Fitch weighs in on impact of cost-pressured medicine funding to pharmacies in Australia

The government subsidises select medicines through Pharmaceutical Benefits Scheme

Australia’s inclusion of a new form of insulin to its subsidy program has been lauded for supporting affordable medicine although the pharmaceutical industry continues to face increasing cost pressures, according to a recent commentary by Fitch Solutions.

The government added a new form of fast-acting insulin aspart, Fiasp Penfill, to its medicine subsidy program Pharmaceutical Benefits Scheme starting 1 October, expanding access to affordable medicines for people living with diabetes. 

While the inclusion of innovative medicines in the subsidy scheme opens opportunities for drugmakers, Fitch cautioned of the cost pressures companies are facing as authorities continue to rely on the lowest cost comparator in assessing the drugs that will be included in the list. 

“In many cases, comparators are medicines that are subject to generic or biosimilar competition and have undergone several rounds of price reductions,” it said. “This practice undermines the attractiveness of Australia's pharmaceutical market.”

Subsidising Fiasp Penfill is estimated to benefit about 15,000 Aussies living with diabetes.

Fitch said a reform in the methods of assessing new medicines for listing under the Pharmaceutical Benefits Scheme bode well for the industry. 

Overall, it said Australia retains its appeal to innovative drugmakers as the country continues to be burdened with non-communicable diseases.

“The arrival of high-value pharmaceuticals to the treatment landscape will further incentivise authorities to focus on cost saving measures,” it added.