The government shouldn’t pay more for a costly drug if a cheaper one is just as good. Instead, the government price should be fixed at the cost of the cheapest option. A new Grattan Institute report shows how the government can save more than $300m a year in the pharmaceutical benefits scheme (PBS).
- Drug companies would have to cut their price to match their cheapest competitor.
- It will take a nibble out of drug company profits, but it might also nudge them towards research into truly innovative, breakthrough drugs.
- The government can save over $300m by expanding the policy to drugs that were previously covered, and by comparing drug prices in a simpler and fairer way.