- Email: [email protected]
Australia: Pharmaceutical Benefits Scheme
418
would be extracted from these programmes next year to finance the new ventures announced by the Secretary. Dr Sullivan explained that additional funds would be freed by the application of what he referred to as "fairness" in the financing of Medicare, the Government’s evercostlier and skimpier health-insurance programme for the elderly. "Fairness" is a sensitive issue for the Bush administration, which, to widespread political and editorial derision, has doggedly pursued a reduction in the capital gains tax, from the present 28% to 15%. To liberate funds for other purposes, those making over$125 000 a year would be required to pay a larger share of the so-called Part B insurance premiums for physicians’ services under Medicare. At present, the cost is$29.90 a month. For those designated wealthy, the amount would increase to$95 a month. The proposal follows the tradition of patching and adjusting government health-care finances rather than taking on the fearsome task of wholesale reform. Even without the increase, the Government would still be paying about 25% of the cost of Part B insurance for the wealthier Medicare recipients. Meanwhile, cost-sharing requirements for Medicare beneficiaries remain a cruel burden on many
impoverished patients. The political plight of health
care is symbolised by the references in Mr Bush’s most recent State of the Union address, delivered on Jan 30, and the remarks he made in last year’s address. On the earlier occasion, the President briefly announced that he had assigned Dr Sullivan to review previous "recommendations on the quality, accessibility, and cost of our nation’s health-care system", adding, "I am committed to bring the staggering costs of health care under control". At last report, the review was still in progress. This year, war matters took up a major part of the State of the Union message, and health was treated in an even briefer manner: "Good health care is every American’s right and every American’s responsibility", the President said. "So we are proposing an aggressive program of new prevention initiatives-for infants, for children, for adults and for the elderly-to promote a healthier America and to help keep
costs
from
spiralling".
These words are dense with nonsense. Only in a rhetorical sense can it be said that good health care is every American’s right. The preventive measures listed by Dr Sullivan are far from aggressive-they are disappointingly timid, given the problems at which they are directed. And if anything is certain, it’s that the Bush administration’s apathetic approach to health care guarantees that costs will continue to
spiral. Daniel S.
Greenberg
Round the World Australia: Pharmaceutical Benefits Scheme In 1949, the Pharmaceutical Benefits Act created a list of 139 prescription medicines available free of charge to all Australians. By 1960, the list had grown to 964 drugs, and costs had risen to$43-8 million (from$5-45 million in 1950-51). A 50 cent per item charge was introduced (except for pensioners). By 1984-85 the Pharmaceutical Benefits Scheme (PBS) cost$541-9 million, and patient contributions had risen to$5-00.
Pharmaceutical manufacturers complained that the negotiating power of the PBS had resulted in drug prices in Australia that were 50% lower than those in OECD countries, with the consequence of depressed growth (and export potential) of the local industry.1 In 1988-89 the price of originator brands was allowed to rise 20 cents above that of the cheapest generic alternative, drug patent life was extended from 16 to 20 years, and bonuses (worth Aus$43 million in 1990-91) were given to companies that could demonstrate significant local research and development. To offset the cost of these initiatives, non-pensioner patient contributions were raised to Aus$11 (up to a maximum of Aus$275 per year). The Government then placed 53 expensive drugs under a bureaucratic "authority to prescribe" system. This decision produced considerable dissension and was ultimately largely reversed. In 1989-90, 105 million prescriptions were subsidised, at a cost of Aus$1-2 billion. Pensioners averaged 27 prescriptions per year, compared with the national average of 7. In November, 1990, pensioners were charged (Aus $2.50 per item) for the first time in the 40-year history of the scheme. This charge was compensated by an initial$50 lump sum increase in the pension, followed by an additional $2.50 per week from March, 1991. The non-pensioner patient contribution was also increased, from$11to$15, up to maximum of$350. In December, 1990, the PBS removed the 20 cent price differential between originator brands and generic alternatives. Under the new minimum pricing policy, once the price of the cheapest "bench-mark" drug was negotiated, other companies were free to charge what they thought the market would bear. However, regardless of what drug was prescribed, the PBS paid only the difference between the patient contribution and the price of the bench-mark drug. If a consumer complained to a pharmacist about the extra cost, the pharmacist could contact the prescriber, who had to approve substitution of bench-mark drugs. For non-pensioner patients, the Government advised pharmacists to charge consumers a$2 fee for this service. For pensioners, the Government paid this fee. In justifying these changes the Government noted that the previous PBS had provided insufficient competition for manufacturers, no price signals to consumers, and thus no disincentive to wasteful or unnecessary prescribing. Government advisers apparently assumed that market forces would lead manufacturers to reduce prices and that assertive cost-conscious consumers would stimulate doctors to cease inappropriate prescribing and prescribe generic drugs instead of originator brands (which had about 95% of the PBS market). In fact, pharmaceutical manufacturers responded by increasing prices and using their marketing power to persuade doctors and consumers to accept more expensive products. "Don’t accept substitutes", said a Beecham patient leaflet. "They might be cheaper but there’s no substitute for guaranteed well-being." 141 drugs, 472 formulations, and 759 brands were involved in the first round of minumum-pricing negotiations. The prices of 506 originator brands remained unchanged, but the price of 172, including the 65 most heavily prescribed, rose on average by 13 % between August and December, 1990. Thus, unless doctors radically change their prescribing habits, patients pay
(including pensioners) will
more.
The only outcome guaranteed by the latest changes in the PBS seems to be increased profits for the drug companies
419
for the Government (since the PBS now the "minimum covers only price" brands). This has been achieved by transferring costs from the Government to consumers. It is ironic that, at a time of economic recession, such regressive changes were introduced by a Labour Government allegedly committed to social justice and equal access to health care. The long-term impact of this potentially unhealthy experiment must be assessed.2 A more important issue is whether the PBS provides value for money. What Australia needs is a comprehensive national drug policy as part of an overall national health policy. The aim would be to achieve a balance between the potentially conflicting objectives of ensuring a viable research-based
and lower
costs
pharmaceutical industry, providing high-quality products, ensuring equity of access, and assuring quality of drug use. 3,4 Ken Harvey 1. Industries Assistance Commission Report. Pharmaceutical Products, 4 April, 1986, no 382. Canberra: Australian Government Publishing
Service. 2. Anderson costs
of
GM, Opitzer WO, Weinstein MC, et al. Benefits, risks, and prescription drugs: a scientific basis for evaluating policy
options. Clin Pharmacol Ther 1990; 48: 111-19. Drug Policy Task Force. Towards a national medicinal drug policy for Australia. Canberra: Consumers’ Health Forum of Australia,
3. Rational
1989. 4. National
Policy Working Group. Older people and medication: national policy issues. Melbourne: Australian Council on the Ageing, 1990.
there are enough organs available, they should be offered to international agencies for organ distribution such as Eurotransplant or Intertransplant in Prague". The Soviet Union is not a member of either of these agencies, although there are connections. Eurotransplant, for instance, has received 40 organs in the past year. But more important are the doubts surrounding the alleged surplus of organs in and around Moscow. Nothing is known in Germany about the numbers of patients with chronic kidney failure, about the number of dialysis patients, or about the number of organ transplants in the Soviet Union. But there are strong suspicions that the 120 organs are badly needed by Soviet citizens. Dr Klaus Ketzler, head of the German Kuratorium fur Dialyse und Nierentransplantation, said that in the past there have repeatedly been requests from Soviet patients for dialysis or kidney transplants in German hospitals. The cool response to this attempted business deal with kidney transplants is medical, as well as ethical. With 120 transplants available the chance of receiving an immunologically matching kidney is low. Furthermore, no connection exists between the Transplantation Institute in Moscow and German institutions or doctors. So there can be no guarantees of adequate medical care and aftercare. German doctors and patients are now waiting for clarification and guidance from both the Soviet and German health ministries.
Annette Tuffs
Germany: Kidneys from Moscow
USA:
On Jan 22 a letter was mailed by a trading agency in Bremen to German dialysis patients and their doctors, offering a kidney transplantation in Moscow. The letter read: "The research institute for transplantology and artificial organs of the Soviet health ministry and its director, Professor Valery Schumakov, offer up to 120 kidney transplantations per year for patients from Germany as a
Those of us old enough to remember some surprising effects of drinking Merrydown cider will have a feeling of deja vu on reading reports of the ill-effects of a drink sold in the US under the name ’Cisco’, a fortified wine containing 20% alcohol (similar to drinks with more threatening names
contribution to reducing the problem of undercare". This refers to the lack of donor organs in Germany-although 7000 dialysis patients are waiting for a new kidney, there were only about 2300 transplantations last year. But why should there be a surplus of kidneys in Russia? The letter explained that there are more than 25 million inhabitants and about 27 medical institutions in the Moscow region. The Soviet transplantation law allows organs to be explanted from any brain-dead donor, unless relatives withhold permission. According to the letter, this regulation accounts for the surplus. The organs would be sold to German patients, who.would be guaranteed a waiting time of only three months. For the transplantation they would have to pay 120 000 DM, inclusive of travel costs, interpreter, and three months’ stay in a luxury hospital-hotel complex. (The well-known eye surgeon Fjodorov has offered his facilities.) This price seems exceedingly high, since a kidney transplantation plus hospital aftercare in a German hospital usually costs about 40 000 DM. The letter from the trading agency was received with indignation by German dialysis doctors and transplant organisations. The German dialysis society spoke of an "unethical attempt to do a foreign currency deal". The president of the society, Dr Heinrich Kutemeyer, said: "If
Liquor with a false face
such
as ’Thunderbird’ and ’Mad Dog’). But ciscq is packaged in pastel colours like the popular "wine coolers", which contain only 4-5% alcohol, and is apt to be placed on the shelves of supermarkets and liquor stores along with the
coolers or even soda water. It sells for$3 a bottle. It became notorious when some teenage boys, who were arrested for throwing large stones off a bridge onto a busy highway, causing many casualties, were found to be intoxicated after drinking cisco. According to Sarah Kayson of the National Council on Alcoholism and Drug Dependence, Dr Joseph
Wright, a paediatrician in Washington, DC, investigated 15 juveniles who presented to hospital with acute alcoholism and found that 10 had taken only cisco-an average of one and a half bottles each. 3 of them were comatose. The council is concerned about the product for two reasons: that some young people will drink it in large amounts, unaware of the high alcohol content, and that others will use it deliberately to get drunk quickly. Since last summer, the Council has been asking the Canandaigua Wine Company of upstate New York, which manufactures cisco, to change the package. At first the company denied that it was at fault, though it did drop the slogan: "It takes you by surprise". It claimed that the problem was not with its product but with under-age
drinking. On Jan 9 Antonia Novello, the Surgeon General, joined the council in trying to get Canandaigua to change the
would be extracted from these programmes next year to finance the new ventures announced by the Secretary. Dr Sullivan explained that additional funds would be freed by the application of what he referred to as "fairness" in the financing of Medicare, the Government’s evercostlier and skimpier health-insurance programme for the elderly. "Fairness" is a sensitive issue for the Bush administration, which, to widespread political and editorial derision, has doggedly pursued a reduction in the capital gains tax, from the present 28% to 15%. To liberate funds for other purposes, those making over$125 000 a year would be required to pay a larger share of the so-called Part B insurance premiums for physicians’ services under Medicare. At present, the cost is$29.90 a month. For those designated wealthy, the amount would increase to$95 a month. The proposal follows the tradition of patching and adjusting government health-care finances rather than taking on the fearsome task of wholesale reform. Even without the increase, the Government would still be paying about 25% of the cost of Part B insurance for the wealthier Medicare recipients. Meanwhile, cost-sharing requirements for Medicare beneficiaries remain a cruel burden on many
impoverished patients. The political plight of health
care is symbolised by the references in Mr Bush’s most recent State of the Union address, delivered on Jan 30, and the remarks he made in last year’s address. On the earlier occasion, the President briefly announced that he had assigned Dr Sullivan to review previous "recommendations on the quality, accessibility, and cost of our nation’s health-care system", adding, "I am committed to bring the staggering costs of health care under control". At last report, the review was still in progress. This year, war matters took up a major part of the State of the Union message, and health was treated in an even briefer manner: "Good health care is every American’s right and every American’s responsibility", the President said. "So we are proposing an aggressive program of new prevention initiatives-for infants, for children, for adults and for the elderly-to promote a healthier America and to help keep
costs
from
spiralling".
These words are dense with nonsense. Only in a rhetorical sense can it be said that good health care is every American’s right. The preventive measures listed by Dr Sullivan are far from aggressive-they are disappointingly timid, given the problems at which they are directed. And if anything is certain, it’s that the Bush administration’s apathetic approach to health care guarantees that costs will continue to
spiral. Daniel S.
Greenberg
Round the World Australia: Pharmaceutical Benefits Scheme In 1949, the Pharmaceutical Benefits Act created a list of 139 prescription medicines available free of charge to all Australians. By 1960, the list had grown to 964 drugs, and costs had risen to$43-8 million (from$5-45 million in 1950-51). A 50 cent per item charge was introduced (except for pensioners). By 1984-85 the Pharmaceutical Benefits Scheme (PBS) cost$541-9 million, and patient contributions had risen to$5-00.
Pharmaceutical manufacturers complained that the negotiating power of the PBS had resulted in drug prices in Australia that were 50% lower than those in OECD countries, with the consequence of depressed growth (and export potential) of the local industry.1 In 1988-89 the price of originator brands was allowed to rise 20 cents above that of the cheapest generic alternative, drug patent life was extended from 16 to 20 years, and bonuses (worth Aus$43 million in 1990-91) were given to companies that could demonstrate significant local research and development. To offset the cost of these initiatives, non-pensioner patient contributions were raised to Aus$11 (up to a maximum of Aus$275 per year). The Government then placed 53 expensive drugs under a bureaucratic "authority to prescribe" system. This decision produced considerable dissension and was ultimately largely reversed. In 1989-90, 105 million prescriptions were subsidised, at a cost of Aus$1-2 billion. Pensioners averaged 27 prescriptions per year, compared with the national average of 7. In November, 1990, pensioners were charged (Aus $2.50 per item) for the first time in the 40-year history of the scheme. This charge was compensated by an initial$50 lump sum increase in the pension, followed by an additional $2.50 per week from March, 1991. The non-pensioner patient contribution was also increased, from$11to$15, up to maximum of$350. In December, 1990, the PBS removed the 20 cent price differential between originator brands and generic alternatives. Under the new minimum pricing policy, once the price of the cheapest "bench-mark" drug was negotiated, other companies were free to charge what they thought the market would bear. However, regardless of what drug was prescribed, the PBS paid only the difference between the patient contribution and the price of the bench-mark drug. If a consumer complained to a pharmacist about the extra cost, the pharmacist could contact the prescriber, who had to approve substitution of bench-mark drugs. For non-pensioner patients, the Government advised pharmacists to charge consumers a$2 fee for this service. For pensioners, the Government paid this fee. In justifying these changes the Government noted that the previous PBS had provided insufficient competition for manufacturers, no price signals to consumers, and thus no disincentive to wasteful or unnecessary prescribing. Government advisers apparently assumed that market forces would lead manufacturers to reduce prices and that assertive cost-conscious consumers would stimulate doctors to cease inappropriate prescribing and prescribe generic drugs instead of originator brands (which had about 95% of the PBS market). In fact, pharmaceutical manufacturers responded by increasing prices and using their marketing power to persuade doctors and consumers to accept more expensive products. "Don’t accept substitutes", said a Beecham patient leaflet. "They might be cheaper but there’s no substitute for guaranteed well-being." 141 drugs, 472 formulations, and 759 brands were involved in the first round of minumum-pricing negotiations. The prices of 506 originator brands remained unchanged, but the price of 172, including the 65 most heavily prescribed, rose on average by 13 % between August and December, 1990. Thus, unless doctors radically change their prescribing habits, patients pay
(including pensioners) will
more.
The only outcome guaranteed by the latest changes in the PBS seems to be increased profits for the drug companies
419
for the Government (since the PBS now the "minimum covers only price" brands). This has been achieved by transferring costs from the Government to consumers. It is ironic that, at a time of economic recession, such regressive changes were introduced by a Labour Government allegedly committed to social justice and equal access to health care. The long-term impact of this potentially unhealthy experiment must be assessed.2 A more important issue is whether the PBS provides value for money. What Australia needs is a comprehensive national drug policy as part of an overall national health policy. The aim would be to achieve a balance between the potentially conflicting objectives of ensuring a viable research-based
and lower
costs
pharmaceutical industry, providing high-quality products, ensuring equity of access, and assuring quality of drug use. 3,4 Ken Harvey 1. Industries Assistance Commission Report. Pharmaceutical Products, 4 April, 1986, no 382. Canberra: Australian Government Publishing
Service. 2. Anderson costs
of
GM, Opitzer WO, Weinstein MC, et al. Benefits, risks, and prescription drugs: a scientific basis for evaluating policy
options. Clin Pharmacol Ther 1990; 48: 111-19. Drug Policy Task Force. Towards a national medicinal drug policy for Australia. Canberra: Consumers’ Health Forum of Australia,
3. Rational
1989. 4. National
Policy Working Group. Older people and medication: national policy issues. Melbourne: Australian Council on the Ageing, 1990.
there are enough organs available, they should be offered to international agencies for organ distribution such as Eurotransplant or Intertransplant in Prague". The Soviet Union is not a member of either of these agencies, although there are connections. Eurotransplant, for instance, has received 40 organs in the past year. But more important are the doubts surrounding the alleged surplus of organs in and around Moscow. Nothing is known in Germany about the numbers of patients with chronic kidney failure, about the number of dialysis patients, or about the number of organ transplants in the Soviet Union. But there are strong suspicions that the 120 organs are badly needed by Soviet citizens. Dr Klaus Ketzler, head of the German Kuratorium fur Dialyse und Nierentransplantation, said that in the past there have repeatedly been requests from Soviet patients for dialysis or kidney transplants in German hospitals. The cool response to this attempted business deal with kidney transplants is medical, as well as ethical. With 120 transplants available the chance of receiving an immunologically matching kidney is low. Furthermore, no connection exists between the Transplantation Institute in Moscow and German institutions or doctors. So there can be no guarantees of adequate medical care and aftercare. German doctors and patients are now waiting for clarification and guidance from both the Soviet and German health ministries.
Annette Tuffs
Germany: Kidneys from Moscow
USA:
On Jan 22 a letter was mailed by a trading agency in Bremen to German dialysis patients and their doctors, offering a kidney transplantation in Moscow. The letter read: "The research institute for transplantology and artificial organs of the Soviet health ministry and its director, Professor Valery Schumakov, offer up to 120 kidney transplantations per year for patients from Germany as a
Those of us old enough to remember some surprising effects of drinking Merrydown cider will have a feeling of deja vu on reading reports of the ill-effects of a drink sold in the US under the name ’Cisco’, a fortified wine containing 20% alcohol (similar to drinks with more threatening names
contribution to reducing the problem of undercare". This refers to the lack of donor organs in Germany-although 7000 dialysis patients are waiting for a new kidney, there were only about 2300 transplantations last year. But why should there be a surplus of kidneys in Russia? The letter explained that there are more than 25 million inhabitants and about 27 medical institutions in the Moscow region. The Soviet transplantation law allows organs to be explanted from any brain-dead donor, unless relatives withhold permission. According to the letter, this regulation accounts for the surplus. The organs would be sold to German patients, who.would be guaranteed a waiting time of only three months. For the transplantation they would have to pay 120 000 DM, inclusive of travel costs, interpreter, and three months’ stay in a luxury hospital-hotel complex. (The well-known eye surgeon Fjodorov has offered his facilities.) This price seems exceedingly high, since a kidney transplantation plus hospital aftercare in a German hospital usually costs about 40 000 DM. The letter from the trading agency was received with indignation by German dialysis doctors and transplant organisations. The German dialysis society spoke of an "unethical attempt to do a foreign currency deal". The president of the society, Dr Heinrich Kutemeyer, said: "If
Liquor with a false face
such
as ’Thunderbird’ and ’Mad Dog’). But ciscq is packaged in pastel colours like the popular "wine coolers", which contain only 4-5% alcohol, and is apt to be placed on the shelves of supermarkets and liquor stores along with the
coolers or even soda water. It sells for$3 a bottle. It became notorious when some teenage boys, who were arrested for throwing large stones off a bridge onto a busy highway, causing many casualties, were found to be intoxicated after drinking cisco. According to Sarah Kayson of the National Council on Alcoholism and Drug Dependence, Dr Joseph
Wright, a paediatrician in Washington, DC, investigated 15 juveniles who presented to hospital with acute alcoholism and found that 10 had taken only cisco-an average of one and a half bottles each. 3 of them were comatose. The council is concerned about the product for two reasons: that some young people will drink it in large amounts, unaware of the high alcohol content, and that others will use it deliberately to get drunk quickly. Since last summer, the Council has been asking the Canandaigua Wine Company of upstate New York, which manufactures cisco, to change the package. At first the company denied that it was at fault, though it did drop the slogan: "It takes you by surprise". It claimed that the problem was not with its product but with under-age
drinking. On Jan 9 Antonia Novello, the Surgeon General, joined the council in trying to get Canandaigua to change the