Health Financial Management

Running Head: HEALTH FINANCIAL MANAGEMENT
Health Financial Management
Name
Institution

HEALTH FINANCIAL MANAGEMENT 2
Health Financial Management
Table of Contents
Introduction......................................................................................................................................3
Costs of Medicine Consumption.....................................................................................................3
Medicines Consumed in Australia...................................................................................................5
Challenges Facing PBS....................................................................................................................7
Recommendations............................................................................................................................8
Conclusions......................................................................................................................................9
References......................................................................................................................................11

HEALTH FINANCIAL MANAGEMENT 3
Introduction
The funding of medicines in a cost-effective way is an endutring problem for health
policies in several nations across the world. In Australia in which the government runs as a
healthcare single payer system, equilibrium should be attained between access to new and new
medicines, as well as managing the cost of Pharmaceutical Benefits Scheme (PBS). Lately, the
Australian govern,ent made the decision to fund a ground-breaking class of novel medicines to
people with hepatitis C of over $ 1 billion based on forward budget projections; however,
offering consiuderable gains for patients by adequately healing the disease (AIHW, 2017a). The
decision was arrived at partly by balancing the gains of the therapies versus their cost via
healthcare economic evalutions. Australian citizens are covered for healthcare services through a
national scheme (Medicare) that covers different programmes. PBS is among these programs that
helps with the costs prescription medicines dispenses in the community in addition to private
healthcare facilities and some pharmaceuticals dispensed to public hospital outpatients plus in
public hospitals emergency departments. Patients in Australia contribute to the costs of
medicines under the PBS via copayments (Department of Health, 2017).
The paper will examine the costs of medicines in Australia and drugs under the PBS
programs and challenges facing PBS and finally offer recommendations.
Costs of Medicine Consumption
PBS is the 10th biggest Commonwealth Government program, currently costing over $9
billion annually. This is a vital aspect of the healthcare systems because it offers access to drugs

HEALTH FINANCIAL MANAGEMENT 4
with a minimum co-payment of $6.60. The PBS is one of the crucial characteristics of the
Australian healthcare system. Thus, the government subsidizes the cost of a broad array of
prescription medicines to all citizens in the country (who have Medicare card). The consumers
usually pay a set price (presently $36.90) for universal patients along with $6.00 for concession
card holders where they are safeguarded from elevated costs by safety net arrangements. Many
drugs on the PBS are dispensed by community pharmacies; however, some medicines are only
accessinble in different healthcare facilities. The government of all motivations has intimately
monitored the growth in PBS (Clark & Petrie, 2014). In one decade between 1994-95 andf 2005-
05, the cost of Pharmaceutical Benefits Scheme expanded by about 13 per cent annually. The
growth has slowed down since this period; however, the average yearly expansion on the
Pharmaceutical Benefits Scheme from 2005-06 and 2013-2014 has been about 4.86 per cent
mark. Recently, the cost of medicines declined and the Parliamentary Budget Office forecast that
in the medium-term, the level will be about 0.3% annually. The state anticipates that the average
growth will be about 4-5 annually in the long-term. Thus, the decreasing growth of
Pharmaceutical Benefits Scheme has been linked, in part, to the effect of diverse pricing policies
along with the alterations to the co-payment plus safety net arrangments that were introduced in
2005 (AIHW, 2017a).
Section 85(s85) of the National Health Act 1953 handles medicines, which are primarily
dispensed via community pharmacies, like those drugs often prescribed by general practitioners
(GPs). The medicines provided under this section comprise normally used medicines, like those
utilized for the management of high blood pressure, infections, high cholesterol, asthma,
diabetes, as well as mental health states. The mainstream of costs on the Pharmaceutical Benefits