Reference pricing, generic drugs and proposed changes to the Pharmaceutical Benefits Scheme

• Draft legislation introduced to Parliament on 24 May 2007 proposes changes to the Pharmaceutical Benefits Scheme (PBS), including the creation of two formularies. The F1 formulary will contain single brand drugs that are not considered "interchangeable on an individual patient basis", while the F2 formulary will contain mainly older drugs (many of them generic) for which there is at least one alternative product considered to be clinically interchangeable. • Drugs in F1 will not be compared with those in F2 for pricing purposes, even if clinical trial data show them to be equivalent (or even inferior) for the same clinical indication. This undermines the evidence-based approach to reference pricing currently used in the PBS. • Other changes require compulsory price disclosures and price cuts for generic medicines. While positive, these amendments are unlikely to deliver generic medicine prices as low as those in other developed countries. This is important, in view of growing evidence of the unaffordability of prescription medicines in the Australian community.