Annex C - Impact analysis

There are assumptions and limitations underpinning the regulatory impact analysis and the conclusions of the analysis should be regarded as indicative rather than as definitive.

Industry compliance costs have been outlined below and quantified wherever possible. TGA has made assumptions based on general information, ARTG data on existing products, stakeholder feedback, and data provided by the broader Department of Health, specifically the divisions of Medical (MBS) and Pharmaceutical benefits (PBS).

In accordance with OBPR requirements, the costs below have been costed over a 10 year period and presented as an average annual impact.

On this page: Option 1 - Status quo | Option 2 - S2 reduced pack size and new label warning | Option 3 - S2 to S3, reduced pack size and new warning label | Option 4 - S2 to S4 | Option 5 - S3 reduced pack size and new label warning | Option 6 - S3 to S4 | Regulatory options combined into scenarios

Option 1 - Status quo

Overview

Option 1 proposes that no changes to the current scheduling of codeine would occur, that a change in pack size would not be enforced and that the inclusion of an additional advisory statement to the label that codeine can cause addition would remain voluntary. The current inconsistencies in the TGA Ingredients Table would remain and these non-harmonised medicine ingredient names would continue to be used in Australia. The health problems associated with this abuse and misuse of codeine would continue (as outlined in Section 2 of the RIS - The problem). Under Option 1 there are no direct compliance costs for industry. However, to establish a baseline, TGA analysed the information it holds on medicine label and Product Information changes (see Regulatory Costing section in the RIS).

Option 2 - S2 reduced pack size and new label warning

Overview

Under Option 2 the current Schedule 2 entry for codeine in cough and cold medicine preparations would be amended to reduce the pack size to not more than 3 days' supply and include a label warning that codeine can cause addiction.

This option would affect 46^[26] ARTG medicine entries (entirely OTC) across 15 sponsors.

Impact on the medicines industry

Annex D outlines the expected costs to industry for Option 2. Current sponsors of S2 products with codeine as the active ingredient would be required to update their labels to reflect the reduced pack size as well as include a new advisory statement that codeine can cause addiction (less those that already contain this advisory statement - currently voluntary). Current sponsors who do not already have a 3 day pack in their production portfolio would need to implement new manufacturing arrangements. All sponsors would need to complete the required documentation to effect the required change to their ARTG listings.

Impact on consumers and healthcare professionals

There is no projected impact on healthcare professionals. Due to the reduction in pack size consumers are expected to spend more to maintain current codeine use. There are no projected gain in health outcomes as there is not expected to be any change in treatment of therapy for those consumers currently abusing low dose codeine medicines.

Option 3 - S2 to S3, reduced pack size and new warning label

Overview

Under Option 3 the current Schedule 2 entries for codeine in cough and cold medicine preparations would be up-scheduled to Schedule 3, and the pack size would be reduced to not more than 3 days' supply and include a label warning that codeine can cause addiction.

This option would affect 46^[27] ARTG medicine entries (entirely OTC) across 15 sponsors.

Impact on the medicines industry

Annex D outlines the expected costs to industry for Option 3. Current sponsors of S2 products with codeine as the active ingredient would be required to update their labels to reflect the change from S2 to S3, the reduced pack size as well as include a new advisory statement that codeine can cause addiction (less those that already contain this advisory statement - currently voluntary). Current sponsors who do not already have a 3 day pack in their production portfolio would need to implement new manufacturing arrangements and generate a new PI for the S3 medicine. All sponsors would need to complete the required documentation to effect the required change to their ARTG listings.

Impact on consumers and healthcare professionals

Annex D outlines the expected costs to healthcare professionals for Option 3. The change from S2 to S3 would require customers to speak to a pharmacist prior to making a purchase of codeine-based cough and cold products. Due to the reduction in pack size consumers are expected to spend more to maintain current codeine use. There is no projected gain in health outcomes as there is not expected to be any change in treatment of therapy for those consumers currently abusing low dose codeine medicines.

Option 4 - S2 to S4

Overview

Under Option 4 - The interim decision, current Schedule 2 entries for codeine would be up-scheduled to Schedule 4 and current Schedule 4 and 8 entries for the Poisons Standard would be amended.

This option would affect 46 ARTG medicine entries (entirely OTC) across 15 sponsors.

Impact on the medicines industry

Annex D outlines the expected costs to industry for Option 4. Current sponsors of S2 products with codeine as the active ingredient would be required to update their labels to reflect the change from S2 to S4. All sponsors would need to complete the required documentation to effect the required change to their ARTG listings.

Impact on consumers and healthcare professionals

Annex D outlines the expected costs to consumers and healthcare professionals for Option 4. The change from S2 to S4 would require patients to visit a doctor to obtain a prescription for any product containing codeine. Some of the consultations will be additional; they would otherwise not have occurred. Others would otherwise have occurred; in this case this regulatory change would result in a slight increase in the length of the consultations for doctors to prepare the script. The requirement to see a doctor might generate health gains compared to the existing situation by driving changes in treatment and therapy. However in the case of S2 these health gains are expected to be small and were not quantified in the economic model. There is also projected to be a net reduction in out of pocket expenses (financial benefit - treated as an economic benefit) for the consumer as a consequence of consumers substituting the S2 medicine with another OTC medicine (paracetamol and/or ibuprofen), which is expected to be cheaper. This substitution occurs because although consumers prefer (due to brand loyalty and/or past use)  the current low dose codeine S2 product to substitute products, the majority of current consumers are expected to prefer purchasing the ongoing OTC medicines rather than visiting their GP for a prescription for the previous S2 (now S4) medicine. It is assumed that the pharmacological effects of low dose codeine products and substitute products are broadly comparable from the consumer perspective.

Impact on the government

Increased visits to GPs will result in increased costs to MBS, however patients are also expected to incorporate obtaining a prescription with other visits that would otherwise occur.

Option 5 - S3 reduced pack size and new label warning

Overview

Under Option 5 the current Schedule 3 entry for codeine products would be amended to reduce the pack size to not more than 3 days' supply and include a label warning that codeine can cause addition.

This option would affect 168 ARTG medicine entries (entirely OTC) across 22 sponsors.

Impact on the medicines industry

Annex D outlines the expected costs to industry for Option 4. Current sponsors of S3 products with codeine as the active ingredient would be required to update their labels to reflect the reduced pack size as well as include a new advisory statement that codeine can cause addiction (less those that already contain this advisory statement - currently voluntary). Current sponsors who do not already have a 3-day pack in their production portfolio would need to implement new manufacturing arrangements. All sponsors would need to complete the required documentation to effect the required change to their ARTG listings.

Impact on consumers and healthcare professionals

There is not projected to be any impact on healthcare professionals. Due to the reduction in pack size consumers are expected to spend more to maintain current codeine use. There is not projected to be any gain in health outcomes as there is not expected to be any change in treatment or therapy for those consumers currently using low dose codeine medicines when other therapies might be more effective or as effective but with less side effects.

Option 6 - S3 to S4

Overview

Under Option 6 - Current Schedule 3 entries for codeine would be up-scheduled to Schedule 4 and current Schedule 4 and 8 entries for the Poisons Standard would be amended.

This option would affect 168 ARTG medicine entries (entirely OTC) across 22 sponsors.

Impact on the medicines industry

Annex D outlines the expected costs to industry for Option 6. Current sponsors of S3 products with codeine as the active ingredient would be required to update their labels to reflect the change from S3 to S4. All sponsors would need to complete the required documentation to effect the required change to their ARTG listings.

Impact on consumers and healthcare professionals

Annex D outlines the expected costs to consumers and healthcare professionals for Option 6. The change from S3 to S4 would require patients to visit a doctor to obtain a prescription for any product containing codeine. Some of these GP consultations will be additional; they would not otherwise have occurred. Some of the GP visits would have occurred anyway, and the impact of the regulatory change would be a slight increase in the time of that consultations for doctors to prepare the script. The requirement to see a doctor would likely generate health gains (health benefit) compared to the existing situation by driving changes in alternative treatment and therapy, providing better health outcomes for many patients. There is also projected to be a net reduction in out of pocket expenses (financial benefit - treated as an economic benefit) for the consumer as a consequence of consumers substituting the S3 medicine with another OTC medicine (paracetamol and/or ibuprofen), which is expected to be cheaper. This substitution occurs because although consumers prefer (due to brand loyalty and/or past use) the current low dose codeine S3 product to substitute products, the majority of current consumers are expected to prefer purchasing the ongoing OTC medicines rather than visiting their GP for a prescription for the previous S3 (now S4) medicine. It is assumed that the pharmacological effects of low dose codeine products and substitute products are broadly comparable from the consumer perspective.

Impact on the government

Increased visits to GPs will increase MBS costs, but for some patients there will be a health gain if they access cost effective therapies, including more suitable prescription medicines, specialist referrals for pain management, or other non-pharmacological treatment options.

Regulatory options combined into scenarios

This section has presented the calculation of the regulatory cost structured along the specified six options. However, there is a logical grouping of these options. Essentially, modification of the regulatory control mechanisms for both S2 and S3 codeine medicines is required simultaneously, otherwise the desired outcomes would largely be negated by consumers shifting from either S2 to S3 (or vice versa) if a single regulatory option was enacted. The table below details the regulatory cost per scenario.