The final report of the chemotherapy review has recommended a move away from the controversial practice of reimbursement based on vial sharing and a raft of other changes that would shift costs from the states and territories to the Commonwealth.
The former federal government launched the review in late 2020.
It was led by Professor Sanchia Aranda AM. She will be supported by the Department of Health and the University of Technology Sydney Centre for Health Economics Research and Evaluation.
The review was included in the measure that scrapped the proposed reform of the supply chain payment system for medicines listed on the PBS with special pricing arrangements and the development of a framework for the unique identification of medicine packs.
According to the review's final report, "Stakeholder submissions made clear the complexity of the cancer medicines supply chain, including the specialised nature of cancer medicines supply, the interconnectedness between existing EFC [efficient funding of chemotherapy] reimbursement arrangements and commercial activity, and the impact of funding and supply chain arrangements on prescriber behaviour. Enhancing patient access to cancer medicines was considered an overarching aim of supply chain interactions."
It says, "The Review found that, by and large, the EFC continues to be an appropriate policy response for the specialised nature of cancer care and to ensure access to cancer medicines via the PBS."
"The Review identified that the current approach to the remuneration of medicines based on the most efficient combination of vials is associated with inefficiency with respect to what is claimed via the PBS in terms of the ‘double-payment’ for the amount of drug contained in vials which exceeds what is prescribed on a per-patient basis," says the report.
It says that reimbursing a medicine on a per-mg basis would reduce the extent to which there is ‘double payment’ for drug wastage.
"However, the Review recognizes that adoption of a per mg reimbursement model has broader systemwide implications, particularly for the flow of funds within public hospitals, necessitating that any such change be managed with careful regard to the overall arrangement of public sector hospital funding arrangements.
"The Review also recognizes that existing commercial arrangements between Government and manufacturers of cancer medicines necessitate the periodic reconciliation of drugs sold by manufacturers into the supply chain with what is claimed for Government reimbursement via the PBS. Existing data arrangements do not readily support the conduct of those reconciliations."
It has recommended a "number of amendments...with a focus on reducing administrative burden, improving inefficiency in remuneration, enhancing equity of access and strengthening system accountability."
The proposed changes include a name change for the EFC, stakeholder education on its operation, the removal of the distinction in PBS item codes between public and private hospital providers, the consideration of expanding the scope of activities captured by EFC fees, the adoption of a per-mg reimbursement mode, the introduction of serialised vials, the payment of compounding fees to all compliant providers, and exploring the establishment of a National Stability Testing Centre.
It said the long-term transition to changes such as a per-mg reimbursement mode would require further review.
The monetisation of wastage is a key finding of the review.
It found that the inclusion of ‘wastage’ in reimbursed cancer treatment “increases the overall estimated cost to Government (by increasing the volume dispensed).” It also says it can have implications for company risk share arrangements where caps trigger volume-based rebate payments. This is “distinct from rebates for special pricing arrangements, which are levied irrespective of the number of units sold.”
The report reveals a significant element of the states and territories wanting to shift costs to the Commonwealth.
One of the recommendations is that the Commonwealth should consider the direct purchase of cancer medicines "as a means of increasing system efficiency and reducing pharmacy/hospital exposure to cost pressures associated with purchasing and carrying EFC-listed stock."
However, direct procurement would likely come up against the same constitutional barrier that led to the creation of the PBS as a reimbursement program.
The report has also recommended that the Commonwealth increase the EFC fee level associated with the distribution fee in place of a specific wholesaler payment.
Another recommendation is the serialisation of medicine vials. The report says that while serialisation is possible and potentially beneficial, it would require investment in infrastructure.