Medicines can contribute to the quality of life of Australians by curing or relieving the symptoms of illness. They can also prevent complications in existing health conditions or delay the onset of disease.
The Australian Government Department of Health implements Australia’s National Medicines Policy in partnership with state and territory governments, medicines industry, healthcare professionals and consumers. The objectives of the policy are:
- timely access to the medicines that Australians need, at a cost that individuals and the community can afford
- medicines meeting appropriate standards of quality, safety and efficacy
- quality use of medicines
- maintaining a responsible and viable medicines industry.
How are medicines regulated?
The Therapeutic Goods Administration (TGA) plays a key role in the implementation of the National Medicines Policy by maintaining the Australian Register of Therapeutic Goods (ARTG). Therapeutic goods must be entered in the ARTG before they can be lawfully supplied in, imported into, or exported from Australia, unless exempt. Medicines, including prescription, over-the-counter (OTC) and complementary medicines, are defined as therapeutic goods and hence must be included in the ARTG.
As part of the National Medicines Policy, the Pharmaceutical Benefits Scheme (PBS) is the key mechanism for providing Australians with reliable, timely and affordable access to a wide range of medicines. Under the PBS, the government subsidises the cost of medicines for most medical conditions where medications must meet the criteria for PBS listing, such as clinical and cost effectiveness. Most of the listed medicines are dispensed by pharmacists and used by patients at home. Some medicines, because of their clinical use and other special features, need medical supervision (such as chemotherapy drugs) and are only accessible at specialised medical services, usually hospitals.
Medicines can be obtained in a number of ways including:
- via a prescription provided by a general practitioner (GP), medical specialist or other health practitioner
- to admitted patients in hospital
- purchased over the counter from community pharmacies or other outlets (such as supermarkets).
Presently a complete data source for all medicines dispensed is not available.
The information presented on this page focuses on medicines provided under the PBS and the Repatriation Pharmaceutical Benefits Scheme (RPBS); information on expenditure for non-PBS/RPBS medicines is also included. Typically, PBS and RPBS listed medicines are dispensed through community pharmacies, but are also available through private hospitals, and public hospitals participating in Pharmaceutical Reform Arrangements (enabling the supply of PBS medicines to patients on discharge from hospital, and non-admitted or day-admitted patients in all jurisdictions except New South Wales and the Australian Capital Territory), or through other arrangements such as the Remote Area Aboriginal Health Services.
In 2020–21, 314.8 million prescriptions were dispensed under the PBS and RPBS – an increase of 0.6% on 2019–20.
What is the PBS and the RPBS?
The PBS and the RPBS are Australian Government Health programs that subsidise the cost of a wide range of medicines in Australia. The PBS is available to current Medicare card holders as well as to overseas visitors from countries with Reciprocal Health Care Agreements with Australia and the RPBS is only available for Department of Veterans’ Affairs Health card holders.
The PBS began in 1948 and has expanded over time. As at 30 June 2021, 906 different medicines in 5,380 brands, used to treat a wide range of health conditions, are listed on the Schedule of Pharmaceutical Benefits. The RPBS subsidises pharmaceuticals available under the PBS and additional medicines and items (for example, wound dressings) for eligible veterans, war widows and widowers, and their dependants.
Spending on prescription medicines
In 2020–21, the Australian Government recorded $13.9 billion in spending on all PBS and RPBS medicines (PBS accounting for 98% of the total) or $541 per person. This was an increase of 8.4% in spending compared with 2019–20. After adjusting for inflation, Australian Government spending increased 5.1% between 2019–20 and 2020–21, which was higher than the average yearly growth between 2015–16 and 2020–21 of 2.0%.
For all prescriptions dispensed in 2020–21, 70% were above the co-payment threshold, indicating the patient paid the relevant co-payment and the remaining cost was subsidised by the Australian Government (see Figure 1). The remaining 30% of medications were under the co-payment threshold meaning the patient paid the full cost of the medicine with no government subsidy attracted.
In total, consumers paid $3.2 billion towards PBS and RPBS prescriptions (for both above and under co-payment prescriptions), which was 19% of the total expenditure on PBS and RPBS medicines in 2020–21. The Australian Government contributed the remaining 81% of total expenditure.
What is the ‘co-payment’?
Under the PBS and the RPBS, the Australian Government sets a maximum ‘co-payment’ amount that people pay towards the cost of their medicines. The Australian Government pays pharmacies the difference between a consumer’s co‑payment and the PBS price of a medicine, as listed on the Schedule of Pharmaceutical Benefits. Some prescriptions are priced below the co-payment threshold for a patient, so the consumer pays the total cost, and the government does not contribute.
Prescriptions priced above the maximum co-payment threshold for a patient are referred to as ‘above co-payment’ prescriptions and attract a subsidy from the Australian Government. Those priced below are referred to as ‘under co-payment’ prescriptions, and do not receive a subsidy.
The maximum co-payment a patient pays depends on their level of entitlement, which is determined by the patient’s concessional status and whether they have qualified for the PBS safety net. Current and historical co‑payments can be found on the PBS website.