Australian Pharmaceutical Policy: Price Control, Equity, and Drug Innovation in Australia

This paper outlines the increasing salience of drug “innovation” in the debate for reform of Australia's pharmaceutical policy, particularly change to Australia's price control mechanisms. The pharmaceutical industry has consistently criticised the central role of price control in Australia's pharmaceutical regulatory regime as an impediment to drug innovation and industry growth. Despite ambivalent or contrary evidence on the impact of price control on drug innovation, this criticism, and the appeals for reform it supports, appear to be increasingly influential in directing pharmaceutical policy. This is particularly evident in the implementation of the Australia/United States Free Trade Agreement, which has led to a weakening of the historical process of evidence-based reference pricing in Australia. Should drug innovation come to dominate Australian pharmaceutical policy, there is the potential to precipitate a devaluing of the current public orientation of regulation and diminish equitable access to affordable pharmaceuticals. The manner in which trade policy has effectively undermined a publicly funded pharmaceutical benefits scheme has clear implications for many countries that maintain such programmes.