Pharmaceutical Benefit Scheme: Financial Impact on Australia

This report evaluates the general concept and issues with Pharmaceutical benefit scheme initiated by government of Australia. The scheme has been in operation for a long period of time and it has provided its benefit to public. This report has provided some statistics that evaluates the level of expenditure done by government of Australia on Pharmaceutical benefits scheme. In addition to that this report has also evaluated some issues that are currently faced by the scheme.

Health Financial Management
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Contents
Executive summary....................................................................................................................3
Introduction................................................................................................................................4
General discussion.....................................................................................................................4
Issues explored...........................................................................................................................5
Conclusion..................................................................................................................................8
References..................................................................................................................................9
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Executive summary
Pharmaceutical benefit scheme is a scheme that is initiated by government of Australia in in
order to provide prescribed medication that at lower prices to residents of Australia. Main
motive of this scheme was to improve the quality of Healthcare services in Australia. This
report has examine the various rules and regulation of PBS. After a detailed evaluation of the
scheme it was evaluated that it can have potential negative financial impact on economy of
Australia in coming future. There are some issues with this scheme that are discussed in this
report along with some recommendations that can help in dealing with the issues.
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Introduction
Pharmaceutical industry is one of the most important industry in business industry of a
country. This industry is responsible for providing Healthcare medicines and other services to
public living in a country. It is important for government of a country to invest in this
industry as Monopoly of private sector can affect the prices charged from the customer.
Government of Australia has initiated a scheme that provide subsidized prescription drugs to
people residing in Australia. This scheme is called as Pharmaceutical benefit scheme. This
report will evaluate some of the general instructions given in this scheme and benefits
achieved by people in Australia with respect to this scheme (Mellish et.al, 2015). In addition
to that issues related to this scheme were also discussed in this report. At last some of the
recommendations will be provided that can help in improvement of execution and planning
of scheme.
General discussion
Purpose of the scheme is to provide subsidised medications to residents of Australia and this
subsidised cost of medicine is provided by government of Australia. A list of subsidised
diseases and medications that are allowed under this schema are prepared and updated on
annual basis by government health department. All the activities under this scheme are taken
and governed by National Health act 1953 (Pearson et.al, 2015). It is important for an
Australian resident to have Medicare card to avail services of this scheme and there are
specific rules and policies that are followed before issuing card to Australian resident. There
are specific number of times that prescribed medication can issue due to a particular card
holder in particular financial year. Application of this restriction is very important as misuse
of this card can be taken by non-card holder and it will increase total health expenditure of
government.
There are 4 category of resident Australians that are eligible for this scheme are pensioner
concession card holders, Commonwealth senior health card holders, Healthcare card holders
and DVA white, gold or Orange card holders. There are specific amount that are required to
be paid by card holder while taking prescriptions by availing services of this scheme, such
payments are called as co-payments (Vitry & Roughead, 2015). These co-payments are
generally very low as compared to what would have to be paid by patient in absence of
Pharmaceutical benefit scheme. For example, from January 2018 card holder is required to
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pay $6.4 for majority of Pharmaceutical benefits scheme medications which would have cost
around $39.5. Rest of the amount that is $ 33.1 will be paid by government of Australia under
the scheme. Therefore it can be said that this is a very profitable scheme for peoples that are
on regular medications and suffering from chronic diseases. These small cost paid by patients
in this scheme in form of co-payment helps in covering the expenditure of regulation of the
scheme. Rate of these co-payments are decided at the first day of every financial year (Cheng
et.al, 2012).
Over the period of time this scheme has developed into full scale beneficial program for
residents of Australia. First comprehensive scheme of this type was initiated in 1960 which
increases that number and type of diseases for which subsidies were provided by government.
Over the period this scheme has taken substantial part of total Healthcare budget decided by
government. In the year 2014-15, Pharmaceutical benefits scheme accounts for around 21%
of total health budget decided by the government. In the same years there were around 211
million prescription that were subsidised with the help of the scheme (Mellor et.al, 2012).
This subsidization of 211 million prescriptions cost around $9 billion to government of
Australia. In the year 2016-17 total expenditure on accrual accounting basis relating to
Pharmaceutical benefit $12,058 million. If a comparison is made year 2015-16 total
expenditure is increased by 11% as total expenditure on this scheme in previous year
was $10,838 million. Out of these total expenditures majority of the expenditure is conducted
is directed toward concessional card holders under this scheme which account for around 70
to 75% of total expenditure (Pearson et.al, 2015).
Issues explored
Issues with the scheme
There are certain issues that arises out of this Pharmaceutical benefit scheme initiated by
government of Australia. This part of the report will discuss some of these issues that can
expect to future prospects of this scheme.
Lack of transparency and operation of the scheme is one of the biggest disadvantage of this
scheme. There are various stakeholders involved in this scheme and is stakeholders have right
to know all the activities conducted including financial activities in the scheme. There is a
requirement of bringing transparency in operations of this scheme which will help
stakeholders such as government to understand method of operations. With the help of
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transparency, it can also be evaluated that benefits of the schema going to people that are in
need of medical help and support (Thai, Vitry & Moss, 2016).
Eligibility criteria of participation in the scheme is also very relaxed. It means that any
Australian resident can easily become beneficiary of the scheme. This is not good situation
for government of Australia and people that actually need medical help and support. There
are various people listed in this scheme that are financially capable of paying their medical
expenses and does not require participation in this scheme (Schweitzer & Lu, 2018).
Currently 21% of total expenditure on Healthcare in a financial year is directed towards
Pharmaceutical benefit scheme and with increase in population this amount will increase in
future. With this rate government of Australia will not be able to provide benefits of the
scheme on continuous basis. Therefore there is a requirement of providing disk into Limited
people that actually not capable of making payments for their medical care.
The number of medicines included in the schema are also increasing on yearly basis that will
put pressure on government financially. This has resulted into overuse of Meditation by
Australian public which will have an impact overall health of the people. As the medications
are available at lower cost people are over using the scheme and in this process they are
affecting their long term health. There are various studies that has indicated that
Pharmaceutical benefit scheme has increase the use of medication in Australia. Intention of
the scheme is very effective but its execution has resulted into various limitation factors that
will be a problem in long run for the public of Australia and government of Australia.
The scheme has become key factors that is discussed in Political environment of the country
as every candidate proposed to decrease the co-payments that are required to be paid by
patient. Inclusion of politics in Healthcare industry is never a good sign for overall
performance of any medical scheme. In addition to that pharmaceutical companies are also
increasing their prices as a substantial amount of total price of medication is paid by
government. This increase in prices has put an immense pressure on people that are not listed
in the scheme. High prices are required to be paid by these non-card holders and their
financial position will be affected by this Pharmaceutical benefit scheme.
Improvements
There is a requirement of bringing a level of transparency in operations of management of
this scheme. This will help in effectively evaluating the cost benefit analysis of this scheme
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so that proper plans can be prepared in order to make sure that and benefits of the schema
going to right people. In addition to that eligibility criteria of this game should be based on
income generated by a person rather than other ways of criteria. Chronic diseases can also be
included in this scheme in addition to eligibility on the basis of income (Duckett, Breadon,
Ginnivan & Venkataraman, 2013). Because if restrictions are not applied by government and
they will not be able to provide the services for a long period of time and that will create
more disadvantages for the public.
Overuse of Medications
In the past decade the use of medication in Australia has increased and PBS has contributed
substantially to this increase in use of medication. Any card holder can get prescribed drugs
on very lower prices for numerous time in a particular year. There are various opioid pain
treatment medicines available with the help of this scheme and there are various people that
are misusing services of this scheme for recreational drugs. It is true that there are various
advantages of this scheme but there are various people that are misusing rules and policies of
the scheme (Stark, McGuire & van Driel, 2016).
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Conclusion
This report has evaluated the general concept and issues with Pharmaceutical benefit scheme
initiated by government of Australia. The scheme has been in operation for a long period of
time and it has provided its benefit to public. This report has provided some statistics that
evaluates the level of expenditure done by government of Australia on Pharmaceutical
benefits scheme. In addition to that this report has also evaluated some issues that are
currently faced by the scheme. There should be some strict policies and procedures that
should be included in execution of the scheme otherwise it would create a heavy financial
impact on Economy of Australia.
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References
Cheng, A. C., Turnidge, J., Collignon, P., Looke, D., Barton, M., & Gottlieb, T. (2012).
Control of fluoroquinolone resistance through successful regulation, Australia. Emerging
infectious diseases, 18(9), 1453.
Duckett, S. J., Breadon, P., Ginnivan, L., & Venkataraman, P. (2013). Australia's bad drug
deal: high pharmaceutical prices. Melbourne: Grattan Institute.
Mellish, L., Karanges, E. A., Litchfield, M. J., Schaffer, A. L., Blanch, B., Daniels, B. J., ... &
Pearson, S. A. (2015). The Australian Pharmaceutical Benefits Scheme data collection: a
practical guide for researchers. BMC research notes, 8(1), 634.
Mellor, J. D., Van Koeverden, P., Yip, S. W. K., Thakerar, A., Kirsa, S. W., & Michael, M.
(2012). Access to anticancer drugs: many evidence‐based treatments are off‐label and
unfunded by the Pharmaceutical Benefits Scheme. Internal medicine journal, 42(11), 1224-
1229.
Pearson, S. A., Pesa, N., Langton, J. M., Drew, A., Faedo, M., & Robertson, J. (2015).
Studies using Australia's Pharmaceutical Benefits Scheme data for pharmacoepidemiological
research: a systematic review of the published literature (1987–
2013). Pharmacoepidemiology and drug safety, 24(5), 447-455.
Pearson, S. A., Pesa, N., Langton, J. M., Drew, A., Faedo, M., & Robertson, J. (2015).
Studies using Australia's Pharmaceutical Benefits Scheme data for pharmacoepidemiological
research: a systematic review of the published literature (1987–
2013). Pharmacoepidemiology and drug safety, 24(5), 447-455.
Schweitzer, S. O., & Lu, Z. J. (2018). Pharmaceutical Economics and Policy: Perspectives,
Promises, and Problems. Oxford University Press.
Stark, R. J., McGuire, T., & van Driel, M. L. (2016). Medication overuse headache in
Australia: a call for multidisciplinary efforts at prevention and treatment. The Medical
Journal of Australia, 205(6), 283.
Thai, L. P., Vitry, A. I., & Moss, J. R. (2016). Pricing and utilisation of proton pump
inhibitors in South Australian public hospitals and the Pharmaceutical Benefits
Scheme. Journal of Pharmacy Practice and Research, 46(2), 130-136.
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Vitry, A., & Roughead, E. (2014). Managed entry agreements for pharmaceuticals in
Australia. Health Policy, 117(3), 345-352.
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