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The Australian government has implemented various strategies to control the cost of pharmaceuticals and ensure they are affordable for its citizens. The Pharmaceutical Benefits Scheme (PBS), introduced in 1948, is a key initiative that provides government-subsidised medicines for most medical conditions. The PBS schedule lists all the medicines available to patients at a subsidised price, with the aim of making essential drugs accessible and affordable. The government also offers rebates for private medical practices, stays in public hospitals, and private health insurance. The National Medicines Policy guides policy development, emphasising timely access to affordable medicines. The cost-effectiveness of drugs is assessed by the Pharmaceutical Benefits Advisory Committee (PBAC), which considers health benefits, side effects, and affordability. While the government manages the price of each medicine on the PBS, the total cost of the scheme is uncapped, and strategies are employed to maintain affordability.
| Characteristics | Values |
|---|---|
| Government control of pharmaceutical costs | The Australian government subsidises many medicines under the Pharmaceutical Benefits Scheme (PBS) and Repatriation PBS (RPBS) to keep the cost of medicines down for Australians. |
| Who does the PBS apply to? | The PBS is available to all Australian residents who hold a current Medicare card. It is also available to overseas visitors from countries with which Australia has a Reciprocal Health Care Agreement (RHCA). |
| Cost-effectiveness | The government drug budget is not capped and has been increasing at a rate of about 10% per year. |
| Cost of pharmaceuticals | Medicines approved for subsidy range from less than a dollar to more than $800 per day. |
| Subsidy requirements | For a drug to be included on the subsidy list, its manufacturer must demonstrate that it is both clinically effective and cost-effective. |
| National Medicines Policy | The Australian government has a National Medicines Policy to guide policy development of pharmaceuticals. The key elements are timely access to affordable medicines that Australians need. |
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What You'll Learn
The Australian Government's Pharmaceutical Benefits Scheme (PBS)
The Pharmaceutical Benefits Scheme (PBS) is a government-subsidised universal system of pharmaceutical provision in Australia. It was established in 1948 as a limited scheme, offering free medicines for pensioners and a list of 139 'life-saving and disease-preventing' medicines at no cost for other community members. Over the years, the PBS has expanded significantly in terms of the range of drugs covered and expenditure.
The PBS is part of the Australian Government's National Medicines Policy, which aims to meet medication and related service needs to achieve optimal health outcomes and economic objectives. The PBS provides timely, reliable, and affordable access to necessary medicines for Australian residents with a current Medicare card. It is managed by the Department of Health and Aged Care and administered by Services Australia. The PBS Schedule, which is now online and updated monthly, lists all the medicines available for dispensation at a government-subsidised price.
To be included on the PBS, medicines undergo rigorous cost-effectiveness analysis by the Pharmaceutical Benefits Advisory Committee (PBAC). This committee considers health benefits, side effects, and cost-effectiveness before making recommendations to the Australian Government. If a medicine is deemed acceptably cost-effective, the government negotiates its listing on the PBS with the supplier.
The PBS incorporates patient copayments, with differentials for the general population and concessional beneficiaries. In October 2022, a legislative amendment was passed to reduce the general copayment to $30 from January 2023, providing cost-of-living relief to Australians amid rising interest rates. Additionally, the Australian Government has implemented strategies such as brand premiums on medications to limit the overall cost of the PBS.
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The PBS safety net
The Pharmaceutical Benefits Scheme (PBS) is a government-subsidised universal system of pharmaceutical provision that has been in place in Australia for over 50 years. The PBS provides timely, reliable, and affordable access to necessary medicines for Australians. The PBS Safety Net is a part of the PBS and offers additional support to those who require a large number of medicines.
The PBS Schedule lists all the medicines available to be dispensed to patients at a government-subsidised price. The PBS has been in existence since 1948 and is governed by the National Health Act 1953 (Commonwealth). The Scheme is available to all Australian residents who hold a current Medicare card. The PBS Safety Net threshold for 2025 is set at $277.20 for patients with a concession card and $1,694.00 for other eligible patients.
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Cost-effectiveness of subsidised drugs
The Australian Government has a subsidised universal system of pharmaceutical provision, the Pharmaceutical Benefits Scheme (PBS), which has been in place for over 50 years. The PBS is part of the Australian Government's broader National Medicines Policy, which aims to meet medication and related service needs, so that both optimal health outcomes and economic objectives are achieved.
The PBS provides timely, reliable, and affordable access to necessary medicines for Australians. The PBS Schedule lists all the medicines available to be dispensed to patients at a government-subsidised price. The PBS consumes around 14% of total government healthcare expenditures and has grown substantially in both the range of drugs covered and expenditure since it was introduced in 1950.
The Australian Government uses various health technology assessment processes to inform what to subsidise. For medicines, it is the Pharmaceutical Benefits Advisory Committee (PBAC) that considers applications to list medicines on the PBS, including health benefits, side effects, and cost-effectiveness. The committee then makes a recommendation to the Australian Government. If a medicine is found to be acceptably cost-effective for the extra health benefits it provides over currently available medicines, the Australian Government negotiates arrangements to list it on the PBS with the supplier.
The PBS safety net provides additional support to those who need lots of medicines. The Australian Government is making hundreds of PBS medicines cheaper by allowing millions of Australians to buy two months' worth of medicine for the price of a single prescription. The PBS limits the amounts of a PBS-listed medicine in a prescription and the number of repeat prescriptions before a patient must be re-examined by their doctor.
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The National Medicines Policy
The NMP has four central pillars:
- Fair, timely, safe, and reliable access to medicines and medicines services at affordable prices.
- Medicines are high-quality, safe, and effective.
- The quality use of medicines is promoted.
- The medicines industry and researchers work together and are innovative and sustainable.
The NMP aims to future-proof the health system to ensure Australia remains a priority country for launching new medicines, vaccines, and biotherapeutics. It also guides and informs a range of activities, encompassing medication and medical services management, access, and affordability.
The Pharmaceutical Benefits Scheme (PBS) is a part of the Australian Government's broader National Medicines Policy. The PBS provides timely, reliable, and affordable access to necessary medicines for Australians. The PBS began as a limited scheme in 1948, offering free medicines for pensioners and a list of 139 'life-saving and disease-preventing' medicines for free. Today, the PBS is governed by the National Health Act 1953 and is available to all Australian residents with a Medicare card. The government subsidises the cost of medicine for most medical conditions through the PBS, with the aim of meeting medication and related service needs to achieve optimal health and economic outcomes.
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The Repatriation Pharmaceuticals Benefits Scheme (RPBS)
The Australian Government has implemented various strategies to control the cost of pharmaceuticals in the country. One of these strategies is the Pharmaceutical Benefits Scheme (PBS), which has been in place since 1948 and provides timely, reliable, and affordable access to necessary medicines for Australians. The PBS is part of the country's National Medicines Policy, which aims to promote the quality use of medicines and ensure that Australians have timely access to the medicines they need at an affordable cost.
The Australian Government carefully assesses the therapeutic benefits and costs of medicines under the RPBS, including comparisons with other treatments. If a medicine is found to be acceptably cost-effective, the government negotiates its price with the supplier to ensure that it is affordable for those who need it. This process is similar to the one used for the PBS, where the Pharmaceutical Benefits Advisory Committee (PBAC) considers applications to list medicines on the scheme based on health benefits, side effects, and cost-effectiveness.
The RPBS is an important component of Australia's healthcare system, ensuring that eligible Australians have access to the medicines they need to maintain their health. By subsidizing the cost of medicines, the RPBS helps to reduce the financial burden on individuals and families, making necessary medications more accessible and affordable. This is particularly important for veterans, war widows and widowers, and their dependents, who may face unique health challenges and financial circumstances.
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Frequently asked questions
Yes, the Australian government does control the cost of pharmaceuticals to an extent. The government manages the price of each medicine on the Pharmaceutical Benefits Scheme (PBS), a scheme that has been in existence since 1948. The PBS provides timely, reliable, and affordable access to necessary medicines for Australians.
The Australian government uses various health technology assessment processes to inform what to subsidise. The Pharmaceutical Benefits Advisory Committee (PBAC) considers applications to list medicines on the PBS, including health benefits, side effects, and cost-effectiveness. If a medicine is found to be acceptably cost-effective, the Australian government negotiates its price with the supplier.
The Australian government's control of the cost of pharmaceuticals aims to achieve efficiency or value for money. The government also wants to maintain autonomy in decision-making and continuity of drug supply against the context of a large, powerful, and globally organized pharmaceutical industry.
