Academic journal article Australian Health Review

The Affordability of Prescription Medicines in Australia: Are Copayments and Safety Net Thresholds Too High?

Academic journal article Australian Health Review

The Affordability of Prescription Medicines in Australia: Are Copayments and Safety Net Thresholds Too High?

Article excerpt


One of the core aims of Australia's National Medicines Policy is to encourage access to necessary medicines at a cost that is affordable to individuals and the community.1 The delivery of affordable medicines is mainly through the Pharmaceutical Benefits Scheme (PBS), which is funded by the federal government and provides universal access to necessary pharmaceuticals. Most patients obtain their prescription medicines through the PBS, which covers ~802-90%3 of medicines prescribed in Australia.

The PBS operates without any upper limit on its annual expenditure, that is, it has an uncapped budget. This is not to say there are no constraints on PBS expenditures. There are several methods that are used to help contain PBS expenditures and these are: measures to ensure the Government buys medicines at prices that represent value for money; the use of cost sharing with patients; and the activities of the National Prescribing Service that are designed to moderate demand through education of prescribers and the public. Despite these policy tools PBS expenditures have recorded relatively strong rates of growth: the cost of operating the PBS has been rising by an average of 8.4% per annum from 1999-2000 to 2009-104 and has grown as many expensive new drugs have been listed and widely prescribed.

This study focussed on the impact of cost sharing. Containing PBS expenditures through cost sharing is mainly exercised through the use of copayments, which are the contributions patients make to the cost of their medicines. The rationale for cost sharing largely centres on a perceived need to send a 'price signal' to patients to discourage unnecessary or suboptimal use which might be expected if PBS insurance resulted in nil out-ofpocket patient costs (moral hazard).5,6 Cost sharing has a direct impact on the affordability of medicines for patients and there is evidence that the impact of pharmaceutical cost sharing is a reduction in the use of both essential and nonessential drugs particularly amongst the poor and elderly.7-10

Affordability problems for patients have been identified in Australia previously and although based on varied methodologies, their findings are consistent: substantial numbers of Australians report difficulties meeting the cost of their prescriptions.5,11-16 For example, in 2001 cost was given as a reason for not obtaining a prescription medicine by between 18 and 21% of Australians.14 In 2003, 20% of Australians reported not obtaining a prescription medicine because of cost5 and this figure was 22% in 2004 and in 2005.15,16

Under current PBS arrangements there are two categories of patient: general and concession (income support recipients such as aged pensioner and unemployed). In January 2012, the maximum per prescription copayment for a PBS listed medicine was set at $35.40 for general patients and $5.80 for concession patients.17 The annual medicine expense for patients is tempered by safety net arrangements. In any calendar year, the safety net provisions are triggered when a patient spends a given amount on PBS listed medicines. In 2012 the safety net was set at $1363.30 for general patients and $448.00 for concession patients. On reaching this threshold, general patients will pay a $5.80 copayment per prescription and concession patients receive prescriptions free of any copayment.18 In addition to the copayment, concession and general patients may still pay a 'brand price premium' which is a price margin that is paid by the patient. It is incurred when a medicine supplier will only supply their drug at a price that is higher than the reimbursed 'benchmark price' - the lowest price of a reimbursed medicine within an identified therapeutic group. Brand price premiums are payable even when the safety net has been reached.

The present study aimed to develop and report indicators that represent the affordability of prescription medicines for patients. The intention is to build these indicators into a comprehensive tool to evaluate the affordability of prescription medicines for patients. …

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