The Pharmaceutical Benefits Scheme (PBS) has served Australians well for many years but recent policy changes are undermining the universality of this important health program. This is highlighted by new research which shows that Australia is falling behind the rest of the developed world in ensuring its citizens have access to affordable medicines.

This research, lead by Dr Anna Kemp at the Centre for Health Services Research, UWA, appears in the most recent Australian Health Review (subscription only) and shows that Australians are paying more out of their own pockets for medicines today than they did in the 1970s (after adjusting for inflation).

The study compared changes in patients’ out-of-pocket spending on prescription medicines over time. Dr Kemp and her colleagues found that spending on publicly subsidised medicines by Australian patients increased from $16 per person in 1971 to $62 in 2007. Patient expenditure on all prescription medicines had risen to $134 per person in 2007 (after adjusting for inflation).

The study also examined how spending in Australia compares with other Organisation for Economic Co-operation and Development (OECD) countries. The results from this analysis show that out-of-pocket expenditure by Australian consumers ranks 4th of 14 OCED countries with universal pharmaceutical subsidies. Australians pay 28% of national pharmaceutical expenditure; more than people in South Korea (27%), Slovak Republic (26%), Sweden (22%), France, Luxembourg, Japan and Switzerland (17%), Germany (15%), Czech Republic (11%) and Spain (6%), but less than people in Finland (36%), Denmark (33%) and Poland (34%).

The article explains that Australia, like most industrialized countries, is spending more on pharmaceuticals due to a range of factors, including the ageing of populations, increased availability of new medicines and the rise in chronic disease. Spending more on medicines (or any other area of health) is not in itself a problem, if it delivers good value to the community.

The problems occur when governments implement budget-control measures which shift the cost of health care from the public purse to individuals, as has occurred with the PBS. This places a disproportionate burden on the sick and the poor, who spend a much greater share of their income on medicines compared with the well and affluent. This undermines the equity and universality of the PBS and can cause flow-on costs elsewhere in the health system, for example, by increasing hospital admissions due to poorly managed chronic disease.

This is not obvious from data which describes the average out-of-pocket costs per person for medicines. In health care, a statistically ‘average’ person is often not a useful concept as health care usage varies so widely within the population. Contributing to the ‘average’ figure of $134 per person per year spent on medicine are large numbers of people who spend little or nothing on medicines and a small number of people who spend a great deal more. Many of this group will also have lower than average incomes, due to their illness and related factors, which further increases the burden of high out-of-pocket costs. The needs of this group, rather than a mostly mythical ‘average’ consumer, should be paramount when making policy changes to the PBS. 

However, this has not occurred as successive governments have increased the out-of-pocket costs for medicines while failing to implement a robust health safety-net for those with problems affording the care they need. As Dr Kemp and her co-authors warn, there are already signs that higher prices are reducing access to essential medicines among some groups in the community. For example, a recent survey by the Commonwealth Fund of consumers in seven industrialized countries found that almost 20 per cent of low income Australians reported not filling a prescription or skipping a dose of medicine due to cost issues. This was second only to consumers in the USA.

If the PBS is to continue as a genuinely universal program, policy makers need to heed the warning of this study and ensure that essential medicines remain affordable to all Australians.