HAD517-The Australian Pharmaceutical Benefits Scheme

The overall consumption of both prescribed and non-prescribed drugs has recorded the highest statistics in Australia states Pearson, et al (2015). One of the most probable reasons for this is the pharmaceutical benefits scheme (PBS) which sells drugs to Australians and visitors to Australia under a reciprocal agreement. The consumption has also been increasing each year as statistics confirm that the government’s budget o the scheme increases each year. This report has therefore been prepared to examine the costs of medicines consumption and the reasons behind the costs, financial implications of the PBS and recommendations on how the scheme can be made more efficient.

The pharmaceutical benefits scheme has been effective since it has ensured availability of medicines in Australia at affordable costs. The scheme was officially introduced in 1948 although a similar program had existed before but in a limited version, initially, the scheme covered only a few prescription medicines that were offered free of charge. Progressively, with inclusion of more medicines, there was set a partial payment to be paid by patients receiving the medication and it has since then increased every year.

According to Page, et al (2015) the PBS serves Australians who have acquired medical cards and visitors who have the reciprocal healthcare agreement (RHCA). The RHCA is however only in a few selected countries and not all citizens of these countries qualify for the scheme either. Those who can benefit have acquired an agreement card. Policy reforms in the PBS such as the accelerated price disclosure has increased the rate of the instances where the government has benefited from reduction of prices of various generic drugs have discouraged people from joining the scheme. The process that a drug goes before it is added into the risk of the drugs is also slowly discouraging people from the scheme.

People have encountered several challenges when using the PBS explains (Parkinson, et al (2015). One of the greatest challenges has been the seasonal price fluctuations that patient is expected to pay depending on previous supply record. One of the policies of PBS indicates that when a certain individual benefits on a certain medication in a given year, the amount his/her family is expected to pay for the case medication in case a similar condition arises is subsidized. The prices then fall back to normal rates in the beginning of a new year. This affects mainly people who suffer from chronic conditions whereby the end up purchasing more drugs towards the end of a year as opposed to the beginning of a year. This situation leads to stock piling and results to serious consequences on drug usage and consumption.

Policy changes also impose serious impacts in the utilization of the medicines. The legislation process is continuous and it involves the decisions by the therapeutic product vigilance (TGA) in collaboration with the pharmaceutical benefits advisory committee on which drugs are to be introduced into the scheme and the fixing of the annual prices of these drugs. Other policy changes affecting the scheme include public hospital pharmaceutical reforms. These reforms have since increased the number of medicines in the scheme this has affected the utilization of various medicines. Other policies introduced in 2011 involving chemotherapeutic agents. This affected the pricing of such medicines and the availability in the pharmacies since the pharmacies opt not to sell drugs whose prices are not subsidized as they don’t sell much.

The costs of medicine consumption have been on the increase throughout the years though the percentage of the increase has slowed down throughout the years. Mellish, et al (2015) indicate that PBS prices of medicine are subsidized at 36.9 dollars for general patients and 6 dollars for concession card holders. The scheme also provides for a safety net which either lowers or eliminates direct costs for people who has various complex and significant medical challenges. This can be interpreted by the fact that patients who spend about 360 dollars in a year automatically starts receiving medication for free.

The government have been responsible in enacting policies that regulate drug consumption. For instance, increasing the co-payment price for the patients in order to discourage people from unnecessary consumption of drugs. This follows statistics that most of the drugs covered for in the scheme are acquired from pharmacies apart from the few that are only available in the hospitals. The price of the medicines in the government subsidy scheme are determined by pharmaceutical benefits remuneration tribunal. The variables for calculating this price are the wholesale mark up, administration and handling fee and the pharmacist’s cost.

The most consumed medicines according to Bekaert, & Hodrick, (2017) are the general practitioner drugs and those used fight conditions such as pneumonia, stomach acidity, bacterial infections and regulation of cholesterol in the blood. The drugs have been group in three categories which are cost, dosage and prescription. Vitamin supplements are also medicines that are most commonly consumed due to the fact that most foods consumed by Australians do not provide these nutrients in the required amounts.

According to the dose, the most commonly consumed drugs include; atorvastatin, amlodipine, candesartan, perindopril, paracetamol and rosuvastatin. In respect to prescription, the mostly consumed drugs include atorvastation, esomeprazole, rosuvastatin, pantoprazole and paracetamol. With regard to total cost, the mostly consumed drugs include; esomeprazole, aflibercept, adalimumab, rosuvastatin and ranibizumab. Key issues affecting the consumption of drugs include polypharmacy, pharmacological burden and self-prescription. The dangers of self-prescription is that it brings about risk factors to the health of the patient. The common over the counter medicines include painkillers and anti-acid tablets (Schaffer, et al 2016).

There are several challenges facing PBS in Australia. For instance, there is an unabated likelihood that in the near future, this may develop due to the existing barriers to the continuous listing of medicines that is tedious, the compensation process so slow and the de-listing of various medicines that are still in use. Continuous listing of medicines has also faced the challenge of confidentiality whereby the government makes clear legal requirements for a transparent process. This makes it difficult to prescribe alternative medicine that is not listed by the scheme (Sandison, 2018).

Timing and execution of the listing of drugs is also another concern for consumers argues Ghabri, & Mauskopf, (2017). There are several steps that are taken for a drug to be listed under the scheme. In addition, a cabinet consideration process is mandatory for expensive medicines. The timing between when a medicine is added or removed from the scheme has made it difficult for the people who procure and sell drugs since the process of listing and delisting is accompanied with price fluctuations that may force them to incur severe losses.

In conclusion, it is clear that there is increased consumption of drugs in Australia every year which results in increased costs to the pharmaceutical benefits scheme. The report has also discussed the most commonly used general prescription and self-prescription drugs. Apparently, challenges and effects of the scheme have also been identified. With this information, it is therefore easy to provide recommendations to address these challenges and concerns.

There are several recommendations that can be put forward based on the identified challenges facing the scheme and the financial implications both to the consumers and to the health sector. The recommendations are mainly focused on how the scheme’s efficiency can be improved and how the scheme can be propelled to produce positive implications and trends of cost and consumption. The recommendations also focus on how the costs can be reduced to lower the financial burden of the subscribers.

1. The role of listing drugs should be scrapped from the government as the government may politicize the exercise. It should be left solely to the hospitals and the PBS committee as this can increase the timeliness of the listing in respect to costs and efficiency of the drugs(Harris, et al 2017).
2. According to Karnon, Edney, & Sorich, (2017) the safety net scheme should be amended to subsidize cost for people with complex conditions throughout the year. This is necessary to reduce stock piling and the possibility of patients consuming drugs unnecessarily by taking advantage of the cost subsidy. The plan should also be amended to cover people who do not necessarily have continued cases of a similar condition but also people who suffer from different cases but incur a lot of costs in treatment.
3. The co-paying amount should also be adjusted in respect to specific types of medicines explains (Carter, Vogan, & Afzali, 2016). This would influence the consumers to choose medications that suit their social economic well-being to treat conditions that have several treatment options such as diabetes.

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.

Schaffer, A. L., Buckley, N. A., Cairns, R., & Pearson, S. A. (2016). Interrupted time series analysis of the effect of rescheduling alprazolam in Australia: Taking control of prescription drug use. JAMA internal medicine, 176(8), 1223-1225.

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.

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.

Parkinson, B., Sermet, C., Clement, F., Crausaz, S., Godman, B., Garner, S., … & Elshaug, A. G. (2015). Disinvestment and value-based purchasing strategies for pharmaceuticals: an international review. Pharmacoeconomics, 33(9), 905-924.

Bekaert, G., & Hodrick, R. (2017). International financial management. Cambridge University Press.

Ghabri, S., & Mauskopf, J. (2017). The use of budget impact analysis in the economic evaluation of new medicines in Australia, England, France and the United States: relationship to cost-effectiveness analysis and methodological challenges.

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.

Carter, D., Vogan, A., & Afzali, H. H. A. (2016). Governments need better guidance to maximise value for money: the case of Australia’s Pharmaceutical Benefits Advisory Committee. Applied health economics and health policy, 14(4), 401-407.

Sandison, B. (2018). Australian Institute of Health and Welfare. Impact, 2018(2), 80-81.