Pharmaceutical Benefits Scheme

The Pharmaceutical Benefits Scheme (PBS) is a programme by the Federal Government of Australia that provides heavily subsidised prescription drugs to all citizens and residents of that country. Most necessary medicines are included in the list of medicines covered by the PBS. Examples of medicines that are not included are hayfever relief medications and cough medicines.

The Federal Government through the PBS purchases medication in bulk from drug companies at a pre-agreed price. The consumer then buys the medicine from his/her pharmacist at a subsidised price and the PBS covers the difference between the bulk purchase cost and the consumer price.

For most people and most medicines as of May 2005, the maximum price for PBS medication is AUD$28.60. For low-income families, welfare recipients, war veterans and other holders of Centrelink concession cards, the cost of PBS medication is as little as $4.60. When any family has spent $874.90 on PBS medicines in a calendar year, that family becomes eligible for $4.60 medicines for the rest of the year. For concession card holders, PBS medicines are free once the card holder's family has spent $239.20 in a calendar year.

Brand-name medicines, however, may be more expensive when a generic brand of the same medicine is available. This commonly occurs when the patent on a particular drug has expired and drug companies produce generic copies of the drug which was previously protected by the patent. For example, if Drug Company X held the patent for Medicine Y and sells it to the PBS for $40 a box, and Drug Company Z produces a generic copy of Medicine Y after the patent has expired and charges the PBS only $35 a box, then $5 will be added to the consumer's bill if he/she chooses to buy the brand produced by Company X. This is part of a Government programme to encourage Australians to use cheaper generic brands and therefore relieve the burden on PBS finances.

Federal Treasurer Peter Costello and the Liberal Party attempted to raise the price of PBS medicines by up to 30 per cent in the 2002 Federal Budget, however this measure was blocked in the Senate in which various minor parties hold the balance of power. However, in June 2004 the main opposition party, the Australian Labor Party, announced that it would allow the PBS price hikes to proceed through the Senate, ostensibly to prove its fiscal responsibility before the forthcoming Federal election.

The PBS was introduced in 1948 by Prime Minister Ben Chifley as part of wider plans to create a British-style National Health Service, but the High Court of Australia soon ruled most of Chifley's health care plans as unconstitutional. However, the PBS was not ruled as unconstitutional. Medicines on the PBS list were free to the consumer until 1960, when nominal user charges were introduced.

In its first year, the PBS cost the Commonwealth Government £149,000 (AUD$298,000). The PBS now costs the Commonwealth Treasury approximately AUD$5 billion a year to operate, despite consumers contributing around AUD$900 million in patient charges. Further attempts to restrain the enormous growth in costs of the PBS may be needed, however, attempts to increase consumer prices of drugs have always proved politically unpopular.

Some PBS medications are available only on "authority". This means that although it is covered by PBS, a doctor's prescription is insufficient: the doctor must ring the Health Department to get an authority number, which then must be written on the prescription. The PBS schedule identifies certain conditions for which an authority will be granted: the doctor simply identifies themselves (using their name and provider number), the patient (using their Medicare number), and when asked by the operator, confirms which of the conditions eligible for an authority the patient is suffering from. The health department normally assumes the doctor's assertion that the condition exists as sufficient.

In addition some medications (e.g. Dexamphetamine, Methadone) require a separate authority from the state (as opposed to federal) health departments to prescribe. This is because these are controlled drugs for which there exists a significant black market; these authorities are administered under the Poisons Schedule as opposed to PBS legislation.