Prescription medicine

Is the government’s unsavvy spending on prescription medicines costing consumers millions of dollars more per year than they need to pay?
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01.Getting a bad deal

Prescription medicine

Shopping for pharmaceutical products to be dispensed to consumers at subsidised rates as part of the Pharmaceutical Benefits Scheme (PBS) cost the federal government more than $7.5bn last year. With much media attention focused on this spending, we decided to take a look at the murky issues surrounding PBS spending.

Of particular concern is the high price Australians pay for medicines compared with other countries, possibly the result of a likely conflict of interest within the Pharmaceutical Benefits Pricing Authority (PBPA)

This key concern, put forward by Stephen Duckett, health program director at the Grattan Institute, highlights the government’s poor shopping skills. According to Australia’s bad drug deal, a report released by the institute in March this year, government spending on pharmaceutical products is far from savvy. Duckett suggests the government is paying at least $1.3bn a year more than it needs to – amounting to 14% of the entire PBS spend. 

At present, the government buys all PBS drugs at a price it negotiates with individual pharmaceutical companies. Consumers without a health care concession card pay up to $36.10 for a prescription, with the government topping up any further cost from its own coffers. However, the Grattan report suggests changes to the way the government does business that could bring the cost of many pharmaceuticals below the $36.10 co-payment. It is unlikely that the changes would make much difference for those with a health care card who pay a reduced co-payment of $5.90.



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