Sweeny, Kim (2002) Trends in the Use and Cost of Pharmaceuticals Under the Pharmaceutical Benefits Scheme. Working Paper. Victoria University, Melbourne, Australia.

Abstract

Most pharmaceuticals in Australia are provided under the Pharmaceuticals Benefits Scheme (PBS) administered by the Commonwealth Department of Health and Aged Care through the Health Insurance Commission (HIC). The scheme is financed primarily from a budgetary allocation of the Commonwealth Government. Over the past few years, the cost to the Government of the PBS has increased markedly – from $2.5 billion in 1997-98 to $3.8 billion in 2000-01. In explaining these cost increases, a lot of attention has been paid to the role of new “blockbuster” drugs, such as the anti- inflammatory celcoxib, the cholesterol reducing statins, the anti-psychotic olanzapine and treatments for peptic ulcers such as omeprazole. Aside from the impact of these new drugs, other factors have also been cited as influencing costs, including: · strong growth in demand for established drugs; · changes in the prices of these drugs; · a general ageing of the population; · more of the population being able to qualify to receive drugs at lower cost; and · the prescribing by doctors of these and other drugs for conditions outside the guidelines specified by the PBS. In its annual budget brought down in May 2002, the Government introduced measures to curb the increase in the cost of the PBS, principally through increasing the amount paid by the final consumer (the maximum patient contribution). A report released at the same time as the budget highlighted the ageing of the population over the next 40 years, and claimed that this would lead to an increase in the use of pharmaceuticals.1 The aim of this current study is to provide an empirical analysis of major trends within the PBS and to examine the contribution to these trends from some of the factors listed above.

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