The Australian Pharmaceutical Benefits Scheme and the Consumption of Medicines in Australia

The Pharmaceutical Benefits Scheme (PBS) in Australia offers affordable, timely and reliable access to necessary medicines for all Australians. However, issues such as lack of comprehensive covers, overuse of medication, and limited availability of certain drugs need to be addressed. This paper explores the benefits and issues of the PBS and its impact on medicine consumption in Australia. Recommendations include comprehensive drug cover, open cover for visiting people, and drug administration only under the recommendation of a qualified medical practitioner.

The Australian pharmaceutical benefits scheme and the consumption of medicines in Australia
Student Name
Student ID
1

Executive summary.........................................................................................................................3
Introduction......................................................................................................................................3
General discussion of issue..............................................................................................................4
Issues explored.............................................................................................................................4
Conclusion and recommendations...................................................................................................8
References........................................................................................................................................8
2

Executive summary
Pharmaceutical benefits scheme has been in existence since the year 1948 and it has seen
good and quality product and service delivery to Australian citizens. It’s through this scheme that
citizens are able to access pharmaceutical products for the treatment of various ailments at
affordable costs. The scheme only requires patients to possess a Medicare card and then they are
made to pay a co-payment towards their drugs supply while the government pays the rest. As of
January 2016, consumers receive a discount of $ 1 on every PBS co-payment. The scheme,
however, has some shortcomings such as lack of comprehensive covers which if dealt with the
beneficiaries will get increased benefits from the scheme.
Introduction
In the year 1948, a limited scheme by the name pharmaceutical benefits scheme was
established and started its operations in Australia. The scheme offers free medicines for all
pensioners together with the free supply of 139 life-saving drugs and disease preventing
medicines to community members. The scheme has grown tremendously and currently, it offers
affordable, timely and reliable access to the necessary medicines for all Australians. It thus forms
part of the Australian government national medicines policy (Lopert, 2009). Through the
scheme, the aim of the national medicines policy which is meeting medication and related
service needs of its citizens is achieved with a lot of ease. In the long run, both economic
objectives and optimal health outcomes are achieved.
It’s under this scheme that the government is able to offer subsidies to the cost of
medications for many medical conditions. Pharmacists dispense most of the listed medicines that
can be used at home by patients however some medicines can only be administered in the
3

presence of an experienced medical officer such as chemotherapy drugs and thus are only found
with the hospital premises (Easton et al., 2009). Any Australian resident that holds a Medicare
card is eligible to benefit from the scheme. Visitors from overseas countries where Australia has
reciprocal health care agreement are also covered under the scheme. Such countries include New
Zealand, United Kingdom, Malta, Netherlands, Belgium, Slovenia, Italy, Sweden etc. for
veterans that are eligible; they need to present DVA cards alongside Medicare cards to benefit
from the scheme. Dentists cannot prescribe the PBS items in general to their patients instead they
possess dental schedule which is separate and can be used to prescribe the dental care medicine
for the patients who are under the scheme.
This is also applicable to the optometric schedule for eye patients. PBS also comes with
a concessional benefit and for one to be eligible for this cover they need one of the following
cards; health care cards, commonwealth seniors health card, pensioner concession card or DVA
white, yellow or gold cards (PBS, 2018). Its therefore evident that this scheme offers an all-
around cover to different people and medical conditions with a subsidized price on medicines
making it affordable for Medicare cardholders to get their conditions treated with less financial
stresses. The scheme is however not perfect and its faced with some disadvantages and issues
that need to be solved for better service and goods delivery to its beneficiaries.
4

Figure1:Trends in Expenditures for Australia's Pharmaceutical Benefits Scheme: 1948-
1949 to 2001-2002
General discussion of the issue
Issues explored
Overuse of medication; In the past decade, Australia has recorded the highest number of
pharmaceuticals use among its residents. This, therefore, points out the benefits of having a
medicine scheme like the PBS to cater for the costs that come with the use of drugs. This is a
pointer to the fact that there is an increased number of illnesses among Australians or increased
misuse of medicines by the population owing to the idea of a subsidized medical scheme (PBS,
2015). Inappropriate use can be detected from drug utilization data which is used to monitor of
regulatory and educational interventions and guide on how the pharmacoeconomic analysis can
be interpreted (Duckett, 2013).
5

The PBS and RPBS were established to offer communities and servicemen who returned
from their missions’ affordable medication and products which have acceptable standards
(Department of Health and Ageing, 2008). Since 2002 there has been an increasing outpatient
number which has led to the increased addition of many medicines in the dataset for the patients.
To prove an increase in the number of medical use by scheme beneficiaries, in the year 2014,
highly specialized drugs data supply prescription has been on an increase in the database for
discharged patients, admitted patients and outpatient ones. Any new medicinal group has to gain
approval for supply in accordance with the therapeutic goods act 1989 and an approval required
for indications of any established drug.
6

Table 1: Number, Total Cost, Average Price, and Percent Change of Prescriptions Issued
under Australia's Pharmaceutical Benefits Scheme, by Anatomical Therapeutics Chemical
Code: July 1, 2000, to June 30, 2002
Code
Year Ended June 30, 2002 Percent Change 2000 to 2002
Number of
Prescriptions
Total
Cost
(In
Millions)
Average
Price
Number of
Prescriptions
Total
Cost
Average
Price
Total 154,970,262 5003.3 32.29 4.7 9.6 4.7
Alimentary Tract and
Metabolism
19,082,701 692.4 36.28 6.4 7.4 0.9
Blood and Blood
Forming Organs
4,023,864 111.9 27.8 12.3 38.5 23.3
Cardiovascular System 46,587,011 1556.9 33.42 5.3 8.7 3.2
Dermatologicals 2,934,367 81.2 27.68 -2.7 1.1 3.9
Genito Urinary System
and Sex Hormones
6,323,714 159.8 25.27 2.7 20.4 17.3
Systemic Hormonal
Preparations, Excluding
Sex Hormones
2,304,729 30.2 13.09 3.9 8.1 4.0
General Anti-Infectives
for Systemic Use
12,550,089 273.1 21.76 -1.1 2.9 4.0
Antineoplastic and
Immunomodulating
Agents
961,818 317.7 330.35 8.0 17.2 8.5
Musculo-Skeletal System 10,709,738 340.1 31.75 27.2 14.4 10.0
Nervous System 30,564,051 906.5 29.66 3.4 8.6 5.1
Antiparasitic Products,
Insecticides and
Repellants 910,580 8.9 9.81 0.4 2.4 2.0
Respiratory System 10,341,286 374.0 36.16 -6.5 7.3 14.8
7

Code
Year Ended June 30, 2002 Percent Change 2000 to 2002
Number of
Prescriptions
Total
Cost
(In
Millions)
Average
Price
Number of
Prescriptions
Total
Cost
Average
Price
Sensory Organs 6,779,904 104.0 15.33 4.4 8.1 3.6
Various 602,127 43.6 72.41 5.7 5.4 -0.3
Not Otherwise Classified 294,283 3.1 10.58 -6.5 0.0 6.9
SOURCE: Duckett, S.J.: estimates derived from
http://www.hic.gov.au/statistics/dyn_pbs/forms/pbsgtab1.shtml (Accessed April 20 2018.)
With the PBS the contributions made by patients towards their medication, are often
capped (MacLennan et al., 2006). In the year 2015, the cost of a prescription to a general patient
was to a maximum of $ 37.70, the pensioner and concession patients paid $ 6.10 per a
prescription given. People with high medical need are protected by a safety net scheme. In 2015
the moment a patient and their immediate family member beneficiaries incurred $ 1,453.90 of
their PBS expenditures, the remaining part of their prescription for the year only cost $ 6.10 per a
prescription. The cardholder threshold for pensioners and other concession stands at $366 and
once one reaches their maximum limits all the remaining prescriptions are received for free
(Australian Institute of health and welfare, 2014).
In the event that a doctor prescribes a more expensive drug to a patient and yet there are
cheaper brands covered by the same scheme, the extra cost is burdened on the patient as a
surcharge. Many drugs are also not available on the PBS and some patients are forced to pay the
full cost despite having the Medicare card (PBS, 2015). The cost of pharmaceutical drugs in
8

Australia is relatively high depending on the sickness and doctors drug prescriptions. It’s evident
that not all the medicines are listed on the PBS and thus any patient who may need a drug out of
the system is forced to pay for the bill at a private cost which is definitely high (Hill et al., 2001).
However, the scheme is quite beneficial to its members especially those that require a lot of
medicines and may end up exhausting their annual covers. The scheme ensures such patients
receive their drug supplies at a subsidized fee of free of charge for the remaining days of the year
(Grove, 2016).
Types of medicine consumed; Under the scheme, there are general medicines which are
dispensed by the pharmacies in the community and used at home by patients. The veteran
medicines are offered to eligible veterans through the RPBS plan administered by the DVA and
they are listed on the DVA in addition to wound care products (Goddard, 2014). The medicines
with special arrangements under section 100 of the NHA are only supplied through special
arrangements. Some require special storage, dispensing and monitoring and need to be
administered in a hospital setup. They may fall under the highly specialized drug program,
efficient funding of chemotherapy etc.
Issues with PBS and what can be done differently; the main problem with this scheme is
that it does not offer comprehensive drug cover; there are situations in which a patient has to pay
for their medication if the drug prescribed is lacking on the PBS list of drugs. Some patients
dealing with an illness that require a lot of drugs exhaust their cover before the year ends and are
forced to pay out of their pockets to get the drugs this hover excludes the pensioners who receive
free medicines even after exhausting their annual covers (Department of Health, 2016). The
scheme is only available to citizens that posses a Medicare card and for the visiting people from
other countries they may not benefit from the cover if their countries do not have a memorandum
9

of understanding regarding the cover with Australia. For the cover to be effective, it has to
include all the citizens whether they possess a Medicare card or not and it should be open to the
visiting people from other countries (Duckett, 2004).
Conclusion and recommendations
From the discussion herein, it’s clear that PBS has played a crucial role when it comes to
reducing the burden of medication to Australian citizens. The subsidies have enabled many
citizens to receive quality treatment for their sicknesses. However, the reduced medical costs
come with the possibility of drug misuse as projected by increased use of pharmaceuticals by the
citizens. The government has to put in measures ensuring the citizens get drugs only for properly
diagnosed illnesses.
The PBS has to be comprehensive and cater to the needs of the patients throughout the year, this
will ensure those suffering from chronic or terminal illnesses are not disadvantaged once their
cover is exhausted
The cover should be open to acquisition by any visiting person from other countries and not just
those that Australia has entered an agreement with
Drug administration should be done only under the recommendation of a qualified medical
practitioner to avoid over usage and misuse of pharmaceuticals as projected by statistics
Table 2: Targets for Control of Government Pharmaceutical Expenditure Used in
Australia
Demand Supply
Price Patient co-payments. Encourage prescription
of “generic” (non-brand name) drugs.
Encourage prescription of alternative
medication in same therapeutic class.
Negotiate prices based on lowest in other
countries.
10

Demand Supply
Volume Patient education programs. Incentives on medical profession as a
whole to limit prescribing.
Practice guidelines.
Limit inclusion on the approval list through
use of cost effectiveness analysis.
Provide education program to pharmacists,
doctors.
SOURCE: Duckett, 2004.
References
Australian Government (2004). National Health Amendment (Pharmaceutical Benefits Budget
Measures)Act2004.Retrievedfrom https://www.legislation.gov.au/Details/C2004A01353.
Australian Institute of health and welfare (2014).Health Expenditure Australia (2013-14). Health
and welfare expenditure series Number 54
Amanda, B. (2003). The Pharmaceutical Benefits Scheme an Overview E-Brief: Online Issue.
Retrievedfromhttps://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Pa
rliamentary _Library/Publications_Archive/archive/PBS Accessed April, 20, 2018.
Department of Health and Ageing (2008). Australian statistics on medicines 2006.
Canberra: Commonwealth of Australia, 2008.
Department of Health (2016). Procedure guidance for listing medicines on the Pharmaceutical
Benefits Scheme. 2016. http://www.pbs.gov.au/info/industry/listing/listing-steps.
Accessed April 20, 2018.
Duckett, S.J. (2004). Drug Policy Down Under: Australia’s Pharmaceutical Benefits Scheme,
Health Care Financing Review, 25(3):55–67.
11

Duckett, S., Breadon, P., Ginnivan, L. and Venkataraman, P. (2013). Australia’s bad drug deal:
high pharmaceutical prices. Melbourne: Grattan Institute. Retrieved from
https://grattan.edu.au/wp-content/uploads/2014/04/Australias_Bad_Drug_Deal_FINAL.pdf
Easton, K., Morgan, T. and Williamson, M. (2009). Medication safety in the community: a
review of the literature. Sydney: National Prescribing Service, 2009.
http://www.nps.org.au/research_and_evaluation/current_research/medication_safet
y_community/complementary_medicines_report Accessed April, 20, 2018.
Goddard, M.S. (2014). How the Pharmaceutical Benefits Scheme began. Med J Aust. 201:1944-
1946. doi:10.5694/mja14.00124.
Grove, A. (2016). The Pharmaceutical Benefits Scheme: a quick guide; Research paper series,
2015–16; In parliamentary library information analysis advice
Hill, S.R., Stevens, A. and Henry, D.A (2001). A Review of the Use of Evidence in the PBS;
in D.M. Fox and A.D. Oxman (eds.), Informing Judgement: Case Studies of Health
Policy and Research in Six Countries (New York: Milbank Memorial Fund, 2001).
Lopert, R. (2009). Issue Brief: Evidence-Based Decision-Making Within Australia’s
pharmaceuticalbenefitsscheme.Retrievedfromhttp://www.commonwealthfund.org/~/medi
a/files/publications/issuebrief/2009/jul/chalkidou/1297_lopert_cer_australia_issue_brief_
724.pdf.
12

MacLennan, A.H. Myers, S.P. and Taylor, A.W. (2006). The continuing use of
complementary and alternative medicine in South Australia: costs and beliefs. Med J
Aust, 184: 27-31.
Pharmaceutical Benefits Scheme (PBS) | The department of health, Australian Government
(2015). Retrieved 20 April 2018 from http://www.health.gov.au/PBS
Pharmaceutical Benefits Scheme (PBS) | (2018). The pharmaceutical benefits scheme; Australian
government department of health. Retrieved 20 April 2018 from
http://www.pbs.gov.au/info/about-the-pbs Accessed April 20, 2018.
13