Medicines Partnership of Australia
May 2014 The PBSMedicines
leadsPartnership
Budgetof‘heavy
Australia lifting’
Pharmaceutical Benefits Scheme (PBS) Scorecard (Budget edition)
The PBS leads Budget “heavy lifting”
Pharmaceutical Benefits Scheme (PBS) Scorecard (Budget edition)
May 2014
Figure 1: PBS forward estimates downgraded by another $4.5 billion
Figure 1 – PBS forward estimates downgraded by another $4.5 billion
This
year’s budget
revealed
PBSbillion
will cost $4.5The
billion
less from
2013-14
than was
This year’s budget
revealed
that the
PBS willthat
costthe
$4.5
amount
taken
out of to
the2016-17
PBS forward
estimates over the
expected
in
last
year’s
budget.
$0.7
billion
of
that
was
attributed
to
increases
in
co-payments
and
next three financial years had a larger positive impact on the
less from 2013-14 to 2016-17 than was expected in last year’s
safety net thresholds to be introduced from January 2015.
However
remaining
billion
is any savings measure
budget
bottomthe
line
over that$3.8
period
than
budget. $0.7 billion of that was attributed to increases in
simply windfall benefit from existing reform and lowerinthan
expected
growth.
This
is
on
top
of
a do more than its
the 2014 Budget. The PBS continues to
co-payments and safety net thresholds to be introduced from
total of $4.1 billion in forward estimate downgrades across
the
previous
two
budgets.
share of fiscal “heavy lifting”.
January 2015. However the remaining $3.8 billion is simply
The amount
outand
of the
PBSthan
forward
estimates As
over
the next
three
financial
hadestimates
a
windfall benefit from
existingtaken
reform
lower
expected
shown
below,
these
latestyears
forward
show that PBS
larger
positive
the budget
bottom line over
that periodas
than
any savingsofmeasure
in the Product (GDP)
growth. This is on
top of
a totalimpact
of $4.1on
billion
in forward
expenditure
a percentage
Gross Domestic
2014 Budget.
Theprevious
PBS continues
to do more than itsisshare
of fiscal
“heavy lifting”.
estimate downgrades
across the
two budgets.
expected
to decline
to less than 0.62% by 2017-18.
As shown below, these latest forward estimates show that PBS expenditure as a percentage of Gross
Domestic Product (GDP) is expected to decline to less than 0.62% by 2017-18.
443253-1
Page 1
Total
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17 2017-18
12,404
12,070
12,882
11,619
12,393
13,166
48,067
11,139
11,664
12,087
12,562
45,579
3,863
10,751
11,127
11,550
12,025
10,225
10,430
10,826
11,272
10,519
10,547
10,694
11,209
11,589
<<--MAY NOT BE CO
4.2%
4.7%
3.6%
3.9%
2,488
Clearly,
PBS Reforms
-451
-489 are delivering massive savings. With those
-480
-729
-1079growing—impacts on all parts
savings come significant—and
1,319 1,755
of the pharmaceutical
industry—manufacturers,
the supply
1583775.44
1631288.7 1708774.92
1794214 1883924
3.0% pharmacies.
4.8%
5.0%
5.0%
chain4.0%
and community
2010 Budget
10,248 PBS10,762
11,076
11,740
Medicines
Partnership of Australia
Scorecard
May 2014
2011 Budget
10,337
10,794
11,245
2012 Budget
10,539
10,889
2013 Budget
10,689
August 2013 Update
2013 MYEFO
Figure2014
2 – Savings
Budget from PBS Reforms top $2 billion per year
The 2014-15
Health Portfolio Budget Statements included
a -356
2012 - 2011
-255
2013
2012
-200
new table showing all ongoing savings from PBS Reforms. Next
Aug 2013 - 2011
financial
year the
at more
than $2 billion
Nominal
GDP savings will be running
1407922
1484232
1522861
5.4%
per year. Two years later they will have increased to
more than2.6%
$2.5 billion per year and cumulatively they will deliver $9.9
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
0.73%
0.73%
0.74%
0.76%
0.79%
0.71%
0.72%
0.73%
0.76%
0.77%
0.70%
0.70%
0.72%
0.71%
0.70%
0.68%
0.68%
0.68%
0.67%
0.65%
0.64%
0.63%
0.63%
2013-14
2014-15
2015-16
2016-17
2017-18
0.66%
0.65%
0.63%
0.62%
0.62%
0.80%
billion2011
overBudget
the next four years.
2012 Budget
2013 Budget
August 2013 Update
2013 MYEFO
2014 Budget
Revised budget
Estimated
C + G +savings
R + WP
2011 Budget
to Government
Budget
from 2012
PBS Reforms
Budget target
Forward year 1
Forward year 2
0.78%
Forward year 3
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
8406
8865
9191 $2,423.3m
9867
10535$2,595.6m
$2,074.6m
$2,767.9m
8461
8645
9208
9815
10585
7830
8041
8374
8625
8910
7825
7686
7725
8092
8341
0.74%
$1,477.7m
2013 Budget
2014 Budget
Health Expenditure
2014 Budget
64511
66892
68203
Benefits as %
FigurePharmaceuticals
3 – PBS expenditure
is growing slower than other major areas of the health budget
16.3%
of Health Expenditure
15.8%
15.7%
71797
74856
15.6%
15.5%
0.72%
0.70%
0.68%
The Budget papers show that expenditure on the PBS will decline significantly in 2014-15, followed by further declines in
Government Expenses
each of
the out years. This is despite significant377700
savings measures
in other
areas of415700
the health431000
budget such
as the MBS.
2013 Budget
381400
398300
454700
Pharmaceutical Benefits as %
of Total Commonwealth
Budget
2.8%
2.8%
2.8%
2.8%
0.76%
0.66%
0.64%
2.8%
0.62%
Commonwealth Budget projections for
PBS expenditure
0.60%
(as at December 2013)
2010
11,400
11,200
11,000
10,800
10,600
10,400
10,200
10,000
11,000
9,800
9,600
2013-14
2014-15
2015-16
10,500
2016-17
10,000
9,500
9,000
Page 2
8,500
8,000
(C
Medicines Partnership of Australia PBS Scorecard February 2014
Figure 4 – How will PBS co-payment and Safety Net changes affect the PBS in 2015?
The Budget papers show that expenditure on the PBS will
The most recent major increase in co-payments was a 24%
increase to both co-payments effective from 1 January 2005.
decline significantly in 2014-15, followed by further declines
in each of the out years. This is despite significant savings
measures in other areas of the health budget such as the MBS.
It was announced in the Budget that PBS co-payments will
increase by 13% on 1 January 2015, over and above the usual
CPI increase – an increase of $0.80 per prescription for patients
with a concession card and of $5.00 per prescription for those
without a concession card. Of at least equal significance,
especially in the longer term, were progressive increases to
safety net thresholds. The concessional threshold will reach 68
co-payments by 2018, while the general safety net will increase
at 10% above inflation each year for four years, and will be well
over $2,000 by 2018.
A major study by the University of Western Australia found
that, compared with dispensings prior to the co-payment
increase, prescriptions fell by 8% for combination asthma
medicines, 9% for proton pump inhibitors and 5% for statins.
The study concluded that increases in patient contributions
particularly impact on concessional patients’ ability to afford
medicines. The increase in the co-payment in 2014 will be
somewhat smaller than in 2005 and the reductions in filled
prescriptions are likely to also be smaller. However the
introduction of a GP co-payment from 1 July 2015 may also
impact on the number of prescriptions written.
As shown below, following the 2005 co-payment increases, PBS
prescription volumes decreased in the two subsequent years.
% change in number of PBS subsidised prescriptions
by calendar year, 2003 to 2008
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
-0.5%
-1.0%
-1.5%
5.7%
24% increase in
co-payments
applied from
1 January 2005
2.1%
2003
2004
2005
1.4%
2006
-0.4%
2007
1.1%
2008
-1.0%
Hynd, Roughead, Preen, Glover, Bulsara, Semmens. Aust NZ J Public Health 2009
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