Drug firms set for budget war

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Drug companies are on the brink of war with the Abbott government over proposed cuts in next week’s budget, which they warn will restrict access to new medicines.

The government is proposing a 5 per cent cut in what it pays for some leading medicines, including the latest cancer drugs, in a bid to save the Pharmaceutical Benefits Scheme $3 billion from the ­innovative medicines sector alone in the next five years. The savings are understood to be part of government plans to cut as much as $5bn from the PBS over the next five years.

Sources have told The Austral­ian that total savings from the health budget will exceed $7bn in Tuesday’s budget.

Medicines Australia, which represents the innovative med­icines industry, is said to be considering a public campaign against the cuts and has called in leading lobbying firms, including Liberal Party pollster Crosby ­Textor.

Medicines Australia, which represents the innovative med­icines industry, is said to be considering a public campaign against the cuts and has called in leading lobbying firms, including Liberal Party pollster Crosby ­Textor.

Medicines Australia chairman Martin Cross wrote to Tony ­Abbott yesterday rejecting the cuts. “We simply cannot support the proposals put forward by the Department of Health on behalf of the government and seek your intervention in order to achieve a much better reform for all concerned,’’ Dr Cross wrote.

He said the Health Department had advised Medicines ­Australia last week about the proposed savings measures and warned that there was “un­precedented concern in our industry’’.

“The proposed path outlined by the department will restrict Australians access to new medi­cines and will not deliver the government’s policy goal,’’ he said.

Dr Cross called on the Prime Minister to intervene by countermanding the cuts.

The potential revolt from Medicines Australia threatens Mr Abbott’s pledge for a “dull and boring budget’’ and has the potential to alienate another powerful health lobby group. The government was forced to abandon the Medicare co-payment that was flagged in last year’s budget after a revolt from doctors.

In March, Medicines Australia released a report showing Australia ranked 18th among OECD countries in access to new medi­cines, with cancer patients waiting an average of 573 days for new drugs that have received approval by a recognised regulator.

The Pharmaceutical Benefits Scheme provides government subsidies to medicines, some of which cost thousands of dollars. Under the PBS, general patients pay $37.70 and concessional ­patients $6.10. PBS expenditure in 2012-13 was $9bn.

Earlier this week it was ­revealed the powerful Pharmacy Guild of Australia had amassed a multi-million-dollar war chest in a bid to head off threats to its control over the supply of medicines as part of negotiations over the next pharmacy agreement.

The Australian understands Medicines Australia has also not ruled out an advertising campaign. An advertising campaign from the pharmacists and Medicines Australia threatens to place the Abbott government in the same position as the Rudd government, which faced an advertising blitz from the Minerals Council of Australia that undermined Kevin Rudd’s prime ministership.

The government is understood to be seeking $400 million in savings from pharmacists over the next five years by introducing optional $1 discounts on prescriptions in next week’s budget.

Dr Cross told Mr Abbott Medicines Australia agreed that “significant budget savings can be provided from our sector — but we believe we can provide these to you in a simpler and more stable way that is better for consumers”.

“We disagree with the department’s way of getting there,’’ he said.

The Australian understands that Medicines Australia had agreed to provide $1.5bn in savings over five years but was then asked to up the savings task to $3bn. Dr Cross said Medicines Australia had helped the government achieve $3bn in savings over 10 years when Mr Abbott was health minister.

“Medicines Australia has worked collaboratively with government to ensure the PBS is sustainable,” he said. “Our industry is committed to ensuring the PBS, which is cherished by Australians and admired around the world, is not inadvertently damaged through hasty policy change.”

Other planned savings including taking Paracetamol, antacids, aspirin and medicines, which are available over the counter, off the PBS. These reforms are aimed at saving $1bn.

Source: The Australian