Impact of the Minimum Pricing Policy and introduction of brand (generic) substitution into the Pharmaceutical Benefits Scheme in Australia

Purpose To describe the effects of introducing the Minimum Pricing Policy ( MPP) and generic (brand) substitution in 1990 and 1994 respectively on the dispensing of Pharmaceutical Benefits Scheme (PBS) prescriptions both at th e aggregate and individual patient level. Methods The relative proportion of prescriptions with a brand premium and t hose at benchmark was examined 4 years after introduction of the MPP and ag ain 5 years later after generic substitution by pharmacists was permitted. To determine the impact of a price signal at the individual level, case stu dies involving a patient tracking methodology were conducted on two drugs ( fluoxetine and ranitidine) that received a brand premium. Results From a zero base when the MPP was introduced in 1990, there were 5A million prescriptions (17%) dispensed for benchmark products 4 years later in 1994. At this stage generic (brand) substitution by pharmacists was the n permitted and the market share of benchmark brands increased to 45% (25.2 million) by 1999. In the patient tracking studies, a significantly lower p roportion of patients was still taking the premium brand of fluoxetine 3 mo nths after the introduction of a price signal compared with patients taking paroxetine which did not have a generic competitor. This was also the case for the premium brand of ranitidine when compared to famotidine The size o f the price signal also had a marked effect on dispensing behaviour with th e drug with the larger premium (fluoxetine) showing a significantly greater switch away from the premium brand to the benchmark product. Conclusions The introduction in 1990 of the Minimum Pricing Policy without allowing generic substitution had a relatively small impact on the selectio n of medicines within the Pharmaceutical Benefits Scheme. However the effec t of generic substitution at the pharmacist level, which was introduced in December 1994, resulted in a marked increase in the percentage of eligible PBS items dispensed at benchmark. Case studies showed a larger premium resu lted in a greater shift of patients from drugs with a brand premium to the benchmark alternative. Copyright (C) 2001 John Wiley & Sons, Ltd.