But the Budget contained few surprises. The Government sought to share the wealth created by the mining boom, and the main winners were low-income earners, families and the elderly.

The PBS was left largely untouched. No new reforms were announced, neither were any major pricing cuts or new therapeutic groups. No barriers to the listing of new medicines were announced or increases to the patient co-payment. Even changes to the R&D tax credit system that the Government was still considering in the weeks leading up to the budget were absent. This was the third consecutive Federal Budget containing no surprises for industry.

Take a moment …

It’s worth reflecting on these outcomes. Individual companies, the GMiA and Medicines Australia have worked tirelessly to inform politicians and policy makers that the PBS had already undergone significant reforms, and that those reforms should be given a chance to play out.

Savings delivered through the MOU have clearly played a role in preventing further PBS cuts in this Budget. The Australian medicines industry has achieved something in this ‘nothing’ budget simply by maintaining the status quo.

What’s next?

The industry can’t rest on its laurels. The Budget has yet to be voted through Parliament, so current proposals may not be delivered. Government revenue from the mining resources rent tax and the GST has decreased, and the Treasurer has said he will make any extra cuts needed to deliver a surplus.

To avoid future reforms, it’s time for clear and consistent messages to Government about the Australian medicines industry’s importance. We need to look beyond the current MOU, ask ourselves if the industry would benefit from a ‘MOU2’ and, if so, what might that look like? What are our ‘asks’ and what are we willing to give up in exchange?

In the meantime, this Budget supports a predictable business environment for industry and enables business as usual: researching, manufacturing, exporting and bringing new products to Australian patients.

While individual companies will be affected by some price cuts – in particular those with angiotensin II receptor antagonists – industry peak bodies GMiA and Medicines Australia applauded the Government’s decision not to impose any further cuts or reforms.

In the tradition of ‘no news is good news’, the above may well be good news. It would be remiss, however, to assume that PBS reform was completely off the radar, even taking into account that the Government’s MOU with Medicines Australia remains in effect for another two years.

Questions for Crestor and Lipitor

Significantly, the Budget did not announce cost cutting for lipid-lowering medicines Crestor and Lipitor. This is despite them comprising the PBS’s greatest outlay and costing the Government $1b annually.

While manufacturers Astra and Pfizer can breathe a sigh of relief for now, the Health Minister is due to review these medicines in July, which could herald significant change for this therapeutic group. July is only six weeks away.

MOU and the surplus

Medicines Australia says the MOU is continuing to deliver the promised savings of $1.9 billion to the PBS, and that the PBS is experiencing historically low levels of spending growth, which are in turn helping ensure its sustainability.

Treasurer Wayne Swan has, however, stated his determination to deliver a Budget surplus. This alone should be keeping industry associations, individual companies and lobbyists busy.

The industry must remain vigilant. It will be important in the coming months to be prepared for unexpected impositions such as price cuts to lipid– lowering medications, possible deferrals of new PBS listings, and potential changes to the patient co-payment.

Industry has shown a growing preference to partner with established and reliable professional service companies that provide comprehensive and integrated service offerings. Commercial Eyes’ Managing Director Andrew Carter said the new appointments represented “an important step in building Commercial Eyes’ comprehensive service offering to the life sciences industry in Australia and the broader Asia-Pacific region.”

Mark Glover – Manager, Commercial Optimisation

Based in Sydney, Mark is responsible for our new Commercial Optimisation group. As the name suggests, the Commercial Optimisation group focuses on optimising our clients’ businesses and products post-launch. The group emphasises the importance of business planning and portfolio expansion; optimising marketing and sales strategies; dealing with competition; commercial effectiveness and change management.

In addition to managing the Commercial Optimisation group, Mark is responsible for leading the expansion of the full Commercial Eyes service offering throughout the Asia-Pacific. Commercial Eyes already assists clients in a number of Asian jurisdictions and the time is right to extend our capabilities throughout the region. Clients will benefit from being able to brief once, thus reducing duplication and time to market, and enabling maximum revenue post market authorisation.

Mark brings a wealth of business and general management experience to Commercial Eyes. He worked for 20 years in the pharmaceutical, biotech and medical device industries, and was most recently Managing Director of Allergan Australia. Mark was also formerly General Manager — ANZ at Merck Serono, and has held senior sales and marketing roles at Schering Plough Pharmaceuticals, AMGEN and Pharmacia.

Contact Mark

Sean Kelly – Manager, Quality Services

Sean, from our Melbourne office, is responsible for our Quality Services team. The Quality Services group is a valuable adjunct to Regulatory Services, and offers the following expert advice and services:

• quality system review and design
• controlled document preparation
• gap analyses
• facilities inspections and audits
• vendor assurance programs
• process mapping and optimisation
• logistics and lean manufacture
• GMP and technical agreement reviews
• annual quality product reviews

Clients will benefit from Sean’s considerable technical expertise and extensive consulting experience. Prior to joining Commercial Eyes, Sean was a senior consultant at SMS Management & Technology, Australia’s leading publicly listed (ASX) Management Services company. Before that, he was a project manager and consultant with Kendle (now INC Research) where he consulted in regulatory compliance, quality, manufacturing, medical device registrations and technical transfer. Prior to consulting, Sean developed his technical expertise at Hospira where he held various positions, in production, regulatory affairs and quality.

Contact Sean

Funding for the Department of Health and Ageing to seek to recover compensation from pharmaceutical companies is potentially of most interest to those who work in ‘originator’ pharmaceutical companies. This relates to losses the Government incurs due to delays in listing generic forms of medicines on the PBS, the most obvious example being the delay to market of generic clopridogrel. The first entry of a new brand results in the application of a statutory price reduction to the medicine’s original and generic PBS-listed brands. In some cases it appears statutory price reductions and the introduction of generic forms may have been delayed, resulting in possible additional Government costs. It is unclear if the additional funding announced last week is allocated specifically for clopridogrel, or if the Government is expecting further cases.

2. Codes of Conduct

The Budget announced $1.4m over four years to strengthen the therapeutic industry’s codes of conduct for the promotion of therapeutic goods. This positive measure encourages transparency and follows the Working Group on Promotion of Therapeutic Products’ recommendations released in March last year. It is expected this funding will increase the effectiveness of self regulated codes of conduct by developing a standardised framework of high-level principles, improving access to information, education and training, and enhancing complaints reporting and handling processes.

3. E-health

By providing almost $234m over three years, the Government has reinforced its commitment to the National e Health Program. From 1 July 2012, Australians will be able to register for a Personally Controlled Electronic Health Record (PCEHR). This will support more informed clinical assessments and decision making, improve continuity of care, and introduce efficiencies in health care service delivery. Patients who choose to participate can securely access – and permit their health care providers to access – their health information. It is unclear how this will impact the pharmaceutical industry. The PCEHR will, however, require us to consider how to maximise the potential of our products and improve quality use of medicines.

4. Change to Prostheses List

‘High revision rate’ joint replacements were removed from the Prostheses List and Government expects this to save $5.8m. Currently, private health insurers must pay a mandatory benefit for each item on the Prostheses List where a Medicare benefit is payable for the associated surgery in a hospital or hospital substitute. Joint replacement prostheses with high revision rates must be replaced more frequently than comparable products, resulting in poor outcomes for patients and higher costs to insurers and the health system. This announcement is good news for private health insurers who will no longer have to pay benefits for these items.

5. No Change to Patient Co-payment

The day before the Budget was announced, Medicines Australia CEO Brendan Shaw said ‘sharp increases in the co-payment can lead to a reduction in script numbers’. But his and industry’s concerns about PBS reform were allayed when it was revealed patient co-payment for prescription medicines would remain unchanged. General consumers will still pay a $35.40 co payment per prescription, while concession cardholders will pay a $5.80 co payment per prescription.