Australians spend $94 million a year at the pharmacist's counter on the cholesterol-lowering drug Lipitor, according to Pharmaceutical Benefits Scheme data.
But more than double that figure is spent on marketing the drug, taking the total cost to the taxpayer — after the PBS subsidy is added — to $581.5 million each year.
According to Choice, the consumer rights watchdog that analysed the PBS data, the price patients pay for common drugs could be slashed by at least a third if drug companies stopped their aggressive marketing campaigns, which are largely aimed at convincing doctors to switch from a similar drug.
Choice's claims are backed by US health economist James Love, who will deliver the annual Ruby Hutchison Memorial Address in Sydney tomorrow .
"The Government might as well just open its wallet to the big drug companies, because they can name their price," he said of the Australian PBS model.
Mr Love, the director of the Washington DC-based Consumer Project on Technology, said not only were drug companies' exorbitant marketing budgets pushing up the cost of medicines, they were also seriously inhibiting medical breakthroughs, with less than 10 per cent of profits going to research and development.
He said most of that research and development money was for developing drugs that were no more effective than existing ones made by competitors.
While in Sydney, Mr Love will outline an alternative model for funding drug development, which would force giant pharmaceutical companies to share formulas with competitors, thereby radically expanding the generic medicines market and pushing down the cost of prescription drugs. The pharmaceutical companies would in turn reap alternative financial benefits by competing for a share of government funding awarded according to the efficacy and innovation of each drug developed.
Mr Love said the alternative model would significantly reduce government spending on health and increase the number of medical breakthroughs.
source - The Age