Study: Australian gov't wasting $320 million per year on drug subsidies
- The therapeutic group premium is a policy in Australia in which drugs used to treat the same conditions are clustered together, allowing the government to choose the cheapest drug to subsidize.
- A study conducted by the Grattan Institute has found that the program is used ineffectively, because it is only applied to four groups of drugs.
- The therapeutic group premium is supposed to keep prices competitive, but because of underutilization, annual waste is roughly $320 million.
The Australian government is currently applying the therapeutic group premium policy to four groups: angiotensin antagonists for treatment of hypertension; H2-receptor antagonists for treatment of excess gastric acid; proton pump inhibitors also for treatment of excess gastric acid and venlafaxine and its derivatives, a commonly used antidepressant.
When Australia's track record is compared with other countries with similar policies, other countries seem to be applying the policy more effectively. For example the Netherlands applies the policy to every type of drug, and Germany applies it to 30 types of drugs.
One example of misapplying the policy in Australia is in the category of drugs used to treat hypercholesterolemia. In this category, the most commonly used drugs in 2013-14 were atorvastatin and rosuvastatin, both which are the most costly in this therapeutic category.