PBS expenditure now falling in real terms

Recent Pharmaceutical Benefits Scheme (PBS) data shows no growth in real terms,confirming the ongoing viability of the best subsidised medicine scheme in the world.

Growth in Federal Government expenditure on the PBS in the 12 months to 31 March 2012 was just 0.8%. After adjusting for inflation, currently at 1.6%, this represents a decline of 0.8% in real terms. This is well below the Government’s own target of two per cent growth in real terms.

The decline in expenditure is likely to continue, as the largest single set of price reductions in the history of the PBS took effect on 1 April 2012 and the impact of these reductions has not yet shown in the official figures. The PBS reforms are working – the Government is on track to save at least $1.9 billion dollars over the forward estimates and the current lack of (real) growth reinforces the industry’s longheld position that PBS is well under control.

The ten year average growth in PBS in the last decade (2000-2010) was one of the lowest since the 1980s. The Department of Health and Ageing Annual Report 2010-11 reported that in the financial year to 30 June 2011, PBS expenditure grew by5.7%. The current growth rate (2.4%) for calendar year 2011 using Medicare Australia data reaffirms that the long term downward trend is continuing.

Over the last decade, PBS expenditure as a proportion of GDP has remained steady at between 0.6% and 0.65%. This percentage is now on a downward trend, as PBS expenditure is now decreasing (in real terms) while the economy continues to grow.

These findings are contained in the Medicines Partnership of Australia’s PBS Scorecard for May, issued today.

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.

Media inquiries: Greg Turnbull 0412 910 261