The Cost Of Medicine Consumption In Australia

Pharmaceutical Benefits Scheme (PBS)

Discuss about the Australian Pharmaceutical Benefits Scheme for Consumption of Medicines.

Medicine consumption rate and cost is highest in Australia compared to other developed countries. The government cost of running Pharmaceutical Benefits Scheme is steadily increasing every year. An increase in cost of medicine increases the government financial burden. The Australian government through the Department of health has a responsibility to provide its citizens with affordable, accessible, reliable, and timely medicine (Karnon,  Edney, & Sorich, 2017). The government provides subsidized medicines through Pharmaceutical Benefits Scheme that lists, distributes, and manages prices and costs of medicines in Australia. The cost of medicine is an important aspect for the government continued provision of affordable medicine to Australian. Overwhelming increase in medicine cost is unsustainable and can lead to government PBS program being stopped as a result of underfunding or lack of funds. The following report discusses the cost of medicine consumption in Australian, type of medicine consumed and the problems with Pharmaceutical Benefits Scheme (PBS).

Australian Pharmaceutical Benefits Scheme (PBS) is a program under Australian Government National Medicine policy whose mandate is to provide affordable, reliable, and timely access to medicine to Australian citizens (Pearson et al., 2015). The program aims to meet Australians medications and other related services for optimal health and economic objectives for the country (“Pharmaceutical Benefits Scheme – Australian Government Department of Human Services”, 2018). The PBS first began in 1948 as a limited scheme for pensioners and 139 life-saving and diseases preventing medical coverage (Mellish et al., 2015). The PBS program is part o National Health regulation 1960 and National Health Act 1953. The government uses the PSC to subsidize medicine cost in the country. The program lists medicines that are then dispensed to citizens by pharmacists. The PBS services are availed to residents who have Medicare cards or visitors from countries that have Reciprocal Health Care Agreement (RHCA) with Australia. The services are also eligible to veterans that have DVA cards (Karnon,  Edney, & Sorich, 2017).

The citizens eligible to PBS program pay less to actual medicine price in the market. The co-payment for concession card is $6.0 as opposed to $39.50 for general public in 2018. The Safety Net price changed from $378 in 2017 to $384 in 2018 for concession card holders and $1494 in 2017 to $1521.80 in 2018 for other patients (Datta Gupta, & Wilson, 2018). The Australian government has therefore been able to maintain low cost of medicines by allowing the patients to pay a small portion while its pay the rest. This has reduced the high medicine burden to Australians and enabled them to access affordable medicines.

The Australian Government National Medicine Policy

The total PBS government expenditure for section 100 and section 85 in 2016-2017 financial year amounted to $12058 million. This amount increased by 11.3% from the previous financial year that had recorded $10838 million. The total volume of prescriptions in 2016-2017 financial year decreased by 4% to 195.8 million from 203 million in 2015-2016 FY. The PBS Section 85 government expenditure was recorded to be $8729.2 million that represented 86.7% of PBS prescription total cost. The remaining 13.3% of the cost was contributed by patients and amounted to $1338.6 million. The large percentage of government expenditure on PBS section 85 prescription in 2016- 2017 financial year was toward concessional cardholders. This amounted to $6520.3 million which is 74.7% of the total expenditure compared to $6081 million in 2015- 2016 forming 75.6% of the total PBS prescription expenditure (“Pharmaceutical Benefits Scheme (PBS) | PBS Expenditure and Prescriptions”, 2018).

Table 1:  PBS Expenditure on Accrual Accounting Basis, 2015-16 and 2016?17

Category	2015-16	Percentage of Total	2016-17	Percentage of Total	Change	Change Percentage
Section 85 – Concessional	$               6,172,196,919	56.9%	$               6,716,569,270	55.7%	$                  544,372,351	8.8%
Section 85 – General	$               1,912,963,069	17.7%	$               2,176,675,514	18.1%	$                  263,712,445	13.8%
Doctors’ Bag	$                     17,218,481	0.2%	$                     18,906,365	0.2%	$                       1,687,884	9.8%
Section 100*	$               2,724,933,327	25.1%	$               3,135,750,822	26.0%	$                  410,817,495	15.1%
Safety Net Cards	$                     10,673,298	0.1%	$                       9,721,956	0.1%	-$                          951,343	-8.9%
Total	$            10,837,985,095	100.0%	$            12,057,623,927	100.0%	$               1,219,638,833	11.3%
Total Including Revenue**	$            10,143,081,604		$               8,790,109,229

Average dispensed price as per PBS Section 85 prescription increased to $51.45 as compared to $46.15 recorded in 2015-2016 financial year. This average dispended price combined the government cost plus the patient contribution. The government average cost of dispensed price increased from $39.45 in 2015- 2016 financial year to $44.58 in 2016- 2017 financial year.   

Table 2: PBS S85 Prescription Volume for 4 years

 Table 3: Graph for PBS S85 Expenditure for 4 FYs

The increasing PBS expenditure has been contributed by several factors. These factors drive the cost high every financial year. They include the aging population, manufacturing of new medicines, over prescribing, and patient awareness.

Australian has an increasing aging population that requires increased medical care. Australia has 15% of the population aged 65 years and above. Currie, Chiarella, & Buckley, (2017) research found that half of old people reported to have a degree of disability. Aging people have deteriorating health that requires increased medical care. 45% older people require palliative care that is important to maintaining their quality of life. It is estimated that Australia will aging population under end-of-life care will be more than 500000 by 2020 (Currie, Chiarella, & Buckley, 2017). This will further increase medicine cost that will be incurred by the government.

Secondly, manufacturing newly developed medicines increase the cost of medicine. Newly manufactured drugs are more expensive compared to existing drugs. Manufacturers incur additional cost to produce a new drug and acquire patent to protect the knowledge and brand (Blanch, Pearson, & Haber, 2014). Manufacturers transfer this cost to PBS that increase the total expenditure. New drugs are unavoidable because they are improvement to existing drugs and are aimed at meeting the current problem. This entails that newly developed drugs are part of improving health care through improved high quality medicines.

Medicine Cost and Government Financial Burden

Another reason for increased medicine expenditure is over prescribing. Over prescribing medicine increases quantity of medicine uptake per patient. Some doctors and pharmacists prescribe much dosage leading to excess quantity uptake by a single patient (Page, Kemp-Casey, Korda, & Banks, 2015). The practitioners’ inefficiency therefore, leads to increased misuse of medicines in the country that increase the PBS expenditure.

Lastly, there has been increased patient awareness to register for Medicare services. Australian residents have highly subscribed to Medicare that enables them access medicines at lower government subsidized price. The number of citizen using Medicare increased from 85.1% in 2015- 2016 financial year to 85.7% in 2016-17 FY. This percentage has steadily increased compare to 82.2% in 2012- 2013 financial year (Harris, Daniels, Ward, & Pearson, 2017).

Medicines are consumed in different level as stipulated under Section 100. These are the prescribed and authorized programs under which patients receive funding for their medicine;

• Growth Hormone Program
• Highly Specialized Drug
• Efficient Funding of Chemotherapy
• IVF/GIFT program
• Botulinum Toxin Program
• Opiate Dependence Treatment

Medicines that do not fall in these categories are non-prescribed and are not allowed to be dispensed to patients at pharmacists’ outlets.

Conclusion

From the discussion of the report, the Pharmaceutical Benefit Scheme plays an important role in providing affordable, reliable, and timely medicine access to Australians. The PBS expenditure has been increasing for the past years that have been caused by increasing aging population, newly expensive medicines, over prescribing and increased patient awareness of Medicare. There is importance of controlling the medicine expenditure by PBS to enhance sustainability of the program. The report recommends that PBS at adopt cost effective strategies that maintain or minimize the cost of providing medicines in Australia. The report therefore concludes that PBS has an important role in the health sector and should increase efficiency to minimize cost and make the program sustainable for the government budget and benefits to citizens.      

The report recommends the following to Pharmaceutics Benefit Scheme in order to minimize cost while optimizing health care delivery;

1. Promoting preventive strategies. This will involve preventing serious conditions from developing leading palliative care. Preventive strategies will include healthy lifestyle campaigns and early diagnostic of diseases. This will reduce the number of patients under serious conditions who require large quantities of medicines. Preventive measure will also shorten time spent in hospitals.
2. Regulating per prescription. PBS should institute regulation on dosage prescription to avoid overdosing. This will improve efficiency in utilization thereby reducing the expenditure.
3. Funding manufacturers’ medical research. This recommendation will ensure that newly developed medicines are not expensive because there are incentives for new medicine from the government.  

References

Blanch, B., Pearson, S. A., & Haber, P. S. (2014). An overview of the patterns of prescription opioid use, costs and related harms in Australia. British journal of clinical pharmacology, 78(5), 1159-1166.

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.

Datta Gupta, A., & Wilson, D. H. (2018). Botulinum toxin for spasticity: a case for change to the Pharmaceutical Benefits Scheme. The Medical Journal of Australia, 208(9), 1.

Harris, C. A., Daniels, B., Ward, R. L., & Pearson, S. A. (2017). Retrospective comparison of Australia’s Pharmaceutical Benefits Scheme claims data with prescription data in HER2-positive early breast cancer patients, 2008-2012. Public Health Research and Practice, 27(5), 1-9.

Home – Australian Institute of Health and Welfare. (2018). Australian Institute of Health and Welfare. Retrieved 18 April 2018, from https://www.aihw.gov.au/

Karnon, J., Edney, L., & Sorich, M. (2017). Costs of paying higher prices for equivalent effects on the Pharmaceutical Benefits Scheme. Australian Health Review, 41(1), 1-6. 

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.

Page, E., Kemp-Casey, A., Korda, R., & Banks, E. (2015). Using Australian Pharmaceutical Benefits Scheme data for pharmacoepidemiological research: challenges and approaches. Public Health Res Pract, 25(4), e2541546.

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.

Pharmaceutical Benefits Scheme (PBS) | PBS Expenditure and Prescriptions. (2018). Pbs.gov.au. Retrieved 18 April 2018, from https://www.pbs.gov.au/info/statistics/expenditure-prescriptions/pbs-expenditure-and-prescriptions

Pharmaceutical Benefits Scheme – Australian Government Department of Human Services. (2018). Humanservices.gov.au. Retrieved 18 April 2018, from https://www.humanservices.gov.au/individuals/services/medicare/pharmaceutical-benefits-scheme