Singapore, Feb 19, 2010: Australians paid much less for drugs than people in the US and 11 European countries including the UK in 2008, a newly released report said.

The report, published by the British Department of Health said when taking the longer-term five-year average exchange rate into account, Australia ranked fourth out of 13 comparator countries.

The report is prepared on a yearly basis by the Department of Health and presented to the British Parliament to give insight into the country’s Pharmaceutical Price Regulation Scheme (PPRS). The 2009 PPRS introduced several cuts in the list price of branded medicines supplied to the UK National Health Service (NHS) in order to make drugs more affordable.

Like the UK, Australia uses drug price controls to manage healthcare expenditure, which is achieved through universal insurance via the Pharmaceutical Benefits Scheme (PBS). Since the early 1990s, the government has considered not only the comparative effectiveness, but also the comparative cost-effectiveness of drugs proposed for listing, ensuring all reimbursed medicines represent value for money.

A downside of this system is the sometimes lengthy pricing negotiations between the Australian Government Department of Health and Aging and the pharmaceutical industry. The time from approval to PBS listing of applications that include a cost-effectiveness analysis has grown steadily since 2003 from 14.3 to 33.5 months in 2008 (Drug Tracker, February 2009). Furthermore, a study performed by Roughead showed that the prices of many innovative products in terms of therapeutic advances, particularly biologics, are more expensive in Australia than in the US.