We can save $300m in the PBS with rules we already have. So why don't we? | Stephen Duckett and Peter Breadon

The government shouldn’t pay more for a costly drug if a cheaper one is just as good. Pharmaceutical companies can cope with the small drop in profits

Whether they are fighting a debt and deficit disaster or charting a path back to surplus, Australian governments are on the hunt for savings. But not all savings are equal. Every saving should be judged on three questions: how much it saves, who it hurts, and how much it hurts them.

A new Grattan Institute report shows how the government can save more than $300m a year in the pharmaceutical benefits scheme (PBS). Unlike many cuts to health spending, it won’t hurt patients. It will take a nibble out of drug company profits, but it might also nudge them towards research into truly innovative, breakthrough drugs.

Related: Australia's poorly applied drug policy wastes $320m a year: study

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