Federal Budget 2015: $5 billion bitter pill coming for pharma sector

Australia’s major pharmaceutical companies will be handed a bitter pill in next week’s federal budget with Treasurer Joe Hockey reportedly planning $5 billion in savings from the sector.

According to reports in the Australian Financial Review, the pharmacy sector is furious over the proposed move and has warned the Abbott government of “a new war over co-payment changes”.

The AFR report claims that a package of changes to the pharmaceutical benefits scheme (PBS) has been signed off by the expenditures committee and will be presented to the full cabinet for consideration this week.

The total savings are likely in tune of $5 billion, with a net saving is around $3 billion and the rest reinvested in the health portfolio, a source tells AFR.

Budget move will be painful, literally

Late last month, Health Minister Sussan Ley also confirmed the government will tackle "perverse incentives" in the health system by removing over-the-counter medications - such as Panadol, aspirin and antacids - from PBS in the budget.

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Ley said consumers and the seriously sick will be the winners by banning over-the-counter drugs from the list of subsidised medicines.

The minister confirmed she is in talks with medical and consumer groups to end medicines like paracetamol, aspirin and antacids being on scripts.

We want to hear how the recent proposed changes to the Pharmaceutical Benefits Scheme might impact you http://t.co/z9XzvBTRrL #Arthritis

— Arthritis NSW (@ArthritisNSW) April 28, 2015

"I don't want to see over-the-counter medications on script at excessive cost to the government budget when it is not necessary," she told reporters in Albury on Sunday.

She said the government is getting more and more requests for expensive, new generation cancer drugs and other medications it wants to be able to list on the Pharmaceutical Benefits Scheme.

The minister declined to put a figure on the savings, but reportedly this and other measures could be worth anywhere between $1 billion and $3 billion.

Labor is supportive of the move.

"It is very sensible to constantly review the Pharmaceutical Benefits Scheme," Opposition health spokeswoman Catherine King told ABC.

Ms King also expressed some sympathy for her counterpart, who she said is having clean up the mess left behind by her predecessor Peter Dutton.

"Let's hope it is not a horror budget for health and we get on track with improving primary care and the health system in this country," she said.