The doctors’ true colours are coming out over generic substitution of prescription drugs.
The loss of fringe benefits for doctors from the drug companies seem to have aroused more concern than patient welfare.
Under present law, drug companies get a 20-year patent or monopoly on new drugs, after which the patent is public property and any company can manufacture it. That is the trade-off for the government-granted monopoly.
Under present pharmaceutical-benefits rules, patients can ask their doctor to prescribe a cheaper brand or to prescribe by the generic name. Or at the pharmacy patients can ask the pharmacist to ring the doctor to see if the doctor will agree to a cheaper substitution. But otherwise it is illegal for a pharmacist to give the cheaper brand of the same drug if the doctor has prescribed the more expensive one by brand name.
The Government has now sensibly decided that the pharmacist can provide the cheaper brand without telephoning the doctor unless the doctor specifically states “”no substitution” on the prescription.
The 20-year monopoly for the first inventor is not affected. Generic drugs are only those which have been around for more than 20 years.
When the changes were first mooted earlier this year, the doctors couched their concerns in terms of patient care. Old patients would get confused at different colour pills. Doctors could not be precisely sure the generic would have the same taste of effect. There was a placebo effect. And so on.
Now the Government has announced its solid intention, the Australian Medical Association has demonstrated its self-interest. Its president, Brendan Nelson, said doctors depended on big-brand companies sponsoring medical education seminars and would not continue doing so unless doctors prescribed their brands. (No mention of patient care here.)
He threatened that doctors would get “”no substitution” stamps and stamp every prescription form. Well, that’s a very interesting approach to individual patient care. The decision about substitution is to be made before the patient walks in the surgery.
The AMA’s objection to generic substitution is inconsistent, selfish and arrogant.
It is inconsistent because a large number of the patients who doctors say are elderly and might be confused by changes to different generics on different occasions come to the doctor after a hospital visit. Invariably the hospital has given them prescriptions with several repeats. Invariably hospitals prescribe generics. Yet the doctors are quite content to “”muddle” these patients by swapping them to brand-name drugs on post-hospital visits.
It is selfish because doctors get kickbacks from drug companies at least in the form of sponsored medical seminars and because there would be a huge saving to the community if doctors prescribed more generics.
It is arrogant because doctors assume that patients and pharmacists are morons and that doctor knows best. Pharmacists are skilled, too, and are often just as aware of their patients’ financial and intellectual capacity as doctors, and the pharmacist is certainly more knowledgable about the price of drugs. Pharmacists and patients are quite capable of making decisions about generics without telephoning the doctor to get permission.
We are talking large sums of money here.
Every year in Australia more than 140 million doctors’ prescriptions are presented at pharmacies (including hospital pharmacy units). Only 40 million of those are total user-pays by non-pensioners because the drug and dispensing costs less than $16.
The balance of 106 million scripts are subsidised by the Federal Government at a cost of $1.5 billion a year. About 80 per cent of them are for social-security recipients who pay just under $3 a prescription with the government paying the balance. The pharmacist gets about $4.
After testing and approval, drugs go on to the pharmaceutical benefits list and become available to patients subsidised by the Government. Many drugs are heavily subsidised in the interests of public health. For example, Interferon costs about $450 for a course and the patient is charged $16. Insulin costs about $120 and the patient is charged $16.
Until a couple of years ago patients had a ceiling cost, no matter what the price of the drug and no matter what cheaper alternatives were available. People had no idea of the cost of drugs, the nature of the subsidy or any incentive to keep costs down.
Then the Government introduced a minimum-pricing policy for drugs. This means that where cheaper alternatives are available the Government will set its price at the lowest one available and require the patient to pay a premium if the doctor prescribes the more expensive brand. And between 90 and 92 per cent of prescriptions by doctor are by brand name.
The resulting premiums vary from 30 cents to $3 or more per script.
The theory was that the extra fee would make patients seek generics. But patients were not well-informed about choices so did not ask doctors for generics; the cost only became apparent at the pharmacy; and pharmacists found it a hassle to telephone the doctor to get permission for a substitute.
So the Government has now decided on a further step to get greater use of generics.
(Incidentally, by generics it means drugs with exactly the same active chemical as specified in the patent, not drugs that have what is called “”bioequivalence” which is a slightly different chemical with very similar biological effect. There are understandable difficulties with the latter.)
Generic substitution is a big issue for the pharmaceutical companies. It costs about $200 million to get a drug through the US Food and Drug Administration, which is the benchmark entry to the world market.
It can take years of research and part of the 20-year patent time can be consumed by getting health-authority approval.
So drug companies would like to get a longer shelf life for their product. This is somewhat threatened by generic substitution.
Australia may be less than 2 per cent of the world market, but it is recognised as somewhat of a world innovator among world health bureaucrats and a nation whose health policy is respected and worth watching. So there could be a big fall-out.
There industry will argue that there is a lot at stake within Australia. Pharmaceutical manufacture is now one of the fastest growing industries in Australia. In 1987 exports were $165 million and R and D spending $7 million. Exports are now about $600 and R & D about $70 million. Imports are running at $1.1 billion, leaving a $400 million deficit. By 2000, however, Australia should be exporting more than importing, with exports running at $2 billion.
However, changes to the generics rule will not affect most of this. A lot of the effort has not been into new active ingredients, but packaging and producing from imported active ingredients.
Also the pharmaceutical companies get indefinite trade-mark protection on top of their patent protection. Usually a new drug is marketed with a brand name by which it becomes known, for example the drug diazepam is better known as Valium. This helps the creating company get a market edge and reasonable returns after the patent runs out.
In all, patient costs and costs to the health budget must out-weigh the selfish arguments put up by doctors and pharmaceutical companies. Both are getting quite reasonable returns with patent and trade mark protection without extending their profits through cosy, secretive arrangements which consumers know little about.