Drug charge issue explained

Press, 17 March 1977, Page 6

Drug charge issue explained

Wellington reporter Drug prescription charges have become a political issue in the Mangere by-election, but the confusion over the issue stems mainly from two largely unrelated attempts to increase charges. One attempt is to add to the prescribed drugs on the part-charge list. The other is to introduce a charge for all prescriptions. The first is a machinery matter within the Health Department, although initiated bv the Government. The second is purely a political matter.

The part-charge system has existed since 1960. Before then, all prescriptions were paid for by the State. Since then, the Pharmacology and Therapeutic Advisory Committee (composed of doctors in practice) has met three times a year to distinguish between free and part-charge drugs.

The committee will examine a group of drugs with < similar functions —such as anti-histamine medicines for: treating hay fever and other]

allergies—after the Health Department has drawn them up in a list ranging from the cheapest to the most expensive. The committee draws a line through the list. The State will then pay all the prescription costs which fall below the line but for products priced above the line, it will pay only up to the line.

It has been the committee’s policy to leave enough drugs below the line to treat most cases. Also, if a doctor thinks that a drug above the line is essential for his patient’s cure, he may write to the Health Department to get it free if he thinks that the cost may embarrass the patient. Although the part-charge system means that not all drugs are free, it also has some advantages. It enables the Health Department to control drug prices to some extent through being able to put pressure on manufacturers to keep down the prices of the more expensive medicines.

There are 140 drugs on the ■ part-charge list at present. I As there are more than 2000

different products on the drug register, only a small proportion is part-charged. Only groups of drugs which cover a broad price range are suitable for the part-charge list. Where all the important drugs in a particular group are priced about the same, it is considered impractical to add them to the list. However, three extra groups will be added to the part-charge list on April 1. They are antacids (mainly for indigestion), diuretics (to remove excess fluid from the body), and anti-cholinergics (to prevent-gastric spasms). All three groups have had blanket cover in the past although they cover a broad range of prices. Only a few in each group will go above the committee’s line and the State will continue to pay the full charge for the rest. The Health Department and the committee are adding to the part-charge list in response to the Government’s wish to restrain spending. Other drugs will be looked at with a view to adding them to the list if appropriate. Almost all drugs are imported. Their cost increases are due mainly to imported

inflation, devalued currency in New Zealand and international freight costs. The increased numbers of doctors in New Zealand, increasing patient demands and the increasing complexity of the ingredients of drugs have also contributed.

In 1960, total spending on pharmaceutical benefits was $11.9M. It was $69.9M in 1976. In the period, New Zealand’s mean population rose from 2,345,600 to 3,090,000.

The number of chemists’ prescriptions in 1960 was 14.4 M. This rose to 26.9 M in 1976. The average cost of a single prescription in 1960 was 83c. It was $2.67 in 1976. The number of prescriptions per head per annum rose from 6.2 in 1960 to 8.7 in 1976 and the cost per head per annum rose from $5.07 in 1960 to $22.58 in 1976. It is figures like these which have led the Government to scrutinise what the Minister of Health (Mr Gill) calls “prescription charges” and to suggest that a charge of 35c for each prescription might be in order. In fact, there is no such thing as a “prescription charge” but there are

several charges made with each prescription. As well as the cost of the drug, the chemist gets a 20 per cent mark-up, a 12c container fee (for the bottle or packet the drug is sold in) and a dispensing fee which averages about 62c per prescription. The Government is believed to have already had one look at these charges since taking office. Last year, a caucus committee was asked by the Minister to support a “prescription charge” but declined to do so. It is understood that the Minister is now again approaching the caucus committee for approval for a charge, in line with over-all Government policy to reduce spending.

Mr Gill has said that he hopes to put a proposal before today’s meeting of the caucus and, if he gets approval, to hold meetings with the Hospital Boards’ Association, the medical profession, and pharmacists. He has proposed that people should pay the container fee (12c) and part of the dispensing fee. Those who cannot afford to pay would be exempted.