New report finds codeine decision to cost govt. $316m per year


Date: 11 November 2015

An expert costing has found that the proposed up-scheduling of over-the-counter (OTC) codeine containing analgesics will cost the Federal Government $316 million a year in increased MBS outlays, or over $1.26 billion over the final four years of the Sixth Community Pharmacy Agreement (6CPA).

The costing has been undertaken by Cadence Economics, a firm of senior economists who specialise in applied quantitative economic analysis.

Cadence found that conservatively 53 per cent of patients would visit a GP to obtain codeine-based analgesics. The estimate does not include the MBS cost of any increased GP visits by patients who are no longer able to access codeine containing cough and cold medications without a prescription.

There are 16.4 million purchases of OTC codeine-based analgesics annually and a further 5.2 million purchases of OTC cold and flu medications containing codeine.

Cadence estimates that there will be 8.7 million additional GP visits as a result of the up-scheduling of codeine containing OTC analgesics. At a weighted average cost to the Commonwealth of $36.41 per GP visit, this equates to an annual MBS cost of $316.4 million.

Even at the lower bound of only 45 per cent of patients visiting their GP, the annual cost to the MBS is $266 million while at the higher bound of 55 per cent of patients visiting their GP, the cost to the MBS jumps to $334 million annually.

The Cadence report concludes that:

“The Commonwealth Government should consider the net costs and benefits of any proposal to reclassify Schedule 3 codeine-based medicines, especially when there appears to be (i) significant potential fiscal costs from increased GP consultations, and (ii) obvious lower cost alternatives to addressing the health issue (such as instituting a register of OTC codeine medicines).”

The lower cost alternative referred to by Cadence is the real time monitoring system that the Guild has developed to ensure that pharmacists have visibility of codeine-based OTC medicine purchases and are able to counsel and support patients who are at-risk of addiction.

The costing from Cadence does not include the potential additional PBS costs emanating from the up-scheduling of codeine-based OTC medicines.

Whichever way you look at it, this proposed up-scheduling does not provide value-for-money either for patients or for the Australian taxpayer.

The up-scheduled medicines themselves would not be PBS subsidised. However it is likely that some patients who visit their GP for a prescription to purchase these products will be prescribed higher strength, PBS subsidised alternatives such as Panadeine Forte.

Cadence’s four-year forward estimates cost of $1.26 billion to the Federal Government does not take into account population growth or any indexation of the MBS schedules.

Nor does it take into account the potential flow-on impacts of the proposed up-scheduling, including the direct out-of-pocket costs to patients of their additional GP visits as well as lost productivity from people having to make additional visits to their GPs.  

Finally, it does not take into account the costs of poorer health outcomes as a result of some patients not seeking treatment at all, or the cost to State Governments from patients presenting at emergency departments.

Overall, it is clear that the proposed up-scheduling of OTC codeine medicines will have a very large and unbudgeted fiscal impact on the Federal Government. More tellingly, the up-scheduling that is being proposed will do little or nothing to address any issues of addiction while disadvantaging the overwhelming majority of Australians who use these medicines responsibly.

Whichever way you look at it, this proposed up-scheduling does not provide value-for-money either for patients or for the Australian taxpayer.

Contact: Executive Director, David Quilty

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