Regulatory demands for cost-benefit studies.

In 1987 to 1988 there was a significant increase in drug costs in Australia. This was largely the result of the introduction of angiotensin-converting enzyme inhibitors into clinical practice. In this article the implications of escalating drug costs are examined. The impact of revolutionary new drugs is considered, and it is questioned whether even a relatively wealthy country, such as Australia, can afford the high costs of these new agents. The Australian Pharmaceutical Benefits Scheme is discussed, and modification of this into a two-tier system is proposed. A two-tier system could preserve the present list and the essential elements of the current scheme but would introduce a second list of new drugs for which a premium would be charged. Such a system could recoup costs generated by new drugs and also restrict overprescribing but may limit the prescription of new drugs to less well-off persons. The article concludes by considering the total health care budget, taking into account the relative cost-benefit expenditures of hospital care and drug therapy.