A Senate inquiry will be held into why PBS listing of seven drugs recommended by the Pharmaceutical Benefits Advisory Committee (PBAC) was "deferred".

Despite the Government announcing 13 new drugs to be listed on the PBS last week, their listings have been deferred without explanation by the Department of Health and Aging (DoHA)..

At a Senate Estimates hearing in May, Jane Halton, secretary of DoHA, failed to give details of the criteria Cabinet used to select which drugs to approve from the list the PBAC put forward, or confirm whether such criteria existed.

Federal Health Minister Nicola Roxon said the decision to defer some drugs "where there were other alternative options available" facilitated the listing of more costly, new and innovative drugs for which no alternative treatment exists.

"When fiscal circumstances are tight, we do need to weigh it up against all the other health expenditure people want," said Roxon.

Dr Teresa Schafer, a partner at Piper Alderman with significant experience in therapeutic goods regulation, disagrees with Roxon.

"The PBAC is one of the toughest regulatory agencies in the world and employs a rigorous approach to the review and approval of drugs for the PBS," she said. "For the Government to claim that these drugs were not approved on substantially fiscal grounds cannot be accepted as a sufficient explanation for the deferrals."

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For the PBAC to put forward a drug or therapy for listing on the PBS, it must be either "cost-minimised" (which is comparable to existing alternative drugs) or "cost-effective" (i.e. the drug has improved health outcomes when compared with other therapies currently listed on the PBS), and therefore saves costs through improved health outcomes.

If the PBAC has favourably determined to list a drug on the PBS, one of the above criteria must be met and a price is then negotiated with the sponsor.

"DoHA and Minister Roxon need to ensure that the accountability and transparency that is built into the PBAC's determination process continues through to the final decision to ensure the continued success of the pharmaceutical industry in Australia," said Schafer.

Answers to the questions put to DoHA at the Senate Estimates hearing are due on the 22 July 2011.