Marcia Church and her mother Carole in 2009 (Image: supplied)

As the Morrison government weighs its full response to the findings of the aged care royal commission, evidence has emerged of doctors' complicity in gaming the system to promote the use of powerful antipsychotic drugs in nursing homes -- despite warnings that the drugs, designed to treat schizophrenia, should not be used for patients with dementia.

Documents provided to Inq show that an elderly woman at a dementia facility was falsely diagnosed as having schizophrenia -- a diagnosis which made it possible to prescribe the powerful antipsychotic drug olanzapine at a discount, although it was then used to treat her dementia symptoms.

Olanzapine has been listed on Australia's Pharmaceutical Benefits Scheme (PBS), making it eligible for large taxpayer-funded subsidies -- but only if it is used to treat schizophrenia. It does not have PBS approval for dementia-related psychosis although some doctors prescribe it "offline" (without going through the PBS and against its official recommended use).