The Australian Health
System and HTA
Professor Kirsten Howard
Professor of Health Economics
Chair, Economics Sub-Committee PBACThe University of Sydney

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Australia’s Health Care System• Shared Australian Government and state government
responsibility reflecting Australia’s federal system ofgovernment.
• Mixed public and private sector provision of services.
• Universal access for Australian residents (but 20% healthexpenditure from patient contribution).
• Australia spent $180.7 billion on health in 2016–17 - 10.3%
GDP• The Australian Government believes this model of private andpublic health services is integral to the provision of universal
access to high quality and affordable health care services for
all Australian citizens and permanent residents.
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Structure

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Page 3Government and private sector healthexpenditure 2016-17 (AIHW Health Expenditure 2016-17)
Other
6.0%
Indiviudals
16.5%

Private Health
Insurance
8.8%

Australian Government
41.3%State/Territory
governments
27.4%

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Complex funding flows

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Source: https://federation.dpmc.gov.au/funding

Australia’s Health Care System• Medicare is Australia’s universal health system.
• Introduced in 1984 to provide eligible Australian residents withaffordable, accessible and high quality health care.
• Medicare comprises:• The Pharmaceutical Benefits Scheme (PBS),• The Medicare Benefits Schedule (MBS), and• The National Health Care Reform Agreement (NHRA)(Commonwealth & States agreement for public hospitals)

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Page 6HTA in Australia– The Australian Government cannot financially support every new
health technology that comes onto the market– HTA aims to help direct government funding, in the form of subsidies,to health technologies that are both clinically relevant, cost effective
and safe– Main subsidy/ funding schemes require HTA– Pharmaceutical Benefits Scheme (PBS) (pharmaceuticals and vaccines)– Medicare Benefits Schedule (MBS) (diagnostic tests, medical (GP andspecialist) services, medical procedures)– Prostheses List (for private health insurance reimbursement of devices andimplanted prostheses, such as cardiac pacemakers and defibrillators)– Also National Immunisation Program (via PBAC); National Blood Program– Less formalised HTA process at a State/Territory level; eg public
hospital formulary committeesThe University of Sydney

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The University of Sydney

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PBS Overview – one HTA example• Main but not only federal Government subsidy program formedicines• All Australian permanent residents are eligible• In operation for over 60 years• Over 5,300 brands/products• Over 209 million scripts in 2015-16• $13.4B cost to govt in 2015-16 (23% increase before rebates).
• Increasing proportion spent on high cost drugs especially cancer andimmunomodulating drugs• Since 1993 Cost-effectiveness assessment mandatory• Underpinned by strong legislation

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Choosing drugs for subsidy– Prerequisite: registered drug (TGA)– Assesses efficacy, safety, quality– Pharmaceutical Benefits Advisory Committee (PBAC)“recommends”– Assesses comparative effectiveness, comparative safety, comparative
costs– Cost effectiveness– Minister “declares”– Accepts/rejects recommendation– Government provides the funding– Minister cannot list a drug for public subsidy on the PBS without apositive PBAC recommendation
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Legislative context of PBAC decision making– Established under the National Health Act 1953.
– Recommends to the Minister for Health which medicines should
be subsidised under the PBS.
– Required, under the Act, to consider the effectiveness and costof the proposed medicine compared with existing (alternative)
therapies (s101).
– The incremental benefits are set against the incremental costs– It cannot make a positive recommendation for a medicine
that is substantially more costly than an alternative medicine
unless it is satisfied that the proposed medicine also provides asignificant improvement in health for at least some people.

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PBAC Outcomes– Recommend– Cost-minimisation (no price advantage)– Acceptable cost-effectiveness (price advantage)– Target use with restrictions– Reject– Incremental cost-effectiveness ratio unacceptably large– High level of uncertainty – quality of evidence– Concerns about total cost
– Concerns about usage beyond restriction– Deferral– Other information requested by the PBAC
– Not yet registered with the TGA– This information is made publicly available on the PBS website– Public Summary Document
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Page 12PBAC HTA Process: 17-week cycle
Pre submission
Advice(without prejudice)

Submission by Sponsor(usually pharmaceutical company)

Independent Expert Evaluation(Departmental Commentary)
Economics
Sub-Committee(ESC)

ConsumerComments

ClinicalAdvisory Grps

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Sponsor
Pre Sub-Committee
Response

Drug Utilisation
Sub-Committee(DUSC)

Pharmaceutical Benefits
Advisory Committee

SponsorPre PBAC
Response

Sponsorhearing
Patient
hearing

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Process for listing 2: post-PBAC
PBAC RECOMMENDATIONREJECT

Resubmit

IndependentReview

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DEFER•Advice to Minister•Advice to sponsor•Decision & reasons on web•Public Summary Document

RECOMMEND
FOR LISTING

Negotiation on final
price

Minister’s approval(Cabinet if >$20m per annum)
Schedule ofPharmaceutical Benefits
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Factors influencing PBAC decision making
Quantifiable– Comparative health gain
– Comparative cost-effectiveness– Patient affordability in theabsence of PBS subsidy– Predicted use in practice andfinancial implications for the PBS– Financial implications for theAustralian Government healthbudgetThe University of Sydney

Less Quantifiable– Overall confidence in the evidence
and assumptions relied on in thesubmission– Equity– Presence of effective alternatives/ clinical need
– Severity of the medical condition
treated– Ability to target therapy with theproposed medicine precisely andeffectively to patients likely tobenefit most– Other public health considerations– Eg prudent use of antibiotics,
QUM
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PBAC Decision Making is becoming harder– Less certainty about comparative effectiveness and harms– Early data, accelerated pathways, necessitating complex HTA methods– Understanding the value of incremental gains– Community expectations of earlier access– Rare and Rarer diseases– Higher price expectations

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Conclusions– HTA is a tool that assists with decisions about investment inhealth care including pharmaceuticals– The existing PBAC process ensure that the value of public
expenditure on pharmaceuticals is probably the clearest of any
aspect of Australian health care investment.
– Uncertainty in evidence is not going to improve in the short termwith increasing requirement for alternative entry models withevidence development.

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Questions?

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