Pharmaceutical Benefits Scheme: Issues, Policies, and Recommendations

This article discusses the Pharmaceutical Benefits Scheme (PBS) in Australia, its objective, issues, policies, and recommendations. It also explores the factors contributing to the overuse of drugs in Australia.

RUNNING HEAD: PHARMACEUTICAL BENEFIT SCHEME 1
Pharmaceutical Benefits scheme
Name:
Institution:
Tutor:
Date:

PHARMACEUTICAL BENEFITS SCHEME 2
Contents
Executive Summary.......................................................................................................3
Introduction....................................................................................................................4
General discussion of the issue......................................................................................4
Issues explored...............................................................................................................4
Conclusions....................................................................................................................4
References......................................................................................................................5
2

PHARMACEUTICAL BENEFITS SCHEME 3
Executive Summary
The Pharmaceutical Benefits Scheme was established in 1958 in Australia. The
objective of this project is to subsidize all the drugs in Australia so that they are
relatively affordable to all the citizens .Consumers are expected to pay certain co-
payments towards the medication and it is estimated at $6 if the consumer has a
concession card. It is the subsidized price of the medicine that has led to the overuse
of drugs in Australia as compared to other developed countries. With the increasing
population, there has been an increased need for medication and that is why there has
been a rise in the expenditure within the PBS. There are different policies in place to
ensure that the expenditure remains low. Some of the policies include price disclosure
and the community pharmacy agreements. The Australian Government should
consider working with the private sector and increasing the co-payments so that the
PBS remains sustainable.
3

PHARMACEUTICAL BENEFITS SCHEME 4
Pharmaceutical Benefit scheme
Introduction
The Pharmaceutical and the Benefits scheme was set up in 1948 and this
means that it has been in operation for more than 5o years. Over this period of time,
the PBS has graduated from simply supplying lifesaving medicines and the preventive
drugs to a wide form of scheme that also offer access to different generic drugs of
more than 590 (Currie, Chiarella, & Buckley, 2017).This drugs are believed to be
available in more than 1460 forms which are then marketed as 2500 different drug
brands.
The Pharmaceutical Benefit Scheme and the Medicare are the key components
of the Australia healthcare system. The objective or the role of the pharmaceutical
Benefits scheme is to ensure that all the Australia get access to lifesaving medicines at
an affordable cost. With time however, the cost of providing the medicine has risen
and this has led to a lot of scrutiny in the PBS (Faunce, 2015). The aim of this
assignment is to highlight the issues within the PBS, what could be done better or
differently and the factors that have generally contributed to the over use of drugs in
Australia.
DISCUSSION
ISSUES WITH THE PBS
How drugs are listed on the pharmaceutical benefit scheme.
The medicine that are available or listed on the PBS are usually listed in a
certain yellow book and this book is regularly updated. The book also contains the
prescribing restrictions, the maximum quantity of drugs prescribed and finally the
number of repeated prescriptions (Gisev et al., 2017) .The yellow book also lists the
drugs that have been dispensed in a single year.
4

PHARMACEUTICAL BENEFITS SCHEME 5
For any medicine to be listed however, it must receive approval from the
Pharmaceutical Benefits Advisory Committee. This is another independent committee
that is made up of medical doctors as well as pharmacists. This the committee that
provides advice to the Ministry of health on which drugs should be made available on
the PBS. However, the minister only approves medicines that require a minimum
outlay of $10 million per year (Goddard, 2014). If the medicine require more than
that, then that is the function of the cabinet to approve it.
What do consumers pay?
It is the Australian government that covers the majority of the PBS
expenditure. Consumers however also make significant contributions. According to
statistics, consumers were contributing co-payments worth $36.90 as at January
2014.A consumer who is in possession of a valid concession card is only expected to
pay $6 as the co-payments (Hall, 2015). There are also certain rules that govern
acquisition of the concession card. It is expected that to own such a card, the
individual ought to have a concessional pensioner card ,a commonwealth seniors
card ,a health care card and finally the department of veterans affairs white, gold or
the orange card.
Within the PBS, there is what is referred to as the safety net system. This is an
initiative that protects individuals who have chronic health conditions and therefore
need a lot of medicine. Once such individuals reach a certain expenditure in a year,
they start paying lower co-payments.
5

PHARMACEUTICAL BENEFITS SCHEME 6
Changes in the PBS
The PBS has totally changed since it was established more than 50 years
ago .It has evolved both in size and the population. The medical technology has also
improved very much. There is also different therapies used to treat different
conditions. All this changes have generally increased the expenditure within the PBS.
There are however different policy changes that are in place to ensure that the cost
does not go high .In 2012-2013 for example ,the expenditure dropped by 3.49% to
$9.832 billion and this was attributed to the different policies in place (Hopkins,
Vitry, O'Doherty, Proudman, & Wiese, 2015). The figure below shows the trends in
expenditure by the pharmaceutical Benefit scheme.
Policy changes
There have been various policies that have been introduced to control the costs
of the PBS .The policies include referencing of different medicines to similar
prices ,the brand premium policy, the utilization of cost effective means of evaluating
6

PHARMACEUTICAL BENEFITS SCHEME 7
and listing new drugs ,the compulsory price reductions upon patent expiry and finally
the price disclosure (Mellish et al., 2015) .All this policies play a critical role in
ensuring that the cost of operations within the PBS are low so that the drugs are also
affordable to the Australian Citizens.
What could be done better or differently?
It is evident that there increased rates in expenditure within the PBS and this
has led to the increase in costs of medicines. There should be certain strategies that
ought to be utilised so that the medicine listed continue being affordable to all the
Australian citizens.
Increasing patient co-payments is one way to lower the cost of
medicines .Under this initiative, the PBS should either introduce a flat rate for every
citizen or pay co-payments in proportion to the ability of the patient to pay or the
proportion of the exact price of the medicine (Mossialos, Wenzl, Osborn, & Sarnak,
2016). This system will go a long way in reducing the budget of the PBS. According
to statistics, there has been a decline in the PBS expenditure due to the co-payments
that the patients have been paying .In 2014 for example, the patients co-payments
accounted for over 20% of the total expenditure by the PBS.
Reducing subsidies on non-essential drugs is also an option to reduce
expenditure of the PBS. There are some drugs that are usually listed to the PBS but
apparently they are not essential or useful to majority of the Australian Citizens. This
drugs strain the budget yet they are rarely used. Some of the non-essential drugs
include topical anti-fungal medicines ("Scheme that shaped community pharmacy
contract proposals found to benefit patients," 2018). In 2011, the budget announced
the delisting of this topical antifungals whose budget was $16 million. Other non-
essential drugs include the anti-inflammatory products, medicines for common bowel
7

PHARMACEUTICAL BENEFITS SCHEME 8
conditions and finally the nasal sprays. The anti-inflammatory and medicine that are
used for stomach conditions were estimated to cost $112 million for a period of four
years (Thai, Moss, Godman, & Vitry, 2016). The nasal sprays on the other hand were
estimated to cost $61 million for the same period of time .If this drugs are delisted on
the PBS, the expenditure would eventually reduce.
The PBS should also consider sharing the burden with the private sector .In
Australia, the private sector does not subsidize medicines that are listed on the PBS.
This combination of the public and the private insurance scheme would significantly
reduce the cost of operations within the PBS.
What has contributed to the overuse of medications?
According to the world health organization report published in 2013, there is
excessive over use of medications in Australia. There are different reasons as to why
this is the case. One of the leading reason is the introduction of the PBS .The
Pharmaceutical and Benefits Scheme was set up with the objective of subsidizing all
the essential drugs so that they can be affordable to all the citizens (Tischner et al.,
2015).It is the reduced costs of the medicines by the PBS that has contributed to the
over use of the drugs since anyone can easily get access to them. However, there are
limited formulations that should be prescribed by the doctors and the pharmacists.
The graphs below demonstrate how the rate of medication is quite high in Australia
when compared to other developed countries.
8

PHARMACEUTICAL BENEFITS SCHEME 9
9

PHARMACEUTICAL BENEFITS SCHEME
10
Due to the potential over use of drugs, the PBS has come up with different
strategies with the aim of curbing this problem. It is recommended that anyone who
prescribes any medicine should be in possession of a PBS number. The suppliers or
10

PHARMACEUTICAL BENEFITS SCHEME
11
the pharmacists should also have a pharmacy number issued by the PBS (Vitry, Thai,
& Roughead, 2014). All this are just attempts to phase out all the unauthorised or
unscrupulous supply and prescription of drugs. This strategies were implemented in
2013 and so far there are more than 5351 pharmacists that are approved by the PBS.
Conclusions
The Pharmaceutical Benefit scheme was set up in 1948 with the single
objective of subsidizing drugs so that they are affordable to all the citizens. There has
been subsequent rise in the drug overuse in Australia as compared to other developed
countries. To benefit from the PBS, the patients are expected to pay for co-payments
which are averagely $6.Due to the ever increasing population however, the
expenditure has risen and this necessitated the implementation of different policies
such as the price disclosure and referencing different medicines. I would recommend
that for the PBS to improve its efficiency, it should consider working with the private
sector or increasing the co-payments paid by the patients. Healthcare is a basic need
and there should be all attempts that it remains affordable to all the Australian
citizens.
11

PHARMACEUTICAL BENEFITS SCHEME
12
References
Currie, J., Chiarella, M., & Buckley, T. (2017). Privately practising nurse
practitioners' provision of care subsidised through the Medicare Benefits
Schedule and the Pharmaceutical Benefits Scheme in Australia: results
from a national survey. Australian Health Review. doi:10.1071/ah17130
Faunce, T. (2015). How the Australia-US free trade agreement compromised the
pharmaceutical benefits scheme. Australian Journal of International
Affairs, 69(5), 473-478. doi:10.1080/10357718.2015.1048785
Gisev, N., Pearson, S., Karanges, E. A., Larance, B., Buckley, N. A., Larney, S.,
… Degenhardt, L. (2017). To what extent do data from pharmaceutical
claims under-estimate opioid analgesic utilisation in Australia?
Pharmacoepidemiology and Drug Safety, 27(5), 550-555.
doi:10.1002/pds.4329
Goddard, M. S. (2014). How the Pharmaceutical Benefits Scheme began. The
Medical Journal of Australia, 201(1), 23-25. doi:10.5694/mja14.00124
Hall, J. (2015). Australian Health Care — The Challenge of Reform in a
Fragmented System. New England Journal of Medicine, 373(6), 493-497.
doi:10.1056/nejmp1410737
Hopkins, A. M., Vitry, A. I., O'Doherty, C. E., Proudman, S. M., & Wiese, M. D.
(2015). Changes to the Australian Pharmaceutical Benefit Scheme
restrictions for biological disease-modifying antirheumatic drugs have
influenced the use of leflunomide. International Journal of Rheumatic
Diseases, 20(11), 1795-1797. doi:10.1111/1756-185x.12717
Mellish, L., Karanges, E. A., Litchfield, M. J., Schaffer, A. L., Blanch, B.,
Daniels, B. J., … Pearson, S. (2015). The Australian Pharmaceutical
12

PHARMACEUTICAL BENEFITS SCHEME
13
Benefits Scheme data collection: a practical guide for researchers. BMC
Research Notes, 8(1). doi:10.1186/s13104-015-1616-8
Mossialos, E. M., Wenzl, M. W., Osborn, R. O., & Sarnak, D. S. (2016).
International Profiles of Health Care Systems, 2015.
doi:10.15868/socialsector.25100
Scheme that shaped community pharmacy contract proposals found to benefit
patients. (2018). The Pharmaceutical Journal.
doi:10.1211/pj.2018.20204648
Thai, L. P., Moss, J. R., Godman, B., & Vitry, A. I. (2016). Cost driver analysis of
statin expenditure on Australia’s Pharmaceutical Benefits Scheme. Expert
Review of Pharmacoeconomics & Outcomes Research, 16(3), 419-433.
doi:10.1586/14737167.2016.1136790
Tischner, J. R., Hartung, D. M., Rittenhouse, B. E., Hartung, D. M.,
Bourdette, D. N., Whitham, R. H., … Whitham, R. H. (2015). The cost of
multiple sclerosis drugs in the US and the pharmaceutical industry: Too
big to fail?Author ResponseAuthor Response. Neurology, 85(19), 1727-
1728. doi:10.1212/wnl.0000000000002095
Vitry, A. I., Thai, L., & Roughead, E. E. (2014). Pharmaceutical Pricing Policies
in Australia. Pharmaceutical Prices in the 21st Century, 1-23.
doi:10.1007/978-3-319-12169-7_1
13