The authors of the editorial on ‘The challenge of costly drugs’ provided a comprehensive summary of the issues surrounding the funding of high-cost medicines entering the Australian market.1 The proposed idea of an electronic national formulary for all Australian hospitals has merit. However, such a proposal must first address the issues of cost shifting between the federal and state governments and the delivery of health care.
As the authors mentioned, many high-cost medicines only have a role in the hospital setting, and medicines for public hospital patients are funded by state governments. In contrast, medicines listed on the Pharmaceutical Benefits Scheme (PBS) are federally funded. With different funding sources for medicines in different settings, formulary decisions can be influenced by cost‑shifting.2
Pharmacoeconomic evaluation of a new medicine is directly impacted by the funding source.3 If the cost-effectiveness of a new medicine is assessed from the perspective of the state government (for consideration of inclusion on a hospital or state-wide formulary), and the comparator is a PBS-funded medicine, there is bias towards the medicine that is federally funded. If both medicines have comparable efficacy and safety and a comparable price, from the perspective of the state government the PBS-funded medicine will be more cost‑effective.
The authors mentioned that ‘state governments do not fund comprehensive pharmacoeconomic assessment’. Even if funding was available to conduct economic analyses, the high prices and the paucity of evidence for many high-cost medicines in the hospital setting would mean their cost-effectiveness is likely to be high and uncertain. Funding resources to investigate clinical outcomes of high-cost medicines used in public hospitals would be the first step towards clarifying some of the uncertainty with regards to efficacy, and consequently cost-effectiveness.
Public health pharmacist