Identify AUSFTA’s potential influences
• Identify variables that might measure these influences
• Measure the variables
• When an association is found, investigate likely causality
• Report the findings
AUSFTA & medicines in Australia
How to measure the impact?
• Issues to consider– Trade and capital flows – Association and causation– Quantitative and qualitative data– Primary and secondary data
AUSFTA & medicines in Australia
How could AUSFTA influence medicines in Australia?
• Based mainly on legal interpretation of the provisions and wording of AUSFTA
• Four basic areas that could generate influence:– Annex 2(c)– Side letter between negotiators– Chapter 17 (intellectual property)– Chapter 21 (dispute resolution)
AUSFTA & medicines in Australia
Annex 2(c)
• Annex 2(c) states, for both parties, the aim of facilitating “high quality health care and continued improvements in public health for their nationals”
• Subsequent provisions state the underlying principals of:– Recognition for innovative medicines– Recognition of R & D– Expeditious, transparent and accountable process for
providing affordable medicines– Recognition of the value of innovation
AUSFTA & medicines in Australia
Annex 2(c)
• 3 of the 4 principles focus on the rights of the manufacturers of ‘innovative’ medicines
• Generic manufacturers not mentioned– Generics have helped control PBS expenditures in
Australia
• Emphasises recognising the value of innovative medicines through competitive markets or other processes that values the medicine– Emphasis is on the manufacturers’ rights without
mentioning patients’ rights
AUSFTA & medicines in Australia
Annex 2 (c)
• Transparency– PBS not directly mentioned, but the implication is that
the onus is on the PBS, as commercial in confidence still retained.
– PBS supports greater transparency but there is a feeling it should be on both sides
• Medicines Working Group (MWG)– Differences in opinion
• Australia: discussion group keeping Australian officials informed about international medicines issues.
• USA: A forum where, amongst other issues, Australia’s system of listing medicines will be discussed, including the role of the PBS in listing and the prices paid for medicines in Australia
AUSFTA & medicines in Australia
Entities influenced by AUSFTA
• Consumers – patients and potential patients
• Pharmaceutical Benefits Scheme (PBS)
• Pharmaceutical Benefits Pricing Authority (PBPA)
• Hospitals
• Generic manufacturers
AUSFTA & medicines in Australia
Selected outcomes
Consumers•Time series of the proportion of consumers who do not fill scripts •Time series on the proportion of personal income spent on pharmaceuticals •Time series of the proportion of consumers who have visited a pharmaceutical company’s web page (and the behaviours that followed this encounter)
PBS•A pharmaceutical price index that records indexed prices drugs. The index will allow pre and post AUSFTA comparisons•A time series of total PBS expenditure (allowing analysis by patent and off-patent drugs and by drugs that were previously listed on the PBS and have had a price review) •Time series of the perceived level of pressure applied to PBAC to reward innovation and R&D
AUSFTA & medicines in Australia
Selected outcomes
Generic manufacturers• Time series of generic manufacturer’s perceptions about the
litigation risk of marketing new generic drugs in Australia• Time series in the level of ‘business confidence’ of Australian
generic manufacturers (include attitudes and perceptions toward investment, exports etc).
• Australian stock exchange time series information on publicly listed generic manufacturers
Hospitals• Time series of non-PBS expenditure on pharmaceuticals (i.e. by
private and public hospitals) • Time series of the number of people presenting at public
hospital emergency departments for medicine normally obtained on prescription
AUSFTA & medicines in Australia
Examples of data collection
• Primary data– Consumer surveys (time series)– Interviews and surveys of PBAC members– Interviews with industry representatives
• Secondary data– Data sets of PBS expenditure– Prices paid for medicines (by PBS)– Quantities of medicines sold (subsidised by
PBS)
AUSFTA & medicines in Australia
Primary data: Consumer survey
• Three years
• Cross sectional design
• Random sample (n=1500)
• Issues– Financial difficulty– Not filling prescriptions– Impact of pharmaceutical web sites / media
AUSFTA & medicines in Australia
Consumer survey example
• Financial difficulty– Over the last three months, BECAUSE OF COST,
have you:• Put off seeing a doctor when you felt it was necessary? • Bought over the counter medicines rather than get a
prescription medicine from your doctor? • Asked your doctor or pharmacist for a cheaper generic
version of a prescribed medicine? • Used medicines you have had at home rather than obtain a
new script? • Used a medicine belonging to someone else rather than
obtain a new script?
AUSFTA & medicines in Australia
Secondary data: Price and quantity
• PBS data publicly available– Price paid by PBS for medicines– Quantities purchased
AUSFTA & medicines in Australia
Secondary data: Price index
90
95
100
105
110
115
120
1998/99 1999/00 2000/01 2001/02 2002/03 2003/04
index numberLaspeyres chained indexLaspeyres direct indexPaasche chained indexPaasche direct indexBase = 100 (1998/99)
Source: Health Insurance Commission
Pharmaceutical price index
AUSFTA & medicines in Australia
Other examples of anticipated analysis
• Using the price index, model scenarios of PBS expenditure– E.g. aim to estimate PBS expenditures in the
absence of decisions made under the influence of AUSFTA
– Compare with pre AUSFTA
AUSFTA & medicines in Australia
What we aim to achieve
• Rigorous assessment of AUSFTA’s impacts• Use sound statistical and economic techniques
to isolate AUSFTA’s influences• Move beyond “association” to likely “causation”• Provide informed commentary and policy
recommendations• Look at ways to improve Australia’s medicines
policy – E.g tendering (as per NZ)
• Provide informed comment on the wisdom of including medicines in future trade agreements
AUSFTA & medicines in Australia
Thank you
Questions and / or suggestions?