Pharmaceutical Benefits Scheme
Encyclopedia
The Pharmaceutical Benefits Scheme or PBS is a program of the Australian Government
that provides subsidised prescription drugs to residents of Australia
. The PBS ensures that all Australians have affordable and reliable access to a wide range of necessary medicines.
Ben Chifley
as part of wider plans to create a British
-style National Health Service
, but the High Court of Australia
soon ruled most of Chifley's health care
plans as unconstitutional. However, the PBS was not ruled as unconstitutional. Medicines on the PBS list were free to the consumer until 1960, when nominal user charges were introduced.
(formerly the Health Insurance Commission) under the Health Insurance Act 1973 (Cth).
In order to receive a Pharmaceutical Benefit under the PBS, a consumer is prescribed the drug listed in the Schedule of Pharmaceutical Benefits. The subsidy
is automatically applied when the drug is dispensed at a pharmacy
and the cost to the patient
is the patient co-payment contribution rather than the full cost of the medication.
The cost of a medication is negotiated between the Commonwealth Government
, through the Pharmaceutical Benefits Pricing Authority (PBPA), and the supplier of the drug. This agreed price is then the basis of the dispensed price of the medication which is negotiated between the Commonwealth Government and the Pharmacy Guild of Australia under the Community Pharmacy Agreement. The dispensed price includes the wholesaler's markup, pharmacist's markup, and a dispensing fee. Pharmacies purchase PBS-listed drugs from the wholesaler or supplier, and claim the difference between the dispensed price and the patient co-payment contribution from Medicare Australia.
34.20 for general patients. Those covered by government entitlements (low-income earners, welfare recipients, Health Care Card holders, etc.) and those covered under the Repatriation Pharmaceutical Benefits Scheme (RPBS) have a reduced co-payment which is $5.60 in 2011. The table below indicates the changes in co-payments over the years. These co-payments are compulsory and cannot be discounted by pharmacies under any circumstances.
There are Safety Net
provisions for a reduction in the patient co-payment contribution once a family has exceeded a certain amount on PBS subsidised medications in a calendar year. General patients are entitled to PBS medications at the concession price for the remainder of the calendar year, while concession patients are entitled to PBS medications at no cost for the remainder of the year.
In 2005, the Safety Net thresholds were $874.90 (general) and $239.20 (concession).
In 2006, these thresholds were $960.10 (general) and $253.80 (concession).
In 2007, these thresholds were $1059.00 (general) and $274.40 (concession).
In 2008, these thresholds were $1141.80 (general) and $290.00 (concession).
In 2009, these thresholds were $1264.90 (general) and $318.00 (concession).
In 2010, these thresholds are $1281.30 (general) and $324.00 (concession).
In 2011, these thresholds are $1317.20 (general) and $336.00 (concession).
Pharmacists are allowed to substitute generic brands for prescribed brands if the brands are flagged "a" in the Schedule of Pharmaceutical Benefits, and if consent is obtained from the patient and prescriber. The prescriber's consent is always assumed to be granted unless "brand substitution not permitted" is indicated on the prescription.
However, a prescriber may obtain an exemption from the TGP if:
Such an exemption requires an approved PBS Authority prescription from the Medicare Australia.
In considering a medication for listing on the PBS, the PBAC considers factors including:
Decisions on PBS listing are generally made on a health economics
perspective, using cost-effectiveness analysis. Cost-effectiveness analysis evaluates the cost and health effects of one technology versus the cost and health effects of another technology, which is usually standard of care. A new technology whose incremental health benefit jutifies its additional expense is deemed to be cost-effective and thus reimbursed by PBAC. Drugs that provide little health benefit at considerable additional expense, such as the PDE5 inhibitor
s (e.g. sildenafil
) and certain expensive cancer chemotherapy
drugs are not listed on the basis of poor cost-effectiveness.
is listed on the PBS as a restricted benefit for the symptomatic treatment
of osteoarthritis
and rheumatoid arthritis
. Prescribers using celecoxib
for other indications are expected to indicate "non-PBS" on the prescription, and/or the pharmacist dispensing the celecoxib should charge the patient the full cost.
In obtaining a phone approval, the doctor simply identifies themselves (using their name and provider number), the patient (using their Medicare number), and when asked by the operator, confirms which of the conditions eligible for an authority the patient is suffering from. The health department normally assumes the doctor's assertion that the condition exists as sufficient.
Former federal Treasurer
Peter Costello
and the Liberal Party
attempted to raise the patient co-payment of PBS medicines by up to 30 per cent in the 2002 Federal Budget, however this measure was blocked in the Senate
in which various minor parties held the balance of power. However, in June 2004 the main opposition party, the Australian Labor Party
, announced that it would allow the PBS co-payment increases to proceed through the Senate, ostensibly to prove its fiscal responsibility before the then upcoming Federal election.
Government of Australia
The Commonwealth of Australia is a federal constitutional monarchy under a parliamentary democracy. The Commonwealth of Australia was formed in 1901 as a result of an agreement among six self-governing British colonies, which became the six states...
that provides subsidised prescription drugs to residents of Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
. The PBS ensures that all Australians have affordable and reliable access to a wide range of necessary medicines.
History
The PBS was established in 1948 by supplying approximately 140 lifesaving and disease-preventing drugs. The PBS was introduced by Prime MinisterPrime Minister of Australia
The Prime Minister of the Commonwealth of Australia is the highest minister of the Crown, leader of the Cabinet and Head of Her Majesty's Australian Government, holding office on commission from the Governor-General of Australia. The office of Prime Minister is, in practice, the most powerful...
Ben Chifley
Ben Chifley
Joseph Benedict Chifley , Australian politician, was the 16th Prime Minister of Australia. He took over the Australian Labor Party leadership and Prime Ministership after the death of John Curtin in 1945, and went on to retain government at the 1946 election, before being defeated at the 1949...
as part of wider plans to create a British
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
-style National Health Service
National Health Service
The National Health Service is the shared name of three of the four publicly funded healthcare systems in the United Kingdom. They provide a comprehensive range of health services, the vast majority of which are free at the point of use to residents of the United Kingdom...
, but the High Court of Australia
High Court of Australia
The High Court of Australia is the supreme court in the Australian court hierarchy and the final court of appeal in Australia. It has both original and appellate jurisdiction, has the power of judicial review over laws passed by the Parliament of Australia and the parliaments of the States, and...
soon ruled most of Chifley's health care
Health care
Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...
plans as unconstitutional. However, the PBS was not ruled as unconstitutional. Medicines on the PBS list were free to the consumer until 1960, when nominal user charges were introduced.
Operation of the PBS
The PBS is governed by the National Health Act 1953 (Cth) and National Health (Pharmaceutical Benefits) Regulations 1960 (Cth). Pharmaceutical Benefits under the PBS may only be supplied by pharmacists and medical practitioners approved under the Act. The PBS is administered by Medicare AustraliaMedicare Australia
Medicare Australia is an agency of the Australian Government that administers health-related programs including Medicare, the Pharmaceutical Benefits Scheme , and others. It is a prescribed agency under the Financial Management and Accountability Act 1997 and a statutory agency within the...
(formerly the Health Insurance Commission) under the Health Insurance Act 1973 (Cth).
In order to receive a Pharmaceutical Benefit under the PBS, a consumer is prescribed the drug listed in the Schedule of Pharmaceutical Benefits. The subsidy
Subsidy
A subsidy is an assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or simply to encourage it to hire more labor A subsidy (also...
is automatically applied when the drug is dispensed at a pharmacy
Pharmacy
Pharmacy is the health profession that links the health sciences with the chemical sciences and it is charged with ensuring the safe and effective use of pharmaceutical drugs...
and the cost to the patient
Patient
A patient is any recipient of healthcare services. The patient is most often ill or injured and in need of treatment by a physician, advanced practice registered nurse, veterinarian, or other health care provider....
is the patient co-payment contribution rather than the full cost of the medication.
The cost of a medication is negotiated between the Commonwealth Government
Government of Australia
The Commonwealth of Australia is a federal constitutional monarchy under a parliamentary democracy. The Commonwealth of Australia was formed in 1901 as a result of an agreement among six self-governing British colonies, which became the six states...
, through the Pharmaceutical Benefits Pricing Authority (PBPA), and the supplier of the drug. This agreed price is then the basis of the dispensed price of the medication which is negotiated between the Commonwealth Government and the Pharmacy Guild of Australia under the Community Pharmacy Agreement. The dispensed price includes the wholesaler's markup, pharmacist's markup, and a dispensing fee. Pharmacies purchase PBS-listed drugs from the wholesaler or supplier, and claim the difference between the dispensed price and the patient co-payment contribution from Medicare Australia.
Patient co-payment and safety net
When purchasing a medication under the PBS the maximum price a consumer pays is the patient co-payment contribution which, as of January 1, 2011 is A$Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
34.20 for general patients. Those covered by government entitlements (low-income earners, welfare recipients, Health Care Card holders, etc.) and those covered under the Repatriation Pharmaceutical Benefits Scheme (RPBS) have a reduced co-payment which is $5.60 in 2011. The table below indicates the changes in co-payments over the years. These co-payments are compulsory and cannot be discounted by pharmacies under any circumstances.
| Year | Co-payment (general) | Co-payment (concession) |
| 1960 | 5 shillings | n/a |
| 1990 | $10.00 | $2.70 |
| 1997 | $20.00 | $3.20 |
| 2002 | $22.40 | $3.60 |
| 2003 | $23.10 | $3.70 |
| 2004 | $23.70 | $3.80 |
| 2005 | $28.60 | $4.60 |
| 2006 | $29.50 | $4.70 |
| 2007 | $30.70 | $4.90 |
| 2008 | $31.30 | $5.00 |
| 2009 | $32.90 | $5.30 |
| 2010 | $33.30 | $5.40 |
| 2011 | $34.20 | $ 5.60 |
There are Safety Net
Safety Net
"Safety Net" is a song by The Shop Assistants which was recorded in 1985 and released as a single in 1986.-Recordings:The song was first recorded for the band's first session for John Peel's BBC Radio 1 show on 8 October 1985...
provisions for a reduction in the patient co-payment contribution once a family has exceeded a certain amount on PBS subsidised medications in a calendar year. General patients are entitled to PBS medications at the concession price for the remainder of the calendar year, while concession patients are entitled to PBS medications at no cost for the remainder of the year.
In 2005, the Safety Net thresholds were $874.90 (general) and $239.20 (concession).
In 2006, these thresholds were $960.10 (general) and $253.80 (concession).
In 2007, these thresholds were $1059.00 (general) and $274.40 (concession).
In 2008, these thresholds were $1141.80 (general) and $290.00 (concession).
In 2009, these thresholds were $1264.90 (general) and $318.00 (concession).
In 2010, these thresholds are $1281.30 (general) and $324.00 (concession).
In 2011, these thresholds are $1317.20 (general) and $336.00 (concession).
Brand Premium and generic medicines
In an effort to limit the cost of the PBS, the Commonwealth Government introduced Brand Premiums on medications where cheaper generic brands were available. The Brand Premium is usually the price difference between the innovator brand and the generic brand. The patient must pay this Brand Premium in addition to the normal patient co-payment contribution if they refuse to purchase the generic brand. The Brand Premium paid does not count toward the Safety Net threshold and must still be paid even once the threshold is reached.Pharmacists are allowed to substitute generic brands for prescribed brands if the brands are flagged "a" in the Schedule of Pharmaceutical Benefits, and if consent is obtained from the patient and prescriber. The prescriber's consent is always assumed to be granted unless "brand substitution not permitted" is indicated on the prescription.
Therapeutic Group Premium
Another effort to limit the cost of the PBS involved the introduction of Therapeutic Group Premiums (TGPs) on medications that are priced significantly above the cheapest medication in a defined therapeutic sub-group where the drugs are considered to be of similar safety and efficacy. The TGP is the price difference between the premium brand and the benchmark (base) price for drugs in the class. The patient must pay this TGP in addition to the normal patient co-payment contribution if they have been prescribed such a medication. The TGP paid does not count toward the Safety Net threshold.However, a prescriber may obtain an exemption from the TGP if:
- adverse effects occurring with all of the base-priced drugs; or
- drug interactions occurring with all of the base-priced drugs; or
- drug interactions expected to occur with all of the base-priced drugs; or
- transfer to a base-priced drug would cause patient confusion resulting in problems with compliance.
Such an exemption requires an approved PBS Authority prescription from the Medicare Australia.
Reciprocal Health Care Agreements
Although PBS subsidies are available only to Australian residents, certain foreign visitors are also eligible under Reciprocal Health Care Agreements between Australia and the United Kingdom, Ireland, New Zealand, Malta, Italy, Sweden, the Netherlands, Finland, Norway and Slovenia.Schedule of Pharmaceutical Benefits
The Pharmaceutical Benefits Advisory Committee (PBAC) makes recommendations to the Minister for Health and Ageing regarding drugs which should be made available as pharmaceutical benefits, which are listed on the Schedule of Pharmaceutical Benefits. The Schedule is published monthly since January 2007, (prior to this it was published three times a year).In considering a medication for listing on the PBS, the PBAC considers factors including:
- The conditions for which the drug has been approved for use in Australia by the Therapeutic Goods AdministrationTherapeutic Goods AdministrationThe Therapeutic Goods Administration is the regulatory body for therapeutic goods in Australia . It is a Division of the Australian Department of Health and Ageing established under the Therapeutic Goods Act 1989 ...
. The PBAC only recommends the listing of a medicine for use in a condition which is in accordance with the Australian Register of Therapeutic Goods. - The conditions in which use has been demonstrated to be effective and safe compared to other therapies.
- The costs involved. The PBAC is required to ensure that the money that the community spends in subsidising the PBS represents cost-effective expenditure of taxpayers' funds.
- A range of other factors and health benefits. These factors may include, for example, costs of hospitalisation or other alternative medical treatments that may be required, as well as less tangible factors such as patients' quality of life.
Decisions on PBS listing are generally made on a health economics
Health economics
Health economics is a branch of economics concerned with issues related to efficiency, effectiveness, value and behavior in the production and consumption of health and health care...
perspective, using cost-effectiveness analysis. Cost-effectiveness analysis evaluates the cost and health effects of one technology versus the cost and health effects of another technology, which is usually standard of care. A new technology whose incremental health benefit jutifies its additional expense is deemed to be cost-effective and thus reimbursed by PBAC. Drugs that provide little health benefit at considerable additional expense, such as the PDE5 inhibitor
PDE5 inhibitor
A phosphodiesterase type 5 inhibitor, often shortened to PDE5 inhibitor, is a drug used to block the degradative action of phosphodiesterase type 5 on cyclic GMP in the smooth muscle cells lining the blood vessels supplying the corpus cavernosum of the penis...
s (e.g. sildenafil
Sildenafil
Sildenafil citrate, sold as Viagra, Revatio and under various other trade names, is a drug used to treat erectile dysfunction and pulmonary arterial hypertension . It was originally developed by British scientists and then brought to market by the US-based pharmaceutical company Pfizer...
) and certain expensive cancer chemotherapy
Chemotherapy
Chemotherapy is the treatment of cancer with an antineoplastic drug or with a combination of such drugs into a standardized treatment regimen....
drugs are not listed on the basis of poor cost-effectiveness.
Restricted benefits
Certain medications listed on the PBS are available only for specific indications or to patients meeting specific criteria where the PBAC has deemed that the cost-benefit analysis is favourable only in those indications/patients. These are noted as "restricted benefits" on the Schedule. The HIC has placed the onus of policing restricted benefits on the prescribers themselves and the pharmacists dispensing. For example, the COX-2 inhibitor celecoxibCelecoxib
Celecoxib INN is a sulfa non-steroidal anti-inflammatory drug and selective COX-2 inhibitor used in the treatment of osteoarthritis, rheumatoid arthritis, acute pain, painful menstruation and menstrual symptoms, and to reduce numbers of colon and rectum polyps in patients with familial...
is listed on the PBS as a restricted benefit for the symptomatic treatment
Symptomatic treatment
Symptomatic treatment is any medical therapy of a disease that only affects its symptoms, not its cause, i.e., its etiology. It is usually aimed at reducing the signs and symptoms for the comfort and well-being of the patient, but it also may be useful in reducing organic consequences and sequelae...
of osteoarthritis
Osteoarthritis
Osteoarthritis also known as degenerative arthritis or degenerative joint disease, is a group of mechanical abnormalities involving degradation of joints, including articular cartilage and subchondral bone. Symptoms may include joint pain, tenderness, stiffness, locking, and sometimes an effusion...
and rheumatoid arthritis
Rheumatoid arthritis
Rheumatoid arthritis is a chronic, systemic inflammatory disorder that may affect many tissues and organs, but principally attacks synovial joints. The process produces an inflammatory response of the synovium secondary to hyperplasia of synovial cells, excess synovial fluid, and the development...
. Prescribers using celecoxib
Celecoxib
Celecoxib INN is a sulfa non-steroidal anti-inflammatory drug and selective COX-2 inhibitor used in the treatment of osteoarthritis, rheumatoid arthritis, acute pain, painful menstruation and menstrual symptoms, and to reduce numbers of colon and rectum polyps in patients with familial...
for other indications are expected to indicate "non-PBS" on the prescription, and/or the pharmacist dispensing the celecoxib should charge the patient the full cost.
Authority required benefits
Some PBS medications are restricted and require prior approval from Medicare Australia. These are noted as "authority required benefits" on the Schedule. Again, the PBAC has deemed that the cost-benefit analysis is favourable only under in specific indications/patients under certain circumstances. Authority may be obtained by telephone to Medicare Australia (known as "phone approval") or in writing from an authorised delegate of the Minister for Health and Ageing. Prescriptions must be written on Authority Prescription Form, and the approval number must be noted on the prescription. Pharmacists cannot dispense the item as a pharmaceutical benefit unless it has been approved by Medicare Australia (indicated by the presence of the approval number).In obtaining a phone approval, the doctor simply identifies themselves (using their name and provider number), the patient (using their Medicare number), and when asked by the operator, confirms which of the conditions eligible for an authority the patient is suffering from. The health department normally assumes the doctor's assertion that the condition exists as sufficient.
Sustainability of the PBS
In its first year, the PBS cost the Commonwealth Government £149,000 (or $7,600,000 in 2009). The PBS now costs the Commonwealth approximately $6.5 billion a year to operate, despite consumers contributing around $1.3 billion in patient co-payments. Further attempts to restrain the growth in costs of the PBS may be needed, however, attempts to increase consumer prices of drugs have always proved politically unpopular. The comparative cost-effectiveness processes of the PBS nonetheless ensure it provides Australian citizens with more equitable access to medicines than in many other developed nations and for many the issue of sustainability of the PBS as a key component of the egalitarian architecture of Australian society is equivalent to asking whether that nation's education system or defence forces are sustainable.Former federal Treasurer
Treasurer
A treasurer is the person responsible for running the treasury of an organization. The adjective for a treasurer is normally "tresorial". The adjective "treasurial" normally means pertaining to a treasury, rather than the treasurer.-Government:...
Peter Costello
Peter Costello
Peter Howard Costello AC is an Australian politician and lawyer who served as the Treasurer in the Australian government from 1996 to 2007. He is the longest-serving Treasurer in Australian history. Costello was a Member of the Australian House of Representatives from 1990 to 2009, representing...
and the Liberal Party
Liberal Party of Australia
The Liberal Party of Australia is an Australian political party.Founded a year after the 1943 federal election to replace the United Australia Party, the centre-right Liberal Party typically competes with the centre-left Australian Labor Party for political office...
attempted to raise the patient co-payment of PBS medicines by up to 30 per cent in the 2002 Federal Budget, however this measure was blocked in the Senate
Australian Senate
The Senate is the upper house of the bicameral Parliament of Australia, the lower house being the House of Representatives. Senators are popularly elected under a system of proportional representation. Senators are elected for a term that is usually six years; after a double dissolution, however,...
in which various minor parties held the balance of power. However, in June 2004 the main opposition party, the Australian Labor Party
Australian Labor Party
The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...
, announced that it would allow the PBS co-payment increases to proceed through the Senate, ostensibly to prove its fiscal responsibility before the then upcoming Federal election.