The Consumption of Medicines in Australia

Running head: HEALTH FINANCIAL MANAGEMENT
THE CONSUMPTION OF MEDICINES IN AUSTRALIA
Name of the Student
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1HEALTH FINANCIAL MANAGEMENT
Introduction
The World Health Organization recently carried out the second review related to the
global production, research, development, international trade and global consumption rates of
pharmaceutical products (WHO, 2018). This survey was named as the “World Drug Situation”
of which, the first report was published in 1988. According to this report Australia is one of the
highest consumers of medicinal products and is one of biggest pharmaceutical market in the
context of sales throughout the world. Despite of these facts the cost of pharmaceutical products
are increasing every year in Australia. To control the medicinal cost effectiveness and to provide
each citizen with right to avail good quality medicines in the year 1948 the Pharmaceutical
Benefit Scheme (PBS) with the aim to provide people in need with medicines (PBS, 2018).
However, The PBS in recent situation is unable to control the increasing cost of medicine sin
Australia. In this assignment, this issue of PBS will be discussed in details. Further, the reasons
of higher costs in Australia will be mentioned, with clear demonstration of type of medicines
(prescribed and non-prescribed). Finally the issues related to PBS system will be mentioned.
The PBS system
The Pharmaceutical benefit scheme or PBS is formed by the federal structure of the
Australian government and it was created to provide concession related to medicine to the senior
section, deprived section and low income communities of the societies. The consumers had to
pay up to $36 for any high cost medicine and the rest is paid by the government (PBS, 2018).
However, the system was unable to include most of the high cost drugs as those did not match
the criteria of drug inclusion. Therefore the aim remains incomplete. Further the Australian
Government formed a statutory committee that determines the pricing of the medicines.

2HEALTH FINANCIAL MANAGEMENT
However, the committee decided prices depending on the usage, rather than the importance of
that drug in the society. The assessment of therapeutic quality, safety and efficacy as well as the
cost effectiveness and clinical relevancy are the factors that are considered for the pricing of the
drugs that leads to increased prices of highest used medicines in Australia (Duckett et al., 2013).
Reason for high cost of medicines
After the development of PBS system, the Australian government formed a committee to
determine the pricing of drug throughout the country. This decision was taken on the basis of a
budget that is opaque and unrealistic as their focus in not decreasing the price of medicines, on
the other hand they increases the price of drugs that are used frequently by the common citizens
(Experts in Chronic Myeloid Leukemia, 2013). Further the listing of drugs in the PBS concession
scheme is also a major concern. According to this criteria, if the yearly consumption of the drug
is below 10 million, then it will be included in the PBS list otherwise the production company
will determine the price with a 6 membered committee of which, 2 members are from
pharmaceutical industry. Therefore, the non-statutory body having industrialists decides the price
of medicines in Australia. The pricing pattern of drug in Australia is mentioned below (Price et
al., 2014).

3HEALTH FINANCIAL MANAGEMENT
The PBS committee recommends a drug for inclusion in PBS
The pricing authority committee also receives an application from the drug
company to include that in PBS
Authority stars negotiation with the company the 10 million
standard is also checked for each drug
If everything is agreed,
the process is forwarded
to health ministry
If not agreed, the drug is
not included in the
pricing list
Cabinet also checks the
expenditure over 10
million factor
Inclusion in PBS
If yes
If no
not included in PBS
(Created by the author)