Pharmaceutical Benefits Scheme: Managing Expenditure and Improving Efficiency

RUNNING HEAD: HEALTH FINANCIAL MANAGEMENT 1
HEALTH FINANCIAL MANAGEMENT
NAME:
INSTITUTION:
TUTOR:
DATE:

HEALTH FINANCIAL MANGEMENT 2
HEALTH FINANCIAL MANAGEMENT
INTRODUCTION
In the current century, prescription of drugs is perceived to be the focal point of
treatment. Drugs have become so expensive in majority of the developed and the developing
countries making it quite difficult for majority of the citizens to acquire the medicine. The
situation gets worse when the respective governments fail to subsidize or employ price control
mechanisms. Healthcare systems are different among developed countries (Currie, Chiarella, &
Buckley, 2017). In the United States of America for example, the healthcare sector is dominated
by the private sector while In the United Kingdom it is predominantly the public sector .In
Ireland, all the sectors are at equal levels. A common feature however is that there are different
strategies that are employed so as to offer subsidies towards medications to certain groups of
people like the aged or the lower class individuals. Countries across the world including
Australia use different mechanisms so as to contain the cost of drugs such as the price and profit
control towards pharmaceutical companies (Pearson et al., 2015). Partial or fully Subsidized
system with patient co-payments is another mechanism employed. Others prefer using reference
price lists and listing reimbursable drugs. However, most of the countries provide subsidy
specifically to drugs and this forms part of a reimbursable medication list.
PBS increasing access to medicine
The Pharmaceutical Benefits Scheme is an Initiative that was set up by the Australian
Government with the core objective of providing subsidized prescribed medicine to all the
Australian Citizens as well as the foreign visitors from countries that have an agreement with
Australia. The initiative was set up in 1948 and the initial objective was to provide affordable,

HEALTH FINANCIAL MANGEMENT 3
reliable and a wide variety of drugs to the Australian citizens. This was according to the
Department of Health Report that was published in 2014(Currow & Sansom, 2014).The PBS is
usually governed by the National Health of 1953.According to a report by the Australian
Institute of Health and Welfare, the estimated drugs that are subsidized through the PBS per year
is about $9 billion.
Initially, there was less prescriptions that were covered by the PBS since it met a lot of
resistance from the medical professions. The new government that was elected in 1949 however
revised the PBS and in 1950, a list of 139 drugs were provided free to the community (Faunce,
2015). Majority of those drugs were the lifesaving and prevention drugs. From there, more drugs
have been covered by the PBS. According to statistics published in 2014,601 generic products
which were available in 1469 forms of strengths were being covered by the PBS.
Studies have established that drugs that are most prescribed are those that deal with the
cardiovascular system. These group of drugs accounts for over 30% of the prescriptions and
costs (Harris, Daniels, Ward, & Pearson, 2017). The prescriptions for the nervous system are the
second at 20% while the Antineoplastic as well as the immunomodulation agents account for less
than 1% but account for 6% of the costs.
Initially, the PBS never needed any patient copayment but on March 1, in 1960, the PBS
came up with a 50 cent copayment and it was to cover the general beneficiaries. By 1990, the
copayment of a$2.50 for a single prescription was then introduced. As of 2003, the copayment
had already increased to A$3.70 for a single prescription for pensioners alone (Karnon, Edney, &
Sorich, 2017) .For the general beneficiaries however, the copayment by then was A$23.10.