Australians are paying almost four times more than the best international prices for a range of prescription drugs, as 6 per cent of patients delay or forgo necessary medication due to cost.
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A report recommending changes to drug prices on the taxpayer-funded Pharmaceutical Benefits Scheme says $1.2 billion in potential savings to the health budget have been missed in just the past four years, while recommending changes to restrictions on pharmacy locations and rules to allow pharmacists to administer vaccinations and issue prescription repeats.
The Grattan Institute report calls on the Turnbull government to supplement the PBS price disclosure system, in place since 2007, with a benchmarking against drug prices paid internationally, as exists in Canada, New Zealand and the European Union.
Currently drug companies are required to disclose how much they charge pharmacies for drugs outside patents over 12-month periods. The government calculates the average price after discounts and reduces the amount it pays for each drug accordingly.
The report calls for a new independent drug pricing authority to be established to use international benchmarks to bring down the cost of generic drugs on the PBS.
It says the federal government could save $445 million a year by extending the list of therapeutic drug groups, which groups common drugs achieving similar results, from seven to 18.
The government pays for the lowest cost drug in each group, but the report says there are too few drugs groups, with the system tolerating higher prices for drugs which are largely equivalent to cheaper alternatives.
Increasing to 18 groups could save an extra $205 million.
The cost of 64 drugs are listed to fall in Australia next month, by an average of 25 per cent, but the report says price drops under the current system are too slow. Currently domestic prices are almost twice those paid in Britain and 3.1 times higher than New Zealand.
Breast cancer drug anastrozole, sold under trade name Arimidex, costs $19.20 for a box of 30 1mg tablets in Australia, compared with $2.45 in Britain.
Australia had the lowest price for only three of the 19 drugs considered by the report.
Of the drugs considered, prices of all but one are below $38.80, the maximum price paid by patients outside the safety net threshold and without a healthcare concession card. The international benchmarking proposal would see bigger reductions for 16 of the drugs, saving an average of $5.33 per pack.
The report says rules governing the location and establishment of pharmacies should be relaxed under Australian Competition and Consumer Commission supervision, with an expanded role for pharmacists to offset lower prices achieved for consumers, ensuring pharmacist income is not reduced.
Pharmacists could administer vaccinations, provide drug information to patients, review medication usage, prescribe repeats and adjust doses.
"This should be done in concert with the existing price disclosure policy.
"The pharmaceutical industry is too closely involved in Australia's current therapeutic group premium policy.
"After nearly two decades of operation in Australia, the policy is full of loopholes. It should be strengthened, so it is more like the pharmaceutical pricing policies used in comparable countries such as Germany."
The report, to be released on Monday, said Australia's pharmacist fees and mark-ups are internationally competitive, lower than New Zealand, Britain and Canada and indicating savings to patients through changes to drug costs will come from wholesale prices.
