Generic drug policy in Australia: a community pharmacy perspective

This article provides a commentary, from a community pharmacy perspective, on the policy environment for the pharmacy sector in Australia, with a particular focus on present challenges arising from proposals to achieve substantial PBS cost savings from an anticipated surge of new generic drugs. Some $2 billion of medicines currently on the PBS will come off patent in the next 4 years. This growth comes from a low base where generics currently account for only 15% of the total PBS budget. Remuneration for PBS dispensing is fixed through five year agreements with the government, so trading terms on generics are important for the cross-subsidy of other dispensing activities and professional services. These trading terms (discounts provided by generics suppliers) have become part of the overall cost and revenue structure of pharmacies. Despite these arrangements, generic substitution rates in Australia are lower than in most comparable countries, which the government views as an opportunity to promote generic use. The future of generic drug supply via the PBS is important to allow consumers access to medications at the lowest possible price and to provide space for PBS listing of new and expensive drugs. But considerations of PBS reform need to take account of the role and viability of community pharmacy sector as provider of pharmaceuticals in a timely and efficient manner to Australian residents.