The Abbott Government will invest a record $372 million to ensure Australians continue to have timely access to life-saving chemotherapy drugs, no matter where they live in Australia.

Minister for Health Sussan Ley today announced the details of a new $372 million, five-year payment package that will provide medicine compounders with the certainty needed to viably continue to deliver chemotherapy drugs on demand to patients and doctors nation-wide.

Ms Ley said this was the equivalent of a 30 per cent increase in overall annual investment by the Government when compared to current funding arrangements.

Ms Ley said the package included a new tiered payment system focused around the unique costs of compounding chemotherapy drugs on demand and meeting the expensive safety standards applied to it, as well as a faster direct payment system that will cut down on wait times for reimbursement.

“This Government recognises there were problems with the way chemotherapy drugs were funded in Australia and the risks this posed for patient access if not addressed,” Ms Ley said.

“These incentives provide certainty over the next five years that lifesaving chemotherapy drugs can continue to compounded on demand and delivered to the 150,000 patients undergoing treatment in Australia in a timely manner, no matter where they live.

“This will particularly benefit patients in regional and rural areas that do not have access to a local compounding chemist by ensuring it remains viable for suppliers to continue distributing chemotherapy drugs long-distance to them without delay.”

Only about one per cent of Australian chemists compound medicines onsite, with third-party suppliers now compounding the majority of chemotherapy treatments or ‘infusions’ offsite in specialised facilities and delivering them nationwide.

Ms Ley said this changing landscape was recognised in a new tiered incentive payment structure for compounders of between $40 and $60 per chemotherapy infusion, depending on whether a pharmacy, hospital or third-party supplier operated a compounding facility licensed by Australia’s drug-safety regulator the Therapeutic Goods Administration (TGA).

“This two-tiered system is necessary to reflect the substantial additional costs associated with the quality and safety processes and infrastructure required to acquire a TGA compounding licence. It also provides an added incentive to maintain it,” Ms Ley said.

“However, we also recognise that not every hospital or pharmacy has the means to invest in this additional infrastructure to be TGA compliant, but still provides a high-quality localised in-house service, and this tiered system ensures their viability is appropriately supported as well.”

Ms Ley said those chemists that did compound onsite would also continue to attract their $80.26 dispensing fee for chemotherapy drugs, plus mark ups, on top of the new compounding payments. This is compared to the standard $6.93 dispensing fee and other mark ups for other types of drugs.

The average cost to a chemist that compounds chemotherapy drugs in-house is about $83.96 per infusion.

This cost is slightly higher in regional and rural areas at about $93.96, but still significantly lower than the total remuneration delivered when this new tiered payment system is combined with the $80.26 dispensing fee.

Ms Ley said the Abbott Government would also move to ensure faster remuneration for chemotherapy drugs, with these new incentives to be paid direct to drug compounders, instead of being reimbursed through other parties issuing the treatments, which can often take many months and has led to industry complaints the Government fee is not being passed on in full down the line.

“Paying compounders direct allows for faster reimbursement of these additional costs and ensures the full fee is paid to the service provider, and not diverted elsewhere in the system. These are essential change if we’re to ensure the long-term sustainability of these services for patients.”

Ms Ley said the incentives would be funded as part of the Sixth Community Pharmacy Agreement, which was an integral part of the Abbott Government’s Pharmaceutical Benefits Scheme Access and Sustainability Reform Package.

Ms Ley said the incentives had been introduced long-term in line with feedback received during the Government’s consultations across the pharmaceutical supply chain, as well as the findings of the 2013 Review of Funding Arrangements for Chemotherapy Services.

In November 2013, the Abbott Government announced it would provide $81 million over 18 months to address serious issue raised in the Review about the adverse impacts of price disclosure on the viability of chemotherapy compounding services. These payments were due to expire June 30 2015.

Ms Ley said it was important to note that prior to the Abbott Government’s election, no payment of this type was paid to compounders to continue to deliver chemotherapy drugs on demand for patients.

“This announcement is further evidence the Abbott Government is delivering on its promise to provide a sustainable long-term solution that recognises the important role compounders play in ensuring patients, hospitals and pharmacies continue to have timely access to chemotherapy drugs.”

Ms Ley said the Government would continue to work with Australia’s various compounders and their representatives to ensure the transition to new arrangements was as smooth as possible.