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Pharmaceutical Industry

Inquiry report

This report was signed on 3 May 1996 and subsequently released in two volumes.

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Volume 1

Cover, Copyright, Signing Page, Contents, Abbreviations, Glossary of drugs names, Terms of Reference, Key Messages, Recommendations, Overview,

Part A:   Current industry position and policy environment

1   The Inquiry
1.1   The reference
1.2   Key Inquiry issues
1.3   The Commission's approach
1.4   Inquiry process
1.5   Previous inquiries
1.6   Guide to the Report

2   Pharmaceutical industry in Australia
2.1   Introduction
2.2   The industry internationally
2.3   Distinguishing industry features
2.4   The Australian industry
2.5   Overall economic contribution
2.6   Conclusion

3   Regulatory environment
3.1   Rationale for the regulation of the safety, efficacy and quality of pharmaceuticals
3.2   TGA risk management
3.3   Therapeutic goods regulation in Australia
3.4   Other regulation
3.5   Funding of the TGA
3.6   Patents
3.7   Outstanding regulatory issues

4   Pharmaceutical Benefits Scheme
4.1   What is the PBS?
4.2   History of the PBS
4.3   Objectives of the PBS and how they are met
4.4   Institutional framework
4.5   PBS outlays in the context of broader health policy
4.6   Cost control measures
4.7   Policy issues

5   Factor f
5.1   Background to the Factor f scheme
5.2   Pharmaceutical Industry Development Program
5.3   Objective of the Factor f scheme
5.4   Administration of the Factor f scheme
5.5   Phase I
5.6   Evaluation of Phase I
5.7   Phase II
5.8   Factor f costs and achievements in total
5.9   Factor f payments in context
5.10   Major issues

6   Global pressures
6.1   Introduction
6.2   Early development of the industry
6.3   Demand side changes
6.4   Supply side changes
6.5   Improving efficiency
6.6   Conclusion

7   Strengths and weaknesses of the Australian industry
7.1   Introduction
7.2   The Commission's approach
7.3   Underlying strengths and weaknesses-factor conditions
7.4   Underlying strengths and weaknesses-demand conditions
7.5   Summary of strengths and weaknesses
7.6   Emerging opportunities and threats
7.7   Australia as an investment location

Part B   Key influences on the industry and options for reform

8   Pharmaceutical Benefits Scheme-pricing and availability issues
8.1   Introduction
8.2   Subsidy effect
8.3   Price effect
8.4   Market restrictions
8.5   Net effect
8.6   Impact of PBS on the availability of drugs
8.7   Pressures on the PBS

9   Pharmaceutical Benefits Scheme-process issues
9.1   Introduction
9.2   Process issues
9.3   Responding to the process issues

10   Cost effectiveness analysis
10.1   Introduction
10.2   Economic analysis
10.3   Methodology and data requirements
10.4   Delays
10.5   Measurement of costs and benefits
10.6   Prospective versus retrospective analysis
10.7   Reliance on cost effectiveness analysis
10.8   Review of cost effectiveness analysis

11   Factor f-an evaluation
11.1   Assessment of the Factor f scheme
11.2   Effectiveness of Factor f
11.3   Efficiency of Factor f
11.4   General equilibrium modelling results
11.5   Administration of Factor f
11.6   Interim arrangements
11.7   Further analysis

12   Pharmaceutical Benefits Scheme-the case for intervention
12.1   Introduction
12.2   Effects of the PBS on activity-a theoretical perspective
12.3   Effects of the PBS on activity-a practical perspective
12.4   The case for general Government intervention
12.5   The case for financial intervention
12.6   Commission's view

13   Approaches to future intervention
13.1   What should the Government do now?
13.2   Reform of the PBS
13.3   Financial intervention: the continuation of Factor f?
13.4   Conclusions

14   Regulatory issues-drug approval
14.1   Introduction
14.2   Performance of the Therapeutic Goods Administration
14.3   General issues in drug approval
14.4   Conclusion

15   Regulatory issues-scheduling and advertising
15.1   Self-medication
15.2   General issues in scheduling
15.3   Specific scheduling issues
15.4   Labelling and advertising
15.5   Streamlining drug approval and scheduling

16   Intellectual property issues
16.1   Protection of intellectual property
16.2   Appropriate level of intellectual property protection
16.3   Effective patent term and patent term restoration
16.4   Generic springboarding
16.5   Transitional arrangements
16.6   Confidential information

17   Implementing change
17.1   The Commission's approach
17.2   Perceptions of policy coherence and stability
17.3   A vision for the industry
17.4   A whole of Government approach to reform
17.5   The Commission's reform proposals
17.6   Implementing reform
17.7   Impact of reform proposals
17.8   Conclusion

Volume 2

A   Inquiry procedures
A.1   Introduction
A.2   Submissions received
A.3   Visits
A.4   Roundtable participants
A.5   Public hearing participants

B   Pharmaceutical Benefits Scheme-background issues

C   Factor f pricing guidelines

D   International pharmaceutical regulations
D.1   Introduction
D.2   Tariff and non-tariff barriers to trade
D.3   Drug evaluation
D.4   Drug scheduling
D.5   Health insurance
D.6   Pharmaceutical reimbursement
D.7   Price and profit control
D.8   Standards of manufacturing
D.9   Product liability

E   International case studies
E.1   Introduction
E.2   Canada
E.3   Japan
E.4   Sweden
E.5   New Zealand
E.6   Ireland
E.7   Singapore
E.8   United Kingdom
E.9   United States

F   General government industry programs
F.1   Industry development policy
F.2   General assistance to the pharmaceutical industry

G   Taxation issues
G.1   Introduction
G.2   Transfer pricing arrangements
G.3   Wholesale sales tax exemption

H   Drug price comparisons
H.1   Methodological issues
H.2   Previous drug price comparisons
H.3   Participants’ data
H.4   APMA survey
H.5   PBPA data

I   Economic analysis in PBS listing
I.1   Introduction of economic analysis requirements
I.2   The guidelines
I.3   Industry concerns with the guidelines

J   Relative performance of factor f participants and non-participants
J.1   Exports
J.2   Value added
J.3   Manufactured output
J.4   Research and development

K   Recalculation of BIE results under different assumptions
K.1   Changing the assumptions
K.2   Changing the subsidy rates

L   Economy-wide effects of factor f
L.1   Introduction
L.2   The pharmaceutical industry
L.3   Phase II of the Factor f scheme
L.4   Results
L.5   What can we learn from the simulations?

M   Factor f-additional information

N   Revised Factor f scheme
N.1   A revised Factor f scheme
N.2   The Commission’s Draft Report model
N.3   Structural issues
N.4   Likely cost to Government
N.5   Another method - tax concessions


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