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1.In a research report titled Shifting the Dial published in 2017, the Productivity Commission recommended a new model of pharmacy be adopted with a ‘move away from community pharmacy as the vehicle for dispensing medicines to a model that anticipates automatic dispending in a majority of locations, supervised by a suitable qualified person’ (Recommendation 2.5). The suitably qualified person would have ‘good social skills and trustworthiness (with support from information technologies), but would not need the clinical and scientific abilities of pharmacists’ (Recommendation 2.4). In the new model, pharmacists would have a new role in the multi-disciplinary management of complex and chronic condition. This role would be defined in consultation with Primary Health Networks, Local Hospital Networks, the various medical colleges and any other relevant clinical bodies. Critically discuss these recommendations by the Productivity Commission taking into account viewpoints of different stakeholders and the possible impact on population health and the economy.

2.Australia and New Zealand both have national medicines policies that aim for equitable access to cost-effective and safe medicines. However, each country has adopted a different approach. Australia has an uncapped system of funding medicines, with the Pharmaceutical Benefits Advisory Committee (PBAC) reviewing submission for new medicines to be listed on the Pharmaceutical Benefits Committee based on selected criteria. New Zealand has an equivalent agency, PHARMAC, which decides which pharmaceuticals to publicly fund. However, PHARMAC operates under a fixed budget constraint, and adopts different procurement mechanisms for medicines such as competitive tendering. Compare and critically review Australia and New Zealand’s policies for providing access to prescription medicines based on need not ability to pay. Make a recommendation as to whether Australia should or should not adopt the New Zealand model.

3.Critically discuss the arguments for and against opening up the pharmacy sector to competition, including through the deregulation of ownership and location rules.
 

Pharma economics in Australia and New Zealand

Australia and New Zealand are two neighbouring nations who possess much amount of similarity in terms of economic policies as well in terms of geographical topologies too. Over the years, a distinct feature that has become prominent within two countries is pharma economics and it mainly deals with the medical policies in the state (1). Though, in case of policies, these two economies differ by a moderate extent, yet there are similarities within the policy framework too (2). This present study will demonstrate the difference between the medical policies provided by the two countries to their citizen and analyse the same in terms of different parameters. In order to do so, the study will initially explain the different medical policies of the aforementioned nations and then provide a critical analysis of the same.

Australia and New Zealand has their own medicinal policies in order to provide medical assurance to their native citizens (3). As the model to provide subsidised patient access system, New Zealand during 1993 established the PHARMAC or the Pharmaceutical Management Agency of New Zealand (4). Key role of the organisation was to decide whether the medicinal service of the state will be subsidised or not. With the empowerment by the government to negotiate prices with the manufacturers of the Pharmaceutical PHARMAC provides rebates on the price list of the same. In addition to this, it acts as the bridge between the patient and pharmaceutical manufacturers by providing bundle agreements, tendering for the generics and reference pricing in order to reduce the price of expensive new drugs against the price reduction of the other supplied drugs (5).

on the other hand, it can be seen that Australia have their own Pharmaceutical Benefits Scheme (PBS) which is entitled to provide subsidised prescription drugs to the native population of the Australia (6). Though the PBS was stablished back in 1948, yet it has come into full force since late 1970s. Initially there were only 140 lifesaving drugs with the PBS scheme, however, over the year it enhanced gradually (7). As of 2003, there were 601 different drugs available with the PBS and these are marketed by 2,602 different manufacturers allowing the PBS to have wide range of medicine for different diseases (8).

 

Figure 1: Medicinal policy overview

Source: (1)

From the above figure it can be seen that Australian and medicinal program from New Zealand provides universal coverage of subsidised medicines to their citizens utilising the different policies. However, when it comes to the patient co-payment, then there is wide amount of difference between the two nations highlighting the fact that there is moderate amount of different in between the overall medicinal policies of these states as well (9).

Medical policies of Australia and New Zealand

Access to these medicines is a very common public health issue in many developed countries as some of the new medicines are quite expensive and are unaffordable to many patients owing to the fact that there is a very limited access to public. Contrary to this, New Zealand and Australia, both the countries are well known for implementing national medicinal policies which focuses on providing access to cost effective and safe medicines (10). New Zealand and Australia, both the countries have adopted different approaches towards funding medicines.

The Pharmaceutical Management Agency of New Zealand (PHARMAC) decides which pharmaceutical products should be subsidized for the use for common people and public hospitals. It also alters the pricing scheme of different types of vaccines, medical devices and on medicines used for treatment of cancer.  PHARMAC also aims to lower the prices of expensive medicines, promotes the use of generics and bundling deals. PHARMAC maintains the pharmaceutical schedule of New Zealand and manages the purchasing of different pharmaceutical products on behalf of District Health Boards (11). However, in case of Australia all the pharmaceutical products are subsidized and funded by Pharmaceuticals Benefit Scheme. It is registered under Therapeutic Goods Administration. It funds the prescription medicines to the Australians. A method of reference pricing is also used for generic medicines. However, it has been seen that the generic medicines   are much highly priced in Australia compared to New Zealand.

Policies such as program budgeting, negotiating tough price and different mechanisms of procurement like competitive tendering helped New Zealand to save a lot.  The government of New Zealand has only funded less than half of the new medicines over a decade. Presence of excellent medicinal policies in both the countries provides its citizens a cost effective and safe pharmaceuticals. Australia usually spend more than double on pharmaceuticals compared to New Zealand (12). Introduction of new pricing policies by Australia includes incentives to pharmacies. The use of medicines has also increased due to the growing of the ageing population. Growth in medicinal expenditures has forced the government to fund specialized expensive medicines. The Pharmaceutical Management Agency of New Zealand and Pharmaceutical benefits advisory committee works on cost effectiveness of all the different kind of new medicines. The suppliers following the guidelines of PABC usually provides a detailed budget impact analysis for each new medicines. The analysis provided are then scrutinised by the Economics Sub Committee of PBAC (13). The models are then evaluated in detail by the Pharmaceutical Evaluation Section which includes the economic data which is used to populate the model (11). In New Zealand there is a presence of red tape in accessing the unlisted treatments for the patients. The public consultation made by PHARMAC presented the negative experiences which relates to lack of access to various kind of drugs. Australia had spent around US$587 for subsidising the medicines on the other hand New Zealand had only spent US$288 (14). Had Australia adopted the pricing system of New Zealand, it would have reduced its expenditure by a $1.1 billion a year. PHARMAC also deters the listings of new medicines so that there is a decline in price with time (15).

Pharmaceutical Management Agency of New Zealand (PHARMAC)

It is easier for New Zealand to achieve more savings because of the negotiations in the price and combination of program budgeting. Analysis of pharmaceuticals is very important in order to select medicines for reimbursements.  There is a presence of consistent coverage in pharmaceuticals which are both universal and consistent along with low patient pharmaceutical co-payments (16). Reference pricing is also used by Australians in case of generic medicines with health outcomes and similar safety. Several pricing policies have been reformed in Australia in the year 2014 (17). The Pharmaceutical Benefit Scheme is a program made by the government of Australia which provides prescription drugs that are subsidized for the Australian residents. This scheme ensures that the residents of Australia have reliable and proper access to a wide range of necessary medicines.

 

Figure 2: Performance difference of medicinal policies

Source: (1)

As it can be seen from the above figure, New Zealand has been successful to reduce their price in government sector and market has become monopsony in nature. Contrary to Australia has introduced mandatory pricing strategy through their medicinal policies and has reduced the price in the successive periods (14). Both the countries are facing challenges in terms of medicinal policy implementation where high generic price of medicines and impact of TPPA on prices of medicines has impacted the performance of medicine market of both the state.

Due to the rising cost of PBS, it has faced much scrutiny. The key component of health care in Australia is the PBS along with Medicare. National Health Act and National Health Regulations governs the Pharmaceutical Benefit Scheme. The suppliers under PBS are usually pharmacists and medical practitioners (17). The benefits of pharmaceutical under the scheme of PBS are administered by Medicare Australia. The benefits on the medicines are only given on those mediations which ate listed in the Pharmaceutical Benefits Schedule. The cost of the pharmaceuticals is negotiated between the supplier of the drugs and the government of Australia (18).

There had been a lot of significant changes in case of the health care system in Australia. The Pharmaceutical Management Agency of New Zealand was introduced in 1993 in order to decide which medications to subsidise by the government (19). The PHARMAC is the crown entity of New Zealand, which with the help of District Health Boards decides on the subsidy of pharmaceutical products. The primary aim of the scheme is to provide security for those eligible people who are in need of pharmaceuticals. In the year 2017, the subsidy budget of PHARMAC was around $850million which has been used to subsidize 48.5 million prescriptions (20).

Pharmaceutical Benefits Scheme (PBS) of Australia

Conclusion:

To conclude it can be stated that difference is presence in terms of pricing policy and strategy implementation in the medicinal policies of both the countries. However, both of them are aimed to provide the best in class service to their citizens. With moderate difference in the price of the subsidised medicinal policy, New Zealand has been effective enough to introduce medicinal policy, however, enhancing cost burden of the PBS from Australia is a major concern of the state. 

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