In Part I of this series we looked at the TGA’s proposed rescheduling OTC codeine containing medicine and learned of the economic analysis by Cadence Economics, commissioned by the Pharmacy Guild. Now we will examine the report.
The independent analysis
The Cadence Economics report was developed for the Pharmacy Guild of Australia to highlight the substantial costs of rescheduling OTC codeine based medicines. Currently OTC medicines are Schedule 2 and Schedule 3, but the proposed changes would make them available by prescription only. The Cadence report states, “The availability of low-does codeine as Schedule 3 or Schedule 2 medicines benefits large numbers of Australians and saves taxpayers in terms of avoided subsidised GP visits.”
The analysis was based on figures from 2014, approximately 16.4 million units/ packets of codeine-containing analgesics were dispensed and 5.2 million units of cold and flu medicine.
The analysis also used data from a survey conducted by the Macquarie Centre for the Health Economy in 2014. In this survey 63 per cent of respondents said that they would see a GP to obtain a prescription for a codeine-containing medicine if they could not get it by simply visiting the pharmacy. Although this percentage is assumed to be on the upper side, these are useful numbers for understanding how consumers might respond to rescheduling OTC codeine and can no longer obtain their low dose cold and flu or analgesic medicines OTC.
Key figures from the report
The Cadence Economics research and forecasting delivered the following figures for the rescheduling OTC codeine containing medicine:
- 53 per cent of patients would visit their GP to get the necessary prescription for a codeine-containing medicine when it is no longer available by just visiting a pharmacy;
- This would mean additional 7 million GP visits a year for patients to obtain their prescription before being able to collect their medicine from the pharmacy;
- Each of these GP visits are weighted at $36.41;
- This would bring additional costs of $316.44 million to the MBS every year. This figure is the base case scenario although the final number could fall between $266 million and $344 million;
- Overall these costs are equivalent to $1.27 billion for the final four years of the 6CPA. These figures do not allow for 1) population growth, or 2) indexation of the MBS subsidy, so could actually be greater.
Other important points to note
While these figures reveal potentially high fiscal costs, there are other wider economic considerations that should be examined.
The report makes the assumption that “the requirement to visit the doctor and then the pharmacist to fill a prescription clearly involves a cost additional to just going to purchase a low-does codeine medicine.” Following this it suggests that patients will “switch to a less-effective (but still convenient) OTC alternative…”. (ref)
This naturally leads to patients’ loss of time and/or productivity as a result of having to visit the GP or being sicker for longer without access to cold & flu/ pain relief. The report expects this to affect full time and/or middle to high-income workers in particular, but does not include a breakdown of these figures.
PBS cost impacts were not included because Cadence considered them to be ‘modest’ compared to the fiscal cost of additional GP visits. However, the report stated that some higher strength, PBS-subsidised alternatives could possibly start to be prescribed more often and there could be a small risk to increase in PBS outlays.
Other non-fiscal considerations
While the report did not include calculations on wider economic costs such as the financial and time costs to patients, it does cite findings produced by the Macquarie Centre for the Health Economy report previously.
This report highlights that pharmacist only analgesics (Schedule 3) currently account for 22 per cent of total analgesics sold in pharmacies in Australia. The paper costs up-scheduling at $675million, which when broken down is:
- $170 million as a direct cost to Medicare for increased GP visits;
- $25 million borne by insurance companies;
- $70 million paid by individual consumers;
- $400 million as indirect costs of lost productivity and delayed treatment.
These figures capture potential impacts on the wider economy as well as direct financial costs to the MBS.
Potential benefits of rescheduling OTC codeine containing medicine that are not discussed in the report
While many of the figures highlight predicted financial and time losses, the report does not take into account any benefits that may result from rescheduling codeine containing medicine. These could include more patients visiting a GP prior to self-medicating with OTC codeine-containing drugs. Such visits may mean that a GP has the chance to identify an underlying case of dependency and can then advise the patient of different, perhaps more effective medicines. (ref) However, the report is designed to highlight the negative impacts of the TGA’s proposed rescheduling codeine containing medicine.
Look out for Part III of this post series where we will look at the new industry responses to proposals for rescheduling OTC codeine containing medicine in the wake of the Cadence Economics report.