Purpose of the Bill

The purpose of the National Health Amendment (Cheaper Medicines) Bill 2025 (the Bill) is to amend the National Health Act 1953 (NHA) to reduce the Pharmaceutical Benefits Scheme (PBS) general co-payment (general patient charge) by $6.60, from the current amount of $31.60 to the new amount of $25.00, commencing 1 January 2026.

The Bill also makes minor amendments to the NHA to omit or repeal information related to the allowable discount which will be phased out for general patients from 1 January 2026.[1]

Background

The Pharmaceutical Benefits Scheme

Overview and patient co-payments

The PBS is the Australian Government program for providing universal, subsidised access to medicines. The PBS subsidises the cost of medicine for Australian residents, and overseas visitors from countries with which Australia has a reciprocal health care agreement, for most medical conditions. Most medicines on the PBS are prescribed by doctors, dispensed by pharmacists, and used by patients at home. Expenditure on the PBS is uncapped and may increase as new medicines are added and demand grows.

Under the PBS, patients pay a co-payment towards the cost of each PBS medicine with the Australian Government paying any remaining cost. Patient co‑payments are currently set at $7.70 for concession card holders and a maximum of $31.60 for general patients (those who are ineligible for a concession). These amounts are generally indexed every year in line with the consumer price index (CPI) but may be revised at other times by legislative amendment. Under the Closing the Gap PBS Co-payment Program, eligible Aboriginal and Torres Strait Islander people who would normally pay the full co-payment only pay the concessional rate, and those who would normally pay the concessional rate are not required to pay the co‑payment.

Under a 2024–25 Budget measure, indexation of the general patient co-payment was frozen for 1 year and indexation of the concessional co-payments was frozen for 5 years (p. 124).[2] As a result, the concessional patient co-payment will remain at $7.70 for 5 calendar years from 2025 to 2029. This Bill will reduce the general co-payment from its current amount of $31.60 to $25.00 on 1 January 2026, with indexation continuing under usual arrangements from 1 January 2027.

PBS safety net

The PBS Safety Net scheme is intended to protect patients needing a large number of medicines in 1 year from excessive out of pocket costs. Individuals and families who spend an amount equal to their Safety Net threshold on co-payments in a calendar year receive further prescriptions for that year free (if they are concession card holders) or for the concessional co-payment of $7.70 (if they are general patients).[3] The Safety Net thresholds are generally indexed on 1 January each year in line with CPI and are currently $277.20 for concession card holders and $1,694.00 for general patients.[4] This Bill will not modify the PBS Safety Net thresholds, meaning patients will need to fill more scripts, at the lower co‑payment amount, before reaching the Safety Net threshold.

2025 election

During the 2025 federal election campaign, the Albanese Government promised to reduce the general co-payment from $31.60 to $25.00 from 1 January 2026, at a cost of $689 million (p. 2).

The Coalition also promised to reduce the general co-payment to $25.00.

Recent measures to address PBS affordability

Since 2020, successive governments have introduced a range of policies aimed at making PBS listed medicines more affordable.

Changes to the Safety Net threshold – January 2020 and July 2022

During the 2019 federal election campaign, the Morrison Government promised to reduce the Safety Net thresholds ‘by 12 scripts for pensioners and concession card holders and the equivalent of 2 scripts for non-concession card holders’ from 1 January 2020, at a cost of $308 million. The announcement was matched by the Australian Labor Party (ALP). Following amendments to the National Health Act 1953, the number of scripts for concessional beneficiaries to reach the Safety Net threshold was reduced from 60 to 48 (dropping the threshold from $390.00 to $316.80) and the general patient Safety Net threshold was reduced from $1,550.70 to $1,486.80 from 1 January 2020.

In the 2022–23 Budget, the Morrison Government announced it would decrease the PBS Safety Net thresholds across the forward estimates (p. 105). The change would reduce the number of scripts required to reach the concessional Safety Net from 48 to 36 (dropping the threshold from $326.40 to $244.80) and reduce the general patient Safety Net threshold to $1,457.10. Following enactment of the Treasury Laws Amendment (Cost of Living Support and Other Measures) Act 2022, these changes took effect on 1 July 2022.

Reduction of general patient co-payment – January 2023

From 1 January 2023, the general PBS co-payment was reduced from $42.50 to $30.00. The co‑payment reduction arose from an ALP election commitment and was implemented through legislation passed in October 2022. Following indexation in January 2024, the general co-payment rose to $31.60.

60-day prescribing – September 2023

Announced in April 2023 and commencing in September 2023, 60‑day prescribing provides doctors with the option to provide a 60‑day supply of medication instead of a 30-day supply (for eligible drugs only) to patients with a stable treatment plan for an ongoing condition. This may result in savings for patients by reducing how often they need to see their GP or attend a pharmacy. The implementation of 60-day dispensing occurred over 3 phases in 12 months.

As outlined in the Impact Analysis – Reduction of the Pharmaceutical Benefits Scheme (PBS) general patient co-payment to $25 (the Impact Analysis) – published with the Explanatory Memorandum to the Bill:

Concessional patients can receive 60 days’ medication for the cost of 30 days and only pay a single $7.70 co-payment. For general patients with PBS items costing:

• $31.60 or more, receive 60 days’ medication for the cost of 30 days and only pay a single $31.60 co-payment.
• less than $31.60, patients will not pay the same amount as for 30 days but will usually pay less than the cost for 60 days (p. 15).

According to the Department of Health, Disability and Ageing, patients with a 60-day prescription for PBS medicine may save up to:

• $189.60 a year per medicine for Medicare card holders who do not have a concession card
• $46.20 a year per medicine for concession card holders.

The saving will be less where the cost of the medication is below the current maximum $31.60 PBS general co-payment amount, or when additional manufacturer surcharges are applicable.

Freeze on the cost of PBS medicines – January 2025

In June 2024, the Government introduced the National Health Amendment (Supporting Patient Access to Cheaper Medicines and Other Measures) Bill 2024 to support the implementation of key elements of the Eighth Community Pharmacy Agreement (8CPA) reached between the Australian Government and the Pharmacy Guild of Australia. The Supporting Patient Access to Cheaper Medicines and Other Measures Bill introduced a freeze in indexation of patient co-payments – indexation of the general patient co-payment was frozen for 1 year and indexation of the concessional co-payments for 5 years.

8CPA commenced on 1 July 2024.

• As a result of the one-year freeze in indexation of the general patient co-payment, this co‑payment will remain at its 2024 rate of $31.60 until the end of 2025.
• As a result of the 5-year freeze in indexation of the concessional co-payments, these co‑payments will remain at their 2024 rate of $7.70 until the end of 2029. Indexation of the concessional co-payments will resume on 1 January 2030.

The Impact Analysis outlines the financial impact of policies introduced since 2022 and states that ‘these measures have collectively provided substantial benefits to patients through paying less for their medicines’ (p. 32). The savings to patients from the policies listed above (except for the 2020 change to the Safety Net) are provided in Table 1. Combined, these policies have resulted in patient savings of over $1.5 billion.

Table 1 Patient savings from affordability measures from 2022

Source: Impact Analysis – Reduction of the Pharmaceutical Benefits Scheme (PBS) general patient co-payment to $25, p. 32.

Policy position of non-government parties/independents

As noted above, during the 2025 federal election campaign, the Coalition also promised to lower the PBS co-payment to $25.00. According to a recent media report, the Coalition is ‘likely to agree’ with the Bill.

At the time of writing, no comments by other non-government parties or independents specifically relating to the Bill had been identified.

Key issues and provisions

The key provision of the Bill is Item 1 of Schedule 1, which amends the definition of ‘general patient charge amount’ in subsection 84(1) of the NHA, to replace ‘$30” with ‘$25’.

Item 6 of Schedule 1 omits the phrase ‘1 January 2025’ from subsection 99G(1A) and substitutes it with ‘1 January 2026’ to provide that indexation of the general patient charge will not occur on 1 January 2026. Indexation will continue under usual arrangements from 1 January 2027.

The proposed amendments will reduce the cost of purchasing PBS medicines for consumers and are intended to reduce cost of living pressures.

The Impact Analysis provides recent views from stakeholders regarding the cost of PBS medicines (pp. 46–47). Stakeholders including the Pharmacy Guild of Australia, Better Access Australia and Medicines Australia are supportive of reducing the cost of PBS medicines.

Concluding comments

The Bill reduces the PBS general co-payment amount from $31.60 to $25.00 (to be indexed annually against CPI) for general patients, reducing out-of-pocket costs for individuals purchasing PBS medicines.

The reduction in patient co-payments was an election promise from both the ALP and the Coalition, and reductions in the cost of PBS medicines are broadly supported by stakeholders. As such, the Bill is unlikely to be controversial.