There are no significant new measures announced in the
Budget for the Pharmaceutical Benefits Scheme (PBS), despite earlier media reports
that up to $5 billion of savings over four to five years would be sought from reimbursements
paid to pharmaceutical companies and pharmacies. Rather, the Government
indicated that it is in the final stages of negotiations with the pharmacy
sector regarding ‘a balanced range of measures’ to support the sustainability
of the PBS. Last year’s budget measure
to increase patient co-payments and safety nets has also been retained.
The start date for the increase in co-payments and safety
net thresholds announced in the 2014–15 Budget has been pushed back one year to
1 January 2016, resulting in an additional saving of $5.1 million in 2018–19,
which now becomes the last year of the measure. This is in addition to
the $1.3 billion in savings over four years that were announced in the 2014–15
Budget. The measure increases the
co-payment for PBS medicines for general patients by $5.00 and concessional
patients by $0.80. It also increases the
safety net thresholds above inflation each year for four years. Further information
on this measure, including stakeholder responses, is available in Budget
The increased co-payments and thresholds were due to start
from 1 January 2015, but the legislation to enact the measure has not passed the
Senate. Then Health Minister
Peter Dutton indicated last December that ‘it remains the government’s policy
to implement this change’ but that in the face of Labor opposition to the
measure it might be willing to compromise in order to secure cross-bench
support. The measure in the
2015–16 Budget has been described by one commentator as ‘politically dead,
unlikely to ever be approved by the Senate’, but with savings still
contributing to budget forecasts.
In keeping with previous years’ Budgets, new and amended
drug listings on the PBS have been included as a budget measure, at a cost of
$1.6 billion over five years. This includes drugs to
treat a number of cancers, asthma and multiple sclerosis. Price changes
recommended by the Pharmaceutical Benefits Advisory Committee (PBAC) have also
been listed as a budget measure, and are predicted to save $252.2 million over
five years to be directed to fund other health priorities or the proposed
Medical Research Future Fund.
More significant changes for the PBS have been foreshadowed
by the Government. The PBS is forecast to cost $9.7 billion in 2015–16, but
this estimate ‘excludes the outcomes of the negotiations on the Sixth Community
Pharmacy Agreement and broader PBS Access and Sustainability Package of
measures.’ Further measures are
expected to be introduced from 1 July 2015 following consultation with
stakeholders including ‘the pharmacy and pharmaceutical sectors’.
Community pharmacy agreements are five year agreements
between the Australian Government and the Pharmacy Guild of Australia that pay
pharmacists to dispense PBS medicines, fund professional programs and support
the supply of PBS medicines by wholesalers. The Fifth Community Pharmacy (5CPA)
was allocated $15.4 billion over five years and is due to end on 30 June 2015.
A recent review of the 5CPA by the Australian National Audit Office (ANAO)
found that the Department of Health ‘is not well positioned to assess whether
the Commonwealth is receiving value for money from the agreement overall, or
performance against the six principles and objectives.’
There have been calls from some consumer groups to extend the 5CPA by two years
to allow an overhaul of the process. However, the Budget
reveals that the next pharmacy agreement is ‘in the final stages of
While there is little detail in the Budget, media reports
have suggested that the Sixth Community Pharmacy Agreement (6CPA) may include
total funding of $18.9 billion over five years, including increases to pharmacy
remuneration and program funding, performance measures, and an option for
pharmacists to discount the patient co-payment by $1 as long as they absorb the
cost. The government wants the
discount to boost competition between pharmacies, although the Health Minister
has acknowledged that rural and regional pharmacists may not be as well placed
to offer the discount. The $1 discount could
also reduce the impact on consumers of the Government’s budgeted increases to
In addition to the 6CPA negotiations, the Budget also notes
that the Government is negotiating a ‘broader PBS Access and Sustainability
Package of measures’, but no details are provided.
This appears to refer to negotiations with the pharmaceutical industry to
reduce the price that the government, and in some cases consumers, pay for PBS
medicines. Measures reportedly being considered include:
removing over the counter medicines such as paracetamol and
aspirin from the PBS
closing a loophole in the pricing of combination drugs to ensure
that they don’t cost more than the total price of their component drugs
requiring patented drugs to take a 5 per cent price cut after 5
years on the PBS and
changing price disclosure rules to force the price of brand name
drugs that are no longer on patent closer to the prices of their generic competitors.
While the above proposals have received quite a lot of
attention, stakeholder reaction to the PBS budget measures has been relatively muted.
The Pharmaceutical Society of Australia (PSA) and the Pharmacy Guild, for
example, have noted the lack of funding announcements relating to the Sixth
Community Pharmacy Agreement and wider proposed PBS changes.
Both the Consumers Health Forum (CHF) and the PSA have reiterated their
opposition to higher costs for consumers resulting from the co-payment and
safety net increases.
It would seem that there are significant changes ahead for
the PBS, but that these are being addressed outside of the budget process.
L Tingle, ‘Abbott
set for war with pharmacists’, Australian Financial Review, 5 May
2015, p. 6.
Australian Government, Portfolio
budget statements 2015–16: budget related paper no. 1.10: Health Portfolio,
Australian Government, Budget
measures: budget paper no. 2: 2015–16, pp. 107–108.
Australian Government, Budget
measures: budget paper no. 2: 2014–15, p. 140.
Co-payments for PBS medicines are currently up to $37.70 for general
patients and $6.10 for concession card holders. The Australian Government pays
any remaining cost. Department of Health, ‘About the PBS’,
Pharmaceutical Benefits Scheme website.
L Ferris, ‘Pharmaceutical
Benefits Scheme’, Budget review 2014–15, Research paper series,
2013–14, Parliamentary Library, Canberra, 2014.
Parliament of Australia, ‘National
Health Amendment (Pharmaceutical Benefits) Bill 2014 homepage’, Australian
S Maher and R Lewis, ‘Dutton
willing to bend on PBS rise’, The Australian, 5 December 2014, p. 5.
P Martin, ‘Hangover
of 2014: Haunted by the walking dead’, The Sydney Morning Herald, 13
May 2015, p. 18.
measures: budget paper no. 2: 2015–16, op. cit., p. 108.
Ibid., p. 109.
budget statements 2015–16, Health Portfolio, op. cit., p. 57.
Ibid., p. 53.
Australian National Audit Office (ANAO), Administration
of the Fifth Community Pharmacy Agreement, ANAO, 2015, p. 16.
Ibid., p. 24.
Consumers Health Forum of Australia, Cancer Voices Australia and the
Chronic Illness Alliance, Now
is the time for overhaul of antiquated pharmacy agreement, media
release, 1 April 2015.
budget statements 2015–16, Health Portfolio, op. cit., p. 56.
S Parnell, ‘Billions
on table for pharmacists’, The Australian, 11 May 2015, p. 1.
L Tingle, ‘Pharmacy
plans may hit the bush’, Australian Financial Review, 29 April 2015,
budget statements 2015–16, Health Portfolio, op. cit., p. 57.
S Maiden, ‘Cheap
drugs for PBS axe’, Sunday Tasmanian, 26 April 2015, p. 13.
S Dunlevy, ‘$200m
pill rort crushed’, Daily Telegraph, 6 May 2015, p. 15.
S Maher, ‘Defiant
Ley stands up to Big Pharma’, The Australian, 8 May 2015, p. 7.
A Probyn and A Tillett, ‘Cheap
drugs’, West Australian, 7 May 2015, p. 1.
Pharmaceutical Society of Australia, Few
surprises, but no answers on 6CPA, media release, 12 May 2015; Pharmacy
Guild of Australia, Forefront:
Budget edition, media release, 12 May 2015.
Consumers Health Forum of Australia, 2015–16
Federal Budget: What are the costs to your health?, media release, 13
May 2015; Pharmaceutical Society of Australia, op. cit.
All online articles accessed May 2015.
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