Budget to target drugs to fund health spending

2 minute read

Phasing out the rebate freeze may be funded by cutting prices paid to pharmaceutical companies

The government plans to pay for a stepped phase-out of the Medicare rebate freeze by seeking major savings on drugs in the coming federal budget.

The rebate freeze for GP item numbers will be phased out first for concessional patients in July, for general patients in 2018-17, and for specialist procedures in 2019-20, according to pre-budget reports.

 Dr Stephen Duckett, health program director at the Grattan Institute, said the government could safely make up shortfalls in health spending by trimming the premiums it paid to “Big Pharma”.

 “All of the money they are looking for can be found in therapeutic premiums,” he told The Medical Republic.  “There is half a billion dollars a year to be saved in that area.” 

The re-indexing of GP items alone will cost several hundred million dollars per year.

 Health Minister Greg Hunt has been in intensive talks with doctors groups for weeks to work out a compromise on ending the freeze, a step he hopes will restore political peace with the sector.  

Concurrently, he has been negotiating with Medicines Australia to cut the prices the government pays for drugs, in exchange for price stability over a five-year period. 

According to a budget leak to News Corp Australia, the government is counting on saving $1.8 billion over four years on what it pays pharmaceutical companies. 

Under a new five-year stability pact, it plans to cut the price of a medicine by 25% when it comes off patent, an increase from the current 16% price drop.  

Separately, the pharmacy sector is set to receive $600 million in the budget for in-store diabetes checks, and the 2014 measure, which was never implemented, to raise prescription drug prices by $5 will be dumped. 

The loser is expected be diagnostic imaging, with the government “poised to abandon” its 2016 election promise to lift the patient rebate freeze on X-rays and scans, the News report said.

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