Australian prices 30% lower than American, Canadian rates

By Phil Kabler
Staff writer

DANIELS — West Virginia could be looking down under for a discount drug pricing schedule for the state.

Under a draft proposal by the state Pharmaceutical Cost Management Council, West Virginia would adopt the Australian pricing schedule as the state’s reference price schedule, which would be used to attempt to negotiate similar discounts from drug manufacturers.

The council did not act on the draft proposal at its meeting Wednesday at Glade Springs Resort, but is scheduled to vote on the recommendation when it meets again in Charleston on Sept. 9.

A subcommittee that reviewed a variety of discount price schedules, including the Canadian Patented Medicine Prices Review Board and the Federal Supply Schedule available to federal government agencies, is recommending the Australian schedule for several reasons:

• Australian drug prices are generally 30 percent below the FSS and are generally lower than Canadian rates.
• Australia is the only country that makes its prescription drug price schedules available to the public.
• Instead of mandating across-the-board discount prices, Australia’s drug agency evaluates each prescription drug for its medical effectiveness, as well as for its economy.

Australia allows higher prices for innovative, cutting-edge drugs that are highly effective, to encourage manufacturers to continue to invest in research and development of new drugs.

“This approach balances the needs of access and innovation, responding to the drug industry’s fears about R&D spending,” the draft recommendation states.

Once the state adopts discount referencing pricing, the challenge will be in getting the drug manufacturers to honor those prices.

Strategies outlined in the draft recommendations include creating purchasing consortia that merge the buying power of the various state-run health insurance systems, including the Public Employees’ Insurance Agency and Medicaid.

It also recommends entering into multi-state purchasing consortia, and working with other states to develop plans for importation of drugs from other countries — an option intended to give the states more bargaining leverage with the drug manufacturers.

To contact staff writer Phil Kabler, use e-mail or call 348-1220.