The report, Australia's Bad Drug Deal, recommends the government hand over responsibility to a new body to manage prescription drug pricing.
Report author Professor Stephen Duckett says there's a potential saving of up to $3.5 million a day.
"Ten years ago Australia was the envy of the world for keeping prescription medicine prices down .. we are now in the category of being the highest payers for prescription drugs," he told SBS.
Professor Duckett wants a "reserve-bank" type authority to manage drug pricing. "An independent body charged with getting the best deals ... making the right decisions to make sure we've got the medicines we need and charged with actually negotiating hard and tough."
New Zealand has an independent Pharmaceutical Management Agency, and when compared to Australia, our wholesale drug prices were, on average, six times higher, and in some cases 20 times more expensive.
The head of industry body Medicines Australia, Brendan Shaw, rubbished the Grattan Institute report, saying, "If you want a how-to-guide for turning your health system into that of a third-world country, this report would be it".
"New Zealand is last in the OECD access to medicines rankings," Dr Shaw said.
"So much so that when New Zealanders can't access a variety of new medicines in their country they come over here."
Health Minister, Tanya Plibersek responded to the report today, describing it as "interesting".
"From our perspective it is much better to have a number of suppliers of medicines rather than just striking with one supplier, because if that company has a problem, if their supply chain is broken for some reason, then you can experience medicine shortages," she said.
