On 25 April 2015, the Minister for Health announced a review of the Guidelines (Guidelines) for Preparing Submissions to the Pharmaceutical Benefits Advisory Committee (PBAC), the body that recommends which products should be reimbursed by Government, and for how much.  The Minister said the review sought to ensure that the PBAC Guidelines are “consistent and transparent, while incorporating international best practice and removing any unnecessary regulatory burden on the pharmaceutical industry”.  The review is being carried out by Adelaide Health Technology Assessment (AHTA) in conjunction with PBAC.

An initial public consultation process has been conducted, which resulted in 25 organisations making submissions to the review. Based on this consultation process, draft revised PBAC Guidelines (Version 5.0) were released in February 2016 (Draft Guidelines).  Public submissions were invited in response to the revised guidelines.  On 6 May 2016 the submissions were published, with 43 organisations making submissions.  Most of the submissions were received from industry, with some also being made by patient rights groups and NGOs, as well as from consumers.

Key proposed changes to the PBAC Guidelines

Least expensive alternative comparator

The PBAC is currently required to consider the effectiveness of a drug by comparing it to alternative therapies, including in relation to the cost of the drug. The Draft Guidelines require the PBAC to place a greater emphasis on economic considerations when comparing drugs.  The draft guidelines state that the PBAC “cannot recommend a new medicine at a price that is substantially higher than the least expensive alternative medicine”.  This contrasts with the current guidelines, which require the PBAC to undertake a clinical comparison of the drug in question with the existing therapy that would be most replaced by prescribers, if the new drug was listed.

Numerous submissions by industry have argued strongly against this proposed change. The most pressing reason is the failure to appropriately recognise innovation and development, particularly if the PBAC requires each listing to occur on a cost-minimisation basis.  In particular, many new drugs simply cannot be listed on a cost-minimisation basis if their price is tied to older therapies particularly when the effects are substantively different. Other leading reasons for opposition to a least expensive alternative comparator include that:

  • the PBAC’s supporting legislation does not provide the PBAC with the power to make the comparator process primarily cost-centric;
  • by not placing sufficient weight on broader societal and non-health benefits it fails to recognise the total value of pharmaceutical products; and
  • it creates a discrepancy between PBAC’s approach and equivalent decision makers in other jurisdictions.

Another critical problem with this proposed change is the ability to produce meaningful comparative data on two treatment pathways, if one of them (the cheaper one) is a pathway which is actually not used in practice.

This proposed change has come as a surprise to some given that none of the initial 25 submissions called for the introduction of a least expensive alternative comparator.  Many submissions called for the retention of the comparator specified in the existing Guidelines.

More onerous comparator requirements

The Draft Guidelines call for the use of multiple comparators where there is no clear market share for one particular comparator, when it is likely that different comparators are used in different subpopulations and where there is a substantial difference of treatment between comparators. Should these guidelines be implemented, it is likely many more drugs would require a multi-comparator analysis than under current arrangements.  Several submissions call for this requirement to be relaxed on the basis that it adds unnecessary complexity and increases the need for indirect comparisons.  It will also increase the length of submissions made to the PBAC, which will increase the cost and likely the time for review.

Supplementary analysis of indirect benefits

The proposed guidelines provide that broader economic analysis “should be provided as a supplementary analysis in addition to (not in place of) the base case that uses a societal health care system perspective”. It is unclear the extent to which indirect benefits, such as reduced reliance on welfare and greater economic productivity through reduced absenteeism, will be taken into account by PBAC.  Many of the submissions call for greater weight to be placed on indirect benefits and for there to be greater clarity about how these benefits will be assessed.

Other comments

Many of the submissions highlight other purported shortfalls in the Draft Guidelines. Common submissions include the need to:

  • adopt best practice mechanisms from other jurisdictions;
  • have greater input from stakeholders (including clinicians and patients) through formal advisory panels and stakeholder meetings;
  • address vaccine-specific and rare diseases issues; and
  • provide greater guidance on a variety of other areas, such as indirect comparisons and surrogate-to-final outcomes.

Next steps

The Guidelines Review Steering Committee is currently considering the submissions.  The Review is scheduled to be completed by August 2016, although several submissions have called for a further round of consultation with stakeholders before the new guidelines are released.  Should this suggestion be adopted, it would almost certainly delay completion of the review.  Also likely to delay completion is the calling of Australia’s federal election, due on 2 July.