PBS: A Budget bright spot

Amid the gloom of collapsing Commonwealth revenues, the Pharmaceutical Benefits Scheme has provided a sustainable bright spot for the Federal Government.

This week’s Budget provided confirmation of the significant impact that PBS price reforms are having on PBS expenditure, delivering the Government an additional $2.5 billion saving over four years.

None of this expenditure write-down has come from new savings measures – most is delivered by the existing program of price disclosure which reduces the prices the government and consumers pay for off-patent medicines.

The goods news on the PBS is outlined in the Medicines Partnership of Australia PBS Scorecard – which will be available here (please follow link)

The Budget papers reveal that the Commonwealth’s savings from price disclosure will increase from $296 million in 2013-14 to a massive $1.1 billion a year in 2016-17, underpinning the sustainability of the subsidised medicine scheme.

The aggregate savings from price disclosure, including the MOU with Medicines Australia, are now estimated to reach $4 billion over the forward estimates period.

Currently, the real rate of growth in pharmaceutical benefits expenditure is only 2% a year, despite Australia’s ageing population, and an estimated 6% annual growth in PBS volumes. This rate of growth is significantly lower than the overall health system and other major health expenditure drivers such as the Medical Benefits Schedule and public hospitals.

The Budget revealed that for the second year in a row, the Government has significantly lowered its own estimates of the likely future costs of the PBS.

For example, the Government is now estimating that pharmaceutical benefits and services costs will be at least $1 billion a year less than it estimated only two years ago.

These Budget figures dispel once and for all the poorly researched reports that have been released over recent months wrongly claiming that there has been a lack of real reform to bring PBS expenditure under control.

Expenditure on pharmaceuticals as a percentage of GDP is now expected to decline every year between 2012-13 and 2016-17. The pharmaceutical and pharmacy sectors are doing their bit to maintain the affordability of the PBS.

The Medicines Partnership of Australia is: The Pharmacy Guild, Medicines Australia, the Generic Medicines Industry Association, the Australian Self-Medication Industry, the Pharmaceutical Society of Australia and the National Pharmaceutical Services Association.

17 May 2013

Media inquiries:Greg Turnbull 0412 910 261