At first glance, a decision not to implement a recommendation by the Pharmaceutical Benefits Advisory Committee (PBAC) to list a drug on the Pharmaceutical Benefits Scheme (PBS) seems ridiculous. The Australian PBS has a worldwide reputation for its rigorous cost-effectiveness analyses. What could be the logic for not listing a drug that has been judged to be cost effective? There are several issues to consider.

First, we should recognise that a new drug is judged to be cost effective based on calculations from appropriate clinical trials. These calculations must show that the overall price to be paid (that is, the cost) for one person to live a year longer (adjusted for quality of life) compares favourably with that calculated for other drugs that are already listed on the PBS.

However, such an analysis tells us nothing about how spending money on the drug compares with other possible uses of the money. More lives might be saved, for instance, by spending the money on other areas of the health budget, such as employing more nurses, or even outside the health budget, such as building bicycle paths. In an ideal world, other possible uses of the money would be subjected to cost-effectiveness analyses equal in rigour to those for new drugs. However, the data needed for such analyses are never likely to be available, so judgements must be based on other criteria. This immediately raises the difficult question of what those other criteria should be. However, the difficulty of the question should not mean that we automatically put it in the 'too hard basket'.

Second, we should recognise that the listing of a new drug on the PBS can lead to an increased overall cost to government – in some cases a major increase – despite the drug being assessed as cost effective. For example, the marketing skills of the pharmaceutical industry will often lead to a rapid increase in the overall use of a drug class when there is a new addition to the class, even though the new drug is of equal cost effectiveness to existing drugs within that class. 'Leakage' of indications, where the drug is prescribed for indications other than those on which the cost-effectiveness analysis was based, can also lead to much greater costs without necessarily achieving additional benefits.

Third, even if the drug is cost effective, the cost commences immediately, but the benefits often only accrue in later years. Apart from the practical issue of finding the extra money upfront, this raises the equity issue of today's taxpayers paying for future taxpayers' benefits.

The PBS, for all its virtues, is not perfect. I would argue, for example, that costs will inevitably continue to rise while the PBS is driven by submissions from pharmaceutical companies wanting their products to be subsidised by the public purse. The industry is extremely good at 'playing the game' and tightly controls the design and publication of the trials that generate the data used in cost-effectiveness calculations. It is also expert at marketing its products and creating increased demand (and thus costs), whether or not a true need exists for new products.

We have become accustomed to a healthcare system where only the best will do, regardless of the cost. My experience of working for many years in a country with far fewer resources than Australia has taught me that good use of older and cheaper drugs can achieve excellent clinical results. Is it really so unreasonable to be asked to use drugs that are 'almost as good' for a bit longer, rather than expect immediate access to every new drug that is assessed to be cost effective?

A positive aspect of the current debate is that it has resulted in a window, albeit brief and probably inadvertently created, during which we can reconsider the whole function of the PBS – which was created to ensure the public had access to new and expensive drugs to treat life-threatening conditions. The PBS continues to be a pillar of the National Medicines Policy, which states 'cost should not constitute a substantial barrier to people's access to medicines they need'.1

Is it time to return to basics and start with the conditions that need to be treated, rather than the drugs for which the pharmaceutical industry is seeking subsidy? Shouldn't we learn from developing countries where guidelines for therapy drive essential drug lists rather than the other way around? Rigorous cost-effectiveness analysis will always be an essential tool in guiding the allocation of public money to the PBS. However, it makes more sense for those analyses to aid the development of guidelines for treating the conditions affecting Australians rather than using them as the sole determinant for adding a new drug to the PBS, which is in practice Australia's essential drugs list.


Rob Moulds

Medical advisor, Therapeutic Guidelines Ltd, Melbourne