Expensive generic drugs cost Australia billions

Consumers and the Australian Government are paying up to 10 times more for generic cholesterol-lowering drugs compared to the United Kingdom, according to research carried out by health economists at the University of Sydney.

A study published today by the Medical Journal of Australia (MJA) found Australia could have saved approximately $900 million on statin treatments (drugs used to lower cholesterol) over the past four years and could save up to an additional $3.2 billion over the next 10 years.

There has been debate over the high cost of statins as part of the Pharmaceutical Benefits Scheme, estimated to cost around one billion a year.

The study shows that Australia has comparatively low use of cheaper generic statins such as simvastatin and pravastatin. In England, only around 26 percent of statins prescribed are the more expensive patented drugs, whereas in Australia these account for 70 percent of all prescriptions. But if Australia increased generic use to match the levels in England it could save up to an additional $6.11 billion over the next 10 years.

The authors, Associate Professor Philip Clarke and Edmund Fitzgerald used publicly available administrative data from Australia and England on prices and quantities of the cholesterol-lowering drugs.

Associate Professor Clarke said past trends were extrapolated to determine likely costs in Australia up to 2020.

"With over 20 million prescriptions per year, these drugs are some of the most commonly prescribed drugs in Australia and so paying much less for generics will bring about large savings," he said.

"It's not only England where some generic drugs are much cheaper. In Australia, the wholesale cost of these drugs is around $30 per month, while in New Zealand it only costs around $1.50 per month for the same drug.

"Even in the United States, generic statins are available for just over $4 per month through some chain pharmacies.

"We need to look for ways to make these drugs cheaper. Many other countries such as New Zealand have introduced tending process for major drugs that has produced major price reductions.

"Health care reform is not just about putting more money into the system, but better using the resources we already have. If we can make savings from reducing the price of statins and other generic drugs it will allow us to spend the money elsewhere."

www.sydney.edu.au