Common medications in Australia can cost 3.7 times as much as the global benchmark, a study has found.
The report, published by the Grattan Institute on Monday, found that drug prices in Australia remain “unacceptably high.”
The Grattan Institute said that even after a round of price cuts expected in April under the “price disclosure” policy, drug prices in Australia will still be 3.7 times more expensive on average than the benchmark best price.
Prices in Australia are almost twice those in Britain and 3.1 times higher than prices in New Zealand.
Stephen Duckett, a health economist at the Grattan Institute, said that the governments price disclosure policy is working too slowly.
“If a more effective policy had been in place, the savings to the government, and therefore taxpayers and patients, would have been much greater,” Duckett told the Guardian Australia on Monday.
“This report identifies savings of hundreds of millions of dollars a year that can be made if the government pursues a better drug deal. With a mounting budget repair task, and the need to find money to fund new and better drugs, the government should grab this low-hanging fruit.”
The report identified the therapeutic group premium, whereby different drugs that treat the same condition are clustered into therapeutic groups after which the government subsidises the cheapest drug in each group, as being far too narrow.
Australia has applied the policy to seven groups, compared to 30 therapeutic groups covered by a similar policy in Germany.
“The way the therapeutic group premium operates in Australia is bad,” the report found.
“There are too few drug groups, and the current policy tolerates higher prices for drugs which are largely equivalent to cheaper versions.”
Duckett said the government would save more than 150 million U.S. dollars a year if it increased the number of groups to 18.
“What we are saying with this report is that while price disclosure has been somewhat effective, there are a number of measures the government could introduce to supplement price disclosure and create additional savings,” Duckett said.
“The government has to be looking for every possible saving, especially if they are considering lifting the Medicare rebate freeze, which will cost them billions of dollars each year.” Enditem