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PBS reforms provide savings to Government and affordable access to medicine: VU study

Reforms to the Pharmaceutical Benefits Scheme will save the Government $6 billion over 10 years while continuing to guarantee good access to affordable medicines, a Victoria University study has found.

Launching the report by the Centre for Strategic Economic Studies today, Professor Peter Sheehan said fears that the rising cost of the scheme could render it ineffective had been allayed.

“The main conclusion is that after some concern about burgeoning costs, the position of the PBS now looks stable. We expect costs to grow by only 3 to 4 per cent and to be a fairly stable share of GDP,” Professor Sheehan said.

“There was an earlier report by Treasury indicating the PBS was in major crisis because of the ageing population and the increasing cost of drugs. The Government then introduced reforms and we have undertaken detailed modelling since those reforms. On the basis of that modelling we conclude that there is no longer a crisis, if there ever was.

“The scheme is not costing consumers a great deal more but the cost to Government is being constrained.

 “What’s really important about the reforms and our assessment of them is it suggests that people will continue to get access to the best medicines at a reasonable price.”

The report says the introduction of a two-tiered scheme effectively separates new medicines protected by patents from those older medicines that are off patent. Only the off patent medicines with more than one brand will now be subject to price reductions with consequent savings to the Government.

The Government would continue to reap the benefits of this as a number of top-selling medicines lose patent protection in the future and new suppliers enter the market.

The Impact of PBS Reforms on PBS Expenditure and Savings was commissioned by Medicines Australia. The full report is available on the MA website:

Professor Peter Sheehan and report author Dr Kim Sweeny from CSES are available for interview.


Media contact: Jim Buckell, A/Senior Media Officer

Marketing and Communications Department, Victoria University

Ph: (03) 9919 4243; mobile: 0400 465 459; email: [email protected]

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