Health Financial Management: Issues, Costs, and Recommendations

The paper offers an introduction to the PBS, the government program of the Australian which helps in subsidizing the cost of medicines. It outlines the analysis of PBS data, medications used and sources of funds. The problems in the use of PBS are also discussed in the paper. It highlights the price of medicines for those who are sick and the type of medicine that the patients consumed (both non-prescribed and prescribed. It also outlines recommendation that should be put in place to lower the consumption and cost of medicine.

Running head: HEALTH FINANCIAL MANAGEMENT 1
Health Financial Management
Name
Institution

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Table of Contents
Introduction................................................................................................................. 4
General Discussion of the issues................................................................................4
Costs of medicine consumption..............................................................................4
Sources of funding..................................................................................................5
Types of medicine in PBS.......................................................................................6
ISSUED EXPLORED..................................................................................................7
Issues with the PBS................................................................................................7
What led to the overuse of medications?................................................................8
Conclusion.................................................................................................................. 8
Recommendation....................................................................................................9
References............................................................................................................... 10

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HEALTH FINANCIAL MANAGEMENT
EXECUTIVE SUMMARY
The paper offers an introduction to the PBS, the government program of the
Australian which helps in subsidizing the cost of medicines. It outlines the analysis of
PBS data, medications used and sources of funds. The problems in the use of PBS are
also discussed in the paper. It highlights the price of medicines for those who are sick
and the type of medicine that the patients consumed (both non-prescribed and
prescribed. It also outlines recommendation that should be put in place to lower the
consumption and cost of medicine (Mellish et.al, 2015).

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Introduction
The government of Australia uses pharmaceutical Benefits Scheme to
subsidize the cost of medicines to all the residents of Australia who are holding a
Medicare card. Larger quantities of medicines that are on the PBS are distributed thru
community pharmacies. However, some medications are offered in the hospital. The
initial attempt to enact a scheme to offer appropriate prescription medicines, for
example, antibiotics, without payment to the residents of Australian was established
in 1994 by the Curtin Labour Government (Pearson et.al, 2015). However, the court
stopped the legislation process. But due to high consumption rates for medicines and
the high cost of medicine in the country, a version of PBS started in 1948 with the aim
of lowering the cost of medicines by providing medicines free of charge. The
Pharmaceutical Benefits Scheme started a comprehensive scheme proposing access to
a broader range of medicines in the year 1960. In Australia, PBS is now viewed as the
main component of the NMP (National Medicines Policy) which help in improving
the outcome of health for the people of Australia (Hajati, Atlantis, Bell & Girosi,
2018).
General Discussion of the issues
Costs of medicine consumption
Since the introduction of the program, the PBS has developed as the
population has aged, the population size has grown, and there is the improvement in
medical technology. This factor has increased the cost of the scheme over those
periods. It has also increased the cost of medicines which PBS subsidies (Ong, Blanch
& Jones, 2018).

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The cost of medicine consumption on PBS between 1994 to 1995 and 2004 to
2005 grew by an estimate of 13% each year. Since then the growth rate decreases but
the annual rate of growth on the Pharmaceutical Benefits Scheme from 2005- 2006 to
2013-2014 was estimated to be 4.86%. In the recent period, the expenditure has
decreased; the PBO (Parliamentary Budget Office) forecasts that in the medium terms
the expenditure will level out at 0.3%p.a. The Australia Government expected that the
average growth in the longer term would be around 4-5% per annum. There is
slowing growth in PBS expenditure because of the various pricing policies put in
place in 2005.
Sources of funding
The Government of Australia funds most of the cost that is associated with the
scheme. The government spending increases to 0.65% of GDP by 2003-2004. In the
recent years, the share of PBS on GDP has been falling. The patients also contribute
to the cost of the scheme, but the government funds large amount to the scheme.

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http://medicinespartnership.com.au/files/2013/02/20140224-gra-final-WEB-
version-of-MA_PBS-booklet.pdf
The PBS also acquires some of the funding from the commonwealth. The
Australia government uses the money collected from the commonwealth to fund most
of the operation of the PBS (Liu et.al, 2017).
http://medicinespartnership.com.au/files/2013/02/20140224-gra-final-WEB-
version-of-MA_PBS-booklet.pdf
Types of medicine in PBS
The PBS medicines are mainly distributed thru community pharmacies. The
medicine offered under PBS have commonly used drugs, for example, drugs use for
the treatment of high cholesterol, high blood pressure, infections asthma, diabetes,
mental health condition, and depression. Most of the expenditure is provided in the
Act (Parkinson et.al, 2015). Some of the most prescribed drugs include: 1)
Atorvastatin - it lower the danger of stroke and heart attack, 2) Rosuvastatin- which

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reduce the risk of heart attack or stroke, 3) Perindopril- it lower blood pressure, 4)
Pantoprazole- used for treating heartburn, acid reflux and stomach ulcers.
ISSUED EXPLORED
Issues with the PBS
There are many issues that affect the PBS, but the most pressing issue is the
need to balance the sustainability of finance for the provision of affordable medical
prescription. The cost of the scheme is also high with less attention being given to the
social, economic, productivity and health benefits. For example, by increasing the
spending on the PBS has stimulated savings to different departments of the health
system, i.e., hospital costs. There is also the issue of developing a policy that will
solve all the problems of the stakeholders in the PBS without affecting the community
(Brett et.al, 2017).
There are issues of coverage, pricing, predictability, the efficiency of the
process, predictability. There is also the issue of working with the modern
technologies, i.e., co-dependent technologies (combination of the medical device).
The is also the problem of coming up with the biologic medicines which offer modern
treatments in different areas, as well as increasing use of medical instruments which
target specific treatments to specific patients (Page, Kemp, Korda & Banks, 2015).
Another challenge comes during the listing of the new pharmaceuticals. PBAC
determines the cost of new drugs and then recommends whether they should be listed
placed on the Pharmaceutical Benefits Scheme. Even though the PBS does not make
any budget, any new medicine the Pharmaceutical Benefits Advisory Committee
recommends for listing that is above $10 million per annum must be accepted by the
Cabinet. Budget pressures are an issue that may prevent the listing process in the PBS.

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The government should develop price policies that affect pharmacy, manufacturer and
the remuneration of the wholesalers. The policies should be changed to ensure that the
costs of medicines are being controlled (Schaffer, Buckley, Cairns & Pearson, 2016).
What led to the overuse of medications?
The overuse of medication in Australia was due to intimidation of the
prescribers by the individuals who are sick (patients) which lead to inappropriate
prescribing. There is the problem of accessing drug treatment problem and pain
management. There is also the problem in the planning of hospital discharge process
which causes patients to use medications beyond the period stated by the clinical
Doctors. The national registration for the health practitioner’s arrangements
contributed to overuse of medication in Australia (Harris, Daniels, Ward & Pearson,
2017).
Conclusion
The paper provides an overview of the PBS as used by the Australian
government. The scheme helps in the provision of cheap medical services to the
Australian residents. It covers the cost of the PBS with the intention of controlling
expenditure. The paper also discusses the issues that affect the program (PBS
scheme). The policies and reforms that can help improve the use of PBS are also
discussed in the paper. The government of Australia should offer subsidies for
different medicines being provided under the PBS through LSDP. Today
Pharmaceutical Benefits Scheme provides reliable, timely and reasonably price to
necessary drugs for the Australians residents. The Austrian government use PBS as a

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National Medicine Policy. The main aim of the policy is to satisfy the meditational
needs of the Australians.
Recommendation
The government should try to find savings for the medicines listed in the
existing PBS, through higher patients’ co-payments or price reforms to correct future
PBS listing. The government should develop policies that control the operation of the
pharmacy (Staatz, Martin, Kong & Hollingworth, 2018). PBS should use cheaper
biosimilar medicine to avoid the use of expensive medicines. The government should
establish the policy that allows the PBS to provide medicines at the public hospital to
outpatients and patients at discharge. The cost of generic medicine should be reduced
this will help in solving the issues in the PBS. The government should also seek for
saving in the existing PBS listed drugs, by reforming the price to accommodate the
drug listing that may take place in the future.

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References
Brett, J., Karanges, E. A., Daniels, B., Buckley, N. A., Schneider, C., Nassir, A., ... &
Pearson, S. A. (2017). Psychotropic medication use in Australia, 2007 to 2015:
Changes in annual incidence, prevalence and treatment exposure. Australian
& New Zealand Journal of Psychiatry, 51(10), 990-999.
Hajati, F., Atlantis, E., Bell, K. J., & Girosi, F. (2018). Patterns and trends of
potentially inappropriate high-density lipoprotein cholesterol testing in
Australian adults at high risk of cardiovascular disease from 2008 to 2014:
analysis of linked individual patient data from the Australian Medicare
Benefits Schedule and Pharmaceutical Benefits Scheme. BMJ open, 8(3),
e019041.
Harris, C. A., Daniels, B., Ward, R. L., & Pearson, S. A. (2017). Retrospective
comparison of Australia's Pharmaceutical Benefits Scheme claims data with
prescription data in HER2-positive early breast cancer patients, 2008-
2012. Public Health Research and Practice, 27(5), 1-9.
Karanges, E. A., Blanch, B., Buckley, N. A., & Pearson, S. A. (2016). Twenty‐five
years of prescription opioid use in Australia: a whole‐of‐population analysis
using pharmaceutical claims. British journal of clinical pharmacology, 82(1),
255-267.
Liu, E., Dyer, S. M., O'Donnell, L. K., Milte, R., Bradley, C., Harrison, S. L., ... &
Crotty, M. (2017). Association of cardiovascular system medications with
cognitive function and dementia in older adults living in nursing homes in
Australia. Journal of geriatric cardiology: JGC, 14(6), 407.
Mellish, L., Karanges, E. A., Litchfield, M. J., Schaffer, A. L., Blanch, B., Daniels, B.
J., ... & Pearson, S. A. (2015). The Australian Pharmaceutical Benefits

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Scheme data collection: a practical guide for researchers. BMC research
notes, 8(1), 634.
Ong, T. T., Blanch, E. W., & Jones, O. A. (2018). Predicted environmental
concentration and fate of the top 10 most dispensed Australian prescription
pharmaceuticals. Environmental Science and Pollution Research, 1-11.
Page, E., Kemp-Casey, A., Korda, R., & Banks, E. (2015). Using Australian
Pharmaceutical Benefits Scheme data for pharmacoepidemiological research:
challenges and approaches. Public Health Res Pract, 25(4), e2541546.
Parkinson, B., Sermet, C., Clement, F., Crausaz, S., Godman, B., Garner, S., ... &
Elshaug, A. G. (2015). Disinvestment and value-based purchasing strategies
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924.
Pearson, S. A., Pesa, N., Langton, J. M., Drew, A., Faedo, M., & Robertson, J. (2015).
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literature (1987–2013). Pharmacoepidemiology and drug safety, 24(5), 447-
455.
Schaffer, A. L., Buckley, N. A., Cairns, R., & Pearson, S. A. (2016). Interrupted time
series analysis of the effect of rescheduling alprazolam in Australia: Taking
control of prescription drug use. JAMA internal medicine, 176(8), 1223-1225.
Staatz, C. E., Martin, N. S., Kong, D. P., & Hollingworth, S. A. (2018). Patterns in
use and costs of subsidising 5-aminosalicyclic acid compounds and biologic
agents in the treatment of inflammatory bowel disease in Australia. Digestive
and Liver Disease, 50(3), 314-317.

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