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Effect on PBS expenditure of generic products entering the market Several factors can affect PBS expenditure by the Government for pharmaceuticals.

These include (among other factors) the subsidy paid for a pharmaceutical, volume of scripts and the proportion of scripts that are concessional. A review of government reimbursement prices for over 50 drugs suggests there is no single narrative that reflects how the government subsidy per script changes over time. Drugs vary in their numbers of dosages and deliveries offered over time, and dosages enter and exit the market throughout time while each dosage may have a different price. Supply and demand side factors can also be expected to play a role. What can be said generally jir 2 order tramadol from this sample is that, as might be expected, the average subsidy paid by the Government per script is lower after the extension of term expires and a generic medicine enters the market compared to the date it is first listed on the PBS. There are a number of factors that contribute to this reduction. Figures 5.4, 5.5 and 5.6 show the total PBS expenditure for three illustrative patented pharmaceuticals, from the first listing of the pharmaceuticals on the jir 2 order tramadol PBS (or the earliest date from which data are available) to after the extended patents expire. They also show the number of manufacturers, relative volume and the subsidy paid by the Government per script over the period. The figures are provided to demonstrate some of the key factors in the jir 2 order tramadol change in government subsidy per script; the actual expenditure and volume figures have been removed. Figures 5.4 and 5.5 indicate that after the patents expire, PBS expenditure decreases due to reduced subsidies paid by the Government. A key factor affecting the average government subsidy per script in these cases is the regulated price reductions, jir 2 order tramadol namely dog hcl tramadol the mandated 16 per cent price reduction that occurs once a second brand of a drug is listed on the PBS and the further price reductions that can occur with price disclosure. The number of manufacturers also has an effect on the Government subsidy per script. Since their introduction as part of the PBS pricing policy, the regulated price reductions referred to above ensures the Government benefits decline as competition increases through reduced subsidies. Figures 5.4 and 5.5 also indicate that volume can be an important factor in the Government subsidy paid, regardless of patent status. Figure jir 2 order tramadol 5.4: PBS Expenditure for Example Drug #1 Drug #1 Year Note: Bars indicate PBS expenditure (excluding the actual values in order to maintain drug anonymity). The numbers above the bars indicate actual number of suppliers in each year. The value for 1995 is a small traction of the 1996 value and therefore does not appear on the PBS expenditures graph. 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 For the drug described in Figure 5.4, the Government subsidy dropped sharply in 2001 when volume increased substantially. The next visible price decline occurred in 2006 (during the beginning of the patent extension) as the number of suppliers increased and volume continued to increase. A major price decline then occurred in 2012, a few years after the extended patent expired and many additional manufacturers were listed on the PBS. Volume 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Figure 5.5: PBS Expenditure for Example Drug #2 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year Note: Bars indicate PBS expenditure (excluding the actual values in order to maintain drug anonymity).



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