In the Middle Ages witches used to tell fortunes and prescribe cures for ills demanding only that the patient “”cross my palm with silver”.
All of the fortune-telling and part of the cure prescriptions were nonsense, but some made sense. For example, witches prescribed thyme-leaf tea for colds and flu. Nowadays, pharmacists prescribe various pills which contain the active ingredient thymol, C10H13OH2.
The range, purity and accuracy of prescriptions have grown exponentially since the Middle Ages. And so has the amount of silver crossing palms.
In the Middle Ages, governments persecuted the witches. Now they join in the business of drug prescription, and rightly so. Without intervention, drugs would be denied the poor and research incentives for drug companies would disappear.
In Australia the vehicle for government intervention is the Pharmaceutical Benefits Scheme. It is one the better examples of effective government intervention and regulation in a market place. One of the reasons for that is that it has been intelligently modified from time to time to meet changing circumstances.
It is about to be changed again. Some say for good, other for ill. Some urge caution, others want to embrace the changes with enthusiasm.
The new changes concern “”generic substitution”.
Before we look at the new and what it means for patients, pharmacists, doctors and the pharmaceutical manufacturers, let’s first outline the present scheme.
Every year in Australia more than 140 million doctors’ prescriptions are presented at pharmacies (including hospital pharmacy units). About 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. Patients usually pay $16 a prescription or $2.60 for pensioners and other social-security recipients with an annual maximum of about $2.60. Patient contribution to subsidised scripts is about $300 million a year. About 80 per cent of scripts are at the social-security concessional rate of $2.60.
Pharmacists get $3.83 per script.
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. Interferon costs $457.35 for a course and the patient is charged $16. Insulin costs $121 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.
The premiums vary from 30 cents to $3 or more per script. For chronic users this cost can add up. In the case of pensioners it is added to the $2.60 and can be a significant amount for them.
Patients can ask their doctor to prescribe a cheaper brand or by the generic name. 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.
The Government thought that the minimum price scheme and the premiums charged would result in patients demanding generic drugs and more generic drugs being prescribed. It has not happened. Or at least not as quickly as the Government hoped.
Nearly all doctors, nearly all the time prescribe by brand name. Between 90 and 92 per cent are prescribed by brand. Most patients are unaware that they can get cheaper generic drugs.
Let’s take some examples. Diazepam comes under three brand names: Valium, Ducene and Antenex. If the doctor prescribes Valium, the patient pays a premium of 85 cents. That is $16.85 or $3.45 for a pensioner. If the doctor prescribes Ducene the premium is 30 cents ($16.30 and $2.90) and no premium for Antenex ($16 and $2.60). In theory all the drugs do the same thing. You just pay for the brand.
The Government thought that pensioners especially would be price conscious about drugs, and they are the biggest consumers of them. Pensioners only have to pay the $2.60 plus any premium for the first 52 scripts in a year. After that they are relieved of paying the $2.60, but still have to pay the premium. The aim was clearly to get the pensioners to pressure doctors to prescribe cheaper drugs.
However, what seems to have happened is that pensioners and most other patients have worked on the theory that Doctor Knows Best, and have not asked for cheaper brands or generic substitutes.
So the Minister for Health, Graham Richardson, proposes to speed things up a little. He has got agreement from the advisory body to state health ministers to change the system. Instead of the pharmacist or patient having to ask the doctor if they can substitute a cheaper generic brand, the new rule would be that the pharmacist could substitute unless the doctor indicated on the script that no substitution was permitted.
This is the sticking point. This is where views diverge. Generally the pharmacy businesses, as represented by the Pharmacy Guild of Australia, are in favour; the drug manufacturers, as represented by the Australian Pharmaceutical Manufacturers Association, are against; and the doctors, represented by the Australian Medical Association, and the pharmacy profession, represented by the Pharmaceutical Society of Australia, have reservations.
All agree, however, that more public and professional education is needed. Many terms are used adding to confusion. Senator Richardson is talking only about generic substitutes which means same drug (chemically identical active ingredient), same dose, same form and same strength. The only difference is the colour and size. He is not talking about “”bio-equivalence” or “”therapeutic equivalence”: these might have a slightly different active ingredient, have a different dose or strength and be administered differently but usually have the same physiological and biological effects.
The industry does not want its research and profits put in jeopardy with changes to the benefits scheme.
Australia may be only a tiny part of the world market, but it has a powerful political influence. For example, as Bill and Hill Clinton wrestle with health care (when their attention is not being carried away in the rapids of Whitewater), US health officials are taking an active interest in the Australian scheme.
Drugs in the more de-regulated US market are hugely more expensive (see picture from a pharmacy in Washington). In Australian two Ventolins are about $11, in the US one is $US21.99 on special. Indocin on special at the Washington pharmacy is $US33.99 for 60. Here it is $9 for 100.
So the manufacturers have a lot to lose.
On generic substitution they say: “”No economic or medical justification has been made for generic substitution in the Australian context, and some patient safety risks and negative impact on quality use of medicines could result”.
They and the AMA argue that where people have been used to a medication over a long period, changing the colour and shape of a drug can have a placebo effect. If people are given a different-looking drug (and generics usually come in a different shape or size) it is hard to convince them it is not a different drug. They can get psychosomatic reactions: “”this does not work”, “”it gives me terrible headaches” etc. This cannot be dismissed, the psychological influences cause physiological changes.
Further, people taking two or more medications, can get confused if the shape and colour change. “Two of the white ones at lunch becomes three of the purple ones”. They then do not take their drugs properly.
These factors especially affect the elderly. The Pharmacy Guild and the Pharmaceutical Society acknowledge them.
The guild, however, says that doctors can also write no-substitution on a script where a patient is elderly, on several prescriptions, or is on long-term medication with a pattern.
The question is: how is substitution to take place. Should doctors have to hand-write “”No Substitution”, should there be a box to be ticked and initialled? Should the box be a “”No Substitution” box or a “”Substitution Allowed” box.
Experience is already showing that if the doctor has to actively permit substitution (by ticking a box) it will not happen, at least for the vast bulk of prescriptions.
The AMA says doctors welcome discussion with patients about the financial implications of sickness and they are only too happy to help. If asked. But patients rarely ask. They argue the toss with the pharmacist, in the very commercialised environment of the pharmacy, among the discount soaps and sun-screen specials.
Dr Peter Wilkins, the assistant secretary general of the AMA, says doctors have to control prescription if the health needs of the patient are to be met.
Doctors would prefer an opting in (to substitution) rather than an opting-out system.
Automatically allowing substitution has dangers, he says. Doctors who are comfortable with their prescribing habits, who work by known brand names with effects they know, should not find that without their knowledge the patient gets something else.
Doctors would have to familiarise themselves with an array of other brand names. And there was no guarantee the result would be precisely the same.
As to doctors getting kickbacks from drug companies, Dr Wilkins said doctors were trying to do the best for their patients. Yes, doctors got a lot of biros and some dinners from drug companies, but it did not affect prescribing habits.
The recent computer scandal (where few doctors) got computers from drug companies was frowned upon by the AMA. In every profession, you would always find a few crooks. There was lots of innuendo about doctors getting benefits from drug companies, but no evidence.
The present system provided for generic substitution when patients asked for it and it could be done under the doctor’s control. It was satisfactory and there was danger in changing.
The national president of the Pharmacy Guild, Colin Johns, says the present arrangement is inconvenient and sometimes treats patients like cattle.
“”Our view is that is the patient wants a cheaper brand we see no reason why the pharmacist shouldn’t provide cheaper drugs,” he said. “”At present that is illegal. The pharmacist has to ring the doctor to get permission. That often costs more time and effort than it’s worth.
“”We want to give patients more choice, either to save money with a cheaper drug or pay more for a drug they want and are comfortable. At present patients are in part being treated by cattle. Doctor knows best and that’s it.”
Pharmacists wanted to be able to offer patients cheaper drugs and supply them when they were wanted by the patient without having to go back to the doctor.
The guild’s executive pharmacist, Simon Appel, said pharmacists are aware of possible patient confusion and phantom or psychosomatic effects.
“”Pharmacists are professionally trained and can talk to patients,” he said.
They could assess whether patients were long-term and/or multiple users or one-off one-drug users and suggest generic cheaper alternatives when appropriate.
The question would then be whether the drug companies’ marketing efforts would shift from the doctors to the pharmacists.
Mr Appel says pharmacists could only substitute lower-priced drugs, so there would be no incentive.
The national director of the Pharmaceutical Society, Bruce Jenkin, said the government might not save much with the new scheme anyway. Most of the benefits would go directly to patients who would not have to pay premiums.
His deputy, Peter Crothers, says the Government is hoping that with pharmacists being able to substitute (unless the doctor prohibits its), there will be more competition.
He explained that where there were three or four generics, one might try to under-price the others and lower the whole price threshold for that drug.
Assessments on how much the Government will save vary up to about $60 million a year.
All the players acknowledge that even without the changes, the Australian scheme is one of the best in the world. It provides drugs cheaper and in a more controlled environment than most other countries.
Whether the new system comes in or not, the simple lesson for consumers is: If you are paying more than $16 for a drug (or $2.60 if you are a pensioner), then ask the pharmacist and your doctor if you can have a cheaper brand.
Colin Johns, national director of the Pharmacy Guild of Australia. present system is inconvenient and treats some patients like cattle. Picture CRISPIN HULL.
Dale Jordan dispensing at suburban Lyneham. Mr Jordan says he has a good relationship with local doctors. As a professional pharmacist he says substitution has to be treated carefully. He points out that different brands can have different absorbsion rates. Picture CRISPIN HULL.
A price list displayed in a Washington pharmacy. Picture: Pharmacy Guild.