Health Minister Sussan Ley has asked the ACCC to investigate a 50% increase in Panadol Osteo, effective from the 1st of January.
“There are no obvious market changes that justify such a substantial increase,” Ley said in a post on her website.
The price of Panadol Osteo is set to rise to $7.50 a box, if pharmacies pass on the full price increase. The medication is used to provide relief for those suffering persistent pain, such as those with osteoarthritis.
GlaxoSmithKline, the maker of Panadol, has said the price rise is due to changes to the Pharmaceutical Benefits Scheme.
The government had changed the PBS to stop subsidising medicines that can be purchased over the counter. 17 over-the-counter medications have been removed from the PBS, with the government expecting to save almost $100 million a year.
“In moving to an over-the-counter business model, GlaxoSmithKline is no longer able to sustain its current pricing of Panadol Osteo,” reads an earlier letter from GSK to its wholesalers.
But Ley disputes this reasoning, saying the changes to the PBS does not impose any new regulative or administrative costs.
“These changes aim to address inconsistencies in the PBS that see consumers without a prescription purchasing a common over-the-counter medicine such as Panadol Osteo or an equivalent brand for under $5 off-the-shelf or online from many pharmacies, while a concessional patient buying it through a prescription pays $7.52.”
In a statement to Business Insider, GSK has further explained the reasoning behind price increase, claiming PBS pricing policies had halted “necessary adjustments” to the pricing of Panadol Osteo — rules which no longer apply.
“It is well documented that price increases for Pharmaceuticals are very restricted, when listed on the PBS, including normal Consumer Price Index (CPI) annual changes,” reads the statement.
“Due to PBS pricing policies, we have been limited to two pricing changes over the past 10 years, despite increasing costs. As we move to an OTC model for Panadol Osteo we are making necessary adjustments to pricing to ensure we can continue to offer this product long term for the benefits of patients.”
But with the price rise set to take effect on the 1st of January, Ley is encouraging consumers to shop around.
“It is important consumers have the opportunity to talk to their GP or pharmacist before January 1 2016 and shop around for an alternative product if they so choose,” says Ley.
“There are currently over 30 equally-effective paracetamol osteo alternatives to Panadol Osteo currently registered in Australia. We hope these changes will help deliver consumers greater competition in the market.”