Learn English while learning about daily life in Australia, with Rob McCormack
Podcast Number 153 – The Cost of Prescription Medicines in Australia
(This podcast is 13 minutes and 42 seconds long.)
We all know that medicines are important for keeping us healthy and having a long and active life. Sickness and injury can affect anybody at any time, so it’s important that all Australians can afford the safest and most effective medicines. Often, people may require a particular medicine for an extended period. I’m sure we all know somebody who has to take tablets on a regular basis.
In this podcast, I would like to talk a little about a government health scheme in Australia called the Pharmaceutical Benefits Scheme, or PBS for short. Pharmaceutical means relating to medicines. The PBS covers the medicines which your doctor prescribes and has the aim of providing safe, effective and affordable medicines to all Australians. I don’t claim to be an expert on this topic, and will provide only a summary here, as the full scheme is complicated. For full and accurate information, please refer to the government website at www.pbs.gov.au, or https://www.healthdirect.gov.au/pharmaceutical-benefits-scheme-pbs
When you consult a doctor, they may prescribe a medicine for you, to help you get well or to help keep you well. They will write out a prescription for you naming the particular medicine and how and when you must take it.
Normally, a prescription will be for a course of the medicine. The course might be for a week or 2 months or some shorter period, whatever the doctor thinks is necessary to treat your health issue. The price of these medicines can vary a great deal. Pharmaceutical companies take a long time to develop them and must invest large amounts to do so. The price they charge will reflect that time and investment cost, as well as the cost of making the medicine. The total price for a medicine could be less than $30, or it could be in the hundreds or even thousands of dollars, or more, for just one prescription. However, with medicines listed on the PBS, the patient pays only a small, capped payment for each prescription, called the co-payment. The government pays the remaining part of the price, called the subsidy.
In 2024, the maximum patient co-payment is $31.60 per prescription. (This amount is adjusted annually according to inflation). It doesn’t matter how much the medicine costs to buy from the pharmaceutical company. For example, some newer cancer medicines are very expensive. Despite that, the patient co-payment is no more than $31.60 per prescription. The government pays the subsidy. For pensioners, for people with a concession card and for military veterans, the patient co-payment is no more than $7.70 per prescription. This scheme, along with the Medicare system for paying doctors and hospital fees (which I covered in Podcast 13), helps ensure that all Australians can afford the healthcare that they need to stay healthy, whether they are rich or poor.
As a further cost saving measure for patients, there are annual restrictions on how much a family must pay for medicines in any one calendar year. This is called the Safety Net. The Safety Net helps families who require a lot of medicines and it saves them money. Once you and your immediate family have spent up to the Safety Net cap for the year, then the co-payment for each prescription will drop to $7.70 for the rest of that calendar year. For pensioners, concession card holders and military veterans, the co-payment drops to $0 per prescription. Of course, once the calendar year is over, the Safety Net starts from zero again and you go back to paying the normal $31.60 co-payment (or whatever the revised amount is each year). In 2024, the Safety Net cap is around $1650 per family per year. It is also adjusted annually. This means that, once your family has paid this amount in co-payments (around 50-60 prescriptions), the safety net is reached and you start paying the reduced co-payment for the rest of the calendar year.
So, the PBS is an important part of the Australian health system. It makes high quality medicines affordable for all sick Australians. In order to be eligible, you must be either an Australian citizen or a permanent resident. Australians and permanent residents will need to show the pharmacist their Medicare Card when they present their prescription. In addition, visitors who are citizens of certain countries may also be covered by the PBS for medicines when they are in Australia. These countries have what is called a Reciprocal Health Care Agreement with the Australian government. The countries are Belgium, Finland, Italy, Malta, New Zealand, United Kingdom, Netherlands, Norway, Slovenia, Sweden and Ireland. Likewise, when Australians are visiting these countries, they can get access to certain medical care at reduced cost. (See https://www.servicesaustralia.gov.au/reciprocal-health-care-agreements).
The PBS list of medicines is very long, with thousands of approved medicines listed. Putting new medicines onto the PBS list does not happen automatically and not all new medicines are included. Each new medicine must first pass an evaluation by the Therapeutic Goods Administration, or TGA for short, a government organisation here in Australia. The TGA evaluates each medicine for safety, quality and effectiveness and must approve it before it can be sold in Australia. However, this does not mean it will receive a government subsidy through the PBS. Once a medicine is approved for sale by the TGA, it must then undergo a separate evaluation by the Pharmaceutical Benefits Advisory Committee, or PBAC for short. This group is also appointed by the government and makes recommendations about including the medicine on the PBS list. This expert committee evaluates not only the safety, quality and effectiveness, but also the cost-effectiveness of the medicine compared to other existing medicines. They consider the impact on the government’s budget if this medicine were to be placed on the PBS. In other words, this committee also considers the ‘value for money’ question. The Minister for Health in the government then receives the PBAC recommendations and makes the final decision as to whether it will be listed on the PBS. That process normally takes many months. All these processes sound complicated, however I think it’s important that approval is only given after all aspects have been considered – both medical and financial aspects.
Here’s some interesting facts about the PBS. In financial year 2021/22, there were 215 million prescriptions subsidized under the PBS. The subsidies for these prescriptions cost the government around $14.4 billion. The patients for these prescriptions paid around $1.6 billion in co-payments. You can see that the savings are large for all Australians.
I sometimes see a news report on the daily 6pm news about a new life saving medicine passing through all the approval steps and finally being added to the PBS. These stories are always good news. One example recently was a new medicine for treating advanced prostate cancer. The new medicine costs around $42,000 for a full year of tablets per patient. That amount is out of reach for many Australian men. Now that it has been listed on the PBS, a patient will pay (in 2024) no more than $31.60 per month. In total, for a full year, the patient will only pay around $380 for 12 prescriptions. The government pays the rest.
I think such stories are wonderful to hear. In my opinion, the PBS is one of the best aspects of our health system.
If you have a question or comment to make, please leave it in the comments box at the bottom of this page. Or, you can send me an email at email@example.com. I would love to hear from you. Tell me where you live, a little bit about yourself and what you think of my Slow English podcast. I will write back to you, in English of course. If you would like to take a short quiz to see if you have understood this podcast, you will also find it on my website. Goodbye until next time.
Podcast 153 Quiz - Did you understand the podcast?
You can take the quiz as many times as you like.
access = when you are able to get something that not all people can get
active = when you do lots of things in your daily life
adjusted according to inflation = has been changed due to inflation in the economy
advanced prostate cancer = cancer of the prostate where it is already very bad
afford = when you have enough money to pay for something
annual = yearly (every 12 months)
approve = to give your agreement
aspects = different parts of something, different viewpoints about something
automatically = without any approval, without any delay
budget = the total amount of money you have available to spend
calendar year = from 1 January to 31 December
cap/capped = (here) a limit, you can’t have more than this amount
citizen = a person who was born in a country and lives there
claim = (here) to say that you can do something special
compared = when you decide if something is better, worse or just different to something else
complicated = when something has many different parts, hard to understand
concession card = a card given by the government which lowers certain costs for you
considered = thought about
consult = ask for advice or help (used when you ask a doctor for their advice)
cost-effective = when something is ‘value for money’, the price is not too high
course = (here) a treatment with medicine, from start to finish, or for a particular timeframe
effective = when something works well, it achieves its purpose
effectiveness = how well something achieves its purpose
evaluation = a test
existing = already there
expensive = costs a lot
expert = someone who knows a lot about a subject
extended = longer or bigger
financial = to do with money
immediate family = a couple, or a couple and their children who are dependent on them
impact = how something is affected by something else
included = added
injury = when your body is damaged in an accident
invest = when you spend money in order to build or develop something new
listed = put onto a list of things
medical = to do with the health of someone
Medicare Card = an Australian government card which says you can get medical benefits
medicines = something used to help sick or injured people get healthy again
pensioners = people who have retired from work and no longer have a job
period = a length of time (for example 2 months or a year)
permanent resident = a person who was born in one country but now lives in another country
prescribes = to write down a medical treatment, usually including a medicine
prescription = a written request by a doctor asking for particular medicine to be provided to a sick patient
providing = to give, to make available
reciprocal = when one person gives something to another and they give the same in return
recommendation = to tell another person what they should do
reduced = made smaller
regular = happens again and again
require = need
restrictions = limits, the point after which things are not allowed to change greatly
revised = changed
scheme = a system, a set of steps to achieve something
tablets = small amounts of medicine, usually shaped like a wheel
treat = (here) doing things to help a person overcome sickness or injury
vary = change
veterans = people who have previously worked in the military (army, navy, airforce)