At long last, a good year for Australia’s pharma industry
The last 12 months have seen positive steps towards a sustainable healthcare system for Australia, but there’s still more work to be done. Elly Earls finds out more.
A 2015 PricewaterhouseCoopers (PwC) report slammed the Australian pharmaceutical industry as inefficient and ineffective for stakeholders, taxpayers, government, suppliers and patients, saying that a lack of trust between originators and government was impacting access to new, innovative and specialised treatments.
And while there has been progress on many fronts in the year since the report was published, there is still much work to be done to ensure the current system is not only fit-for-purpose today, but also in the years to come.
The past year has seen Australian pharmaceutical companies make significant breakthroughs across a range of areas. For example, new treatments for melanoma and new generation hepatitis C therapies have been added to the government’s Pharmaceutical Benefits Scheme (PBS), which provides reliable and affordable access to necessary medicines for Australians.
Yet reforms to the PBS, which came into force in mid-2015 in the form of the PBS Access and Sustainability Package (PASP) and were designed to ensure the future sustainability of the scheme, are also putting huge pressure on pharmaceutical companies.
“There’s no doubt that our members are still feeling the effects of recent reforms to the PBS, which have led to new ways of pricing medicines, significant price reductions for on-patent medicines and staffing cuts, and have created a less certain environment for companies as they plan for the future and identify timeframes to bring innovative medicines to the Australian market,” says Elizabeth de Somer, director of policy for Medicines Australia, which represents the country’s discovery-driven pharmaceutical industry.
While Medicines Australia and its members believe the PBS is more sustainable than it’s ever been (indeed, no other sector has done “so much of the heavy lifting in health reform…to identify efficiencies and take pressure off the Federal Budget” than the pharmaceutical industry, according to de Somer), they are also keen to stress that a sophisticated debate between the government, industry and community is now absolutely necessary to determine whether the current system is fit-for-purpose and can continue to best serve the interests of Australians into the future.
“We need a long-term conversation about whether the structure of the PBS and the rules which govern the decision-making around listing new therapies is keeping pace with the incredible advances in treatments and international best practices in determining value,” de Somer stresses.
“Innovative medicines are becoming more unique and personalised, which demands greater investment in clinical trials and creates more commercialisation challenges. This in turn creates unprecedented approval and funding challenges for decision-makers around the globe and Australia needs to prepare for that.”
That said there have been several positive developments over the last 12 months, including the announcement of the Medical Research Future Fund (MRFF) and the Biomedical Translation Fund (BTF) as well as ongoing government commitment to the R&D tax credit initiative.
As Rhenu Bhuller and Sanjeev Kumar, partner and industry manager of the Asia Pacific transformational health team at Frost & Sullivan, summarise: “There have been efforts on both parts to increase communication. Industry has been seeking ways to interact with Government. Government as well wants to continue to promote the industry and wants to encourage innovation.”
But further key partnerships between industry and government will be essential if this momentum is to be sustained. “In an ever increasingly globally competitive environment, Australia’s continued level of access to innovative medicines will hinge on faster and improved regulatory and reimbursement processes, a strong and stable intellectual property framework and government policy that encourages investment,” de Somer is keen to stress.
“These challenges will only be met appropriately by government, the government departments, industry and the broader community working together to find solutions.”
Opportunities in biosimilars
One subsector of the Australian pharmaceutical industry that is entering a particularly exciting phase is biosimilars. From 2016, the next wave of these drugs – monoclonal antibodies – will start to come to market, bringing benefits to patients and government alike.
“With brand-name biological medicines accounting for $2.3 billion, or around 25% of annual PBS expenditure, the increased availability and use of biosimilars will deliver significant savings to the PBS,” explains Belinda Wood, chief executive officer of Australia’s Generic and Biosimilar Medicines Association (GBMA). Biosimilars reduce the cost of medicines to the Australian health system in two ways – firstly, through an instant 16% price reduction upon PBS listing, and then over time as a result of competition and price disclosure.
Again, though, the Australian health system will only see the true benefits of biosimilar medicines if the government works closely with the industry to secure the market’s long-term future. “Regulatory certainty and predictability is needed, while from a reimbursement perspective, GBMA continues to advocate the need for biosimilar uptake drivers as the benefits of biosimilars can only be realised if they are prescribed by doctors, dispensed by pharmacists and accepted by consumers,” Wood emphasises.
“Finally, the conversation in Australia needs to evolve in line with the global conversation. That is, we need to move beyond questions on the concept of biosimilarity and immunogenicity towards a strategic conversation on how policy makers can help create a sustainable and viable biosimilars market over the long term.”
There is certainly cause for optimism in this area. For example, the GBMA negotiated an agreement with the Australian Government in 2015 that includes a biosimilar education and awareness initiative to the value of $20 million over three years, as well as the establishment of a Generic Medicines Working Group, through which different stakeholders are working towards developing policies to support a functioning market. “There are positive signs, but we must act quickly so the biosimilar opportunities for savings and increased patient access are not missed,” Wood says.
Other challenges and opportunities the industry will face in the years to come will centre on integrating technology into the healthcare system, according to Bhuller and Kumar. “If healthcare costs are going to be controlled, there will have to be a shift to healthcare delivery out of the hospital, using technology. Hence the pharma industry will need to evolve to delivery of products and patient centric services outside of hospital as well using a combination of technology platforms,” they predict.
And as medicines become more and more personalised, more opportunities for digital innovation will arise, de Somer believes. “The ability to access and utilise data will open up opportunities such as better analysis of the benefits of medicines for patients, for the economy and the Budget,” she says. “Greater uptake, use and coordination of eHealth platforms will be key to this.”The overwhelming feeling among industry experts is that the sector is taking positive steps, but that more needs to be done by the government to ensure the healthcare system meets the needs of future patients. “It’s time to provide the industry with some policy stability and predictability so they can plan ahead with confidence for what will be a time of significant opportunity to improve health outcomes and the economy, through innovation in medicines for patients,” de Somer emphatically concludes.