Australian Broadcasting Corporation
US drug company appeals PBS decision
The World Today - Monday, 8 May 2006
Reporter: Simon Lauder
ELEANOR HALL: It’s just over a year since the Australia US Free Trade Agreement came into force, opening the door for US drug companies to force a review of decisions about which drugs are subsidised by the Australian Government.
Now that power is being used by the US drug company Eli Lilly.
It is appealing an Australian decision not to put an osteoporosis drug on the Pharmaceutical Benefits Scheme, as Simon Lauder reports.
SIMON LAUDER: Forteo is a drug designed to help osteoporosis patients at high risk of fractures.
After having its application for Forteo to be included on the Pharmaceutical Benefits Scheme knocked back four times, American company Eli Lilly is making use of provisions under the US Free Trade Agreement.
It’s the first to apply for an independent review of a decision from the Pharmaceutical Benefits Advisory Committee.
Professor Philip Sambrook is the Medical Director of Osteoporosis Australia, and he’s advised Eli Lilly on the process.
PHILIP SAMBROOK: We’ve gone to the PBAC, telling the PBAC that we think that this is a very useful drug in its elect population. It’s moderately expensive, so it needs to be used appropriately. But for people with very low bone density, it’s probably the only drug that can reverse the process.
SIMON LAUDER: Professor Sambrook says Forteo needs to be subsidised because otherwise it would cost a patient about $8,000 a year.
PHILIP SAMBROOK: We need the drug for certain patients, not for everyone, but so far on various technical and economic reasons it’s been rejected. And I think both the PBAC and Lilly are probably interested in the outcome of the appeal, because this is the first time this new process will have happened, and no one knows how it’s going to work.
SIMON LAUDER: Do you dispute the committee’s claim that Forteo has uncertain clinical benefit?
PHILIP SAMBROOK: Oh yes, I would dispute that. I think there’s no doubt that it has proven clinical benefit.
SIMON LAUDER: How many osteoporosis sufferers are likely to be affected by this decision?
PHILIP SAMBROOK: Oh, I mean, there are two million people with osteoporosis in Australia, but we’re talking only a very tiny percentage of people who would be eligible or appropriate for this drug. You know, probably only a couple of thousand would be the sort of people that we would be wanting to treat.
SIMON LAUDER: The drug was rejected partly because of the committee’s concerns about cost effectiveness.
Lecturer in medical rights and ethics at the Australian National University, Doctor Tom Faunce, says at the moment drugs have to be proven to be innovative in the value they add to patients, compared to other drugs and treatments.
So, cost effectiveness is part of the Australian system’s definition of innovation.
TOM FAUNCE: Manufacturers, such as Lilly would probably have a different definition and so they would think, for example, that because they’ve got a new drug it should be listed on the PBS, and that’s how innovation should be rewarded.
So there’s a difference of opinion, and I guess this creates a situation where a lot of lobbying can go on behind the scenes.
SIMON LAUDER: Two years ago Dr Faunce warned a Senate inquiry that the free trade agreement would have a disastrous effect on the operation of the Pharmaceutical Benefits Scheme.
He says the committee still has no way of knowing the breakdown of a drug company’s pricing system.
(to Tom Faunce) So in other words, the pharmaceutical benefits system has to consider whether or not it will be subsidising the advertising budget of a drugs company?
TOM FAUNCE: Exactly. And I think we need to have, what we need to have in Australia is a debate as to what really is innovation.
There’s a strong argument that generic, so-called generic drugs, are innovative in their own way, in the sense that they manage to create products that have equal safety, equal efficacy of the brand-name drugs, but do so at a substantially reduced price.
Now, from the point of view of the patient, that’s an innovation. I don’t think that’s the definition of innovation that we’re seeing in the sort of companies that are pushing for these reviews.
ELEANOR HALL: The ANU’s Tom Faunce speaking to Simon Lauder.