(Aust Prescr 2000;23:32)
Brand
premiums
A number of
years ago, benchmark pricing was introduced to
the Pharmaceutical Benefits Schedule, whereby a drug company would be
allowed to introduce a brand surcharge for their particular product. My
understanding of the operation
of this scheme was that it would follow the guidelines
of the Australian Competition and Consumer Commission with respect to
collusive pricing and price fixing. This would not appear to be the case,
as many products today are obviously manufactured by the same company,
their logo and name appearing on both the generic and premium-priced product
(despite having a `different' manufacturing code on the Pharmaceutical
Benefits Schedule). An explanation of how brand price premiums are allowed,
and calculated, would be appreciated.
Michael D.
Rumpff
Pharmacist
Sale, Vic.
The Secretary
of the Pharmaceutical Benefits Pricing Authority comments:
The Brand Premium Policy was introduced in December 1990 to reduce price
controls where possible by allowing pharmaceutical suppliers to set their
own price on multi-branded and therapeutically interchangeable brands
listed onhe Pharmaceutical Benefits Scheme, provided one brand was available
at the subsidised price. This also encourages the development of the generic
pharmaceutical industry in Australia.
Under the policy, suppliers of multi-branded items are able to set their own prices at a level they think the market will bear. At the same time, prescribers, pharmacists and patients can decide whether it is necessary to pay more for a particular brand when a cheaper equivalent and therapeutically interchangeable brand is available.
As the brand premium is not a government charge, it does not count towards a patient's safety net. The premium arises from the supplier's price setting and the majority of it goes to the supplier, with wholesalers and pharmacists receiving a percentage.
Under the competitive environment, it is up to the sponsor of the product to set the price at which it sells its brand. The government only sets the subsidised price. The pricing freedom that applies is similar to that of many other commodities such as food, clothing and cosmetics.
As of February 2000 there were 236 benefit items with a brand premium that could be therapeutically interchanged. The average brand premium was $1.45 and premiums ranged from $0.23 to $43.28.
