General Facts

The Cost & Value of Medicines

How much does Australia spend on medicines?

The cost of prescription medicines to the Federal Government through the Pharmaceutical Benefits Scheme (PBS) is around $4.9 billion per year. This represents less than $1 in every $10 spent by Australian governments on healthcare.1 Taxpayer funded expenditure on pharmaceuticals in Australia is lower per person than most comparable nations. It has been estimated that the Federal Government would have to spend around $1.8 billion per year extra on the PBS before public spending on medicines reached the OECD average.2

Is PBS expenditure on medicines increasing?

The cost of medicines to the Federal Government has been rising in recent years. If the PBS system is operating as intended, expenditure will rise as the Federal Government purchases improved health for Australians through medicines. However, the Federal Government is also subsidising an increasing proportion of PBS expenditure relative to patient contributions.

Does Australia pay too much for its medicines?

The growth in PBS expenditure is not driven by unduly high prices in Australia. Prices paid to manufacturers of medicines are among the lowest in the world.3 This has been confirmed by the Productivity Commission's findings in which they compared Australian prices to those in other similar nations.4

Should we be worried about how much the Federal Government spends on medicines?

The cost of the PBS cannot be viewed in isolation from the value it delivers through improved healthcare. Australians place a high value on medicines because they can significantly improve or save lives. In addition, by helping to get or keep people well, medicines save money by reducing the need to access expensive health services like hospitals and nursing homes. Research has indicated that a $1 increase in pharmaceutical costs can be associated with a $3.65 saving in hospital care expenditure.5 In fact, while the cost of the PBS has been rising, expenditure on hospitals has grown much more slowly. This is partly because of the new medication treatments available. New medicines also help people with an illness get back to work so that they don't need to rely on their family or the government for support.

How does the Federal Government know it is getting value for its PBS dollar?

A new medicine will only be listed on the PBS if it is shown to work in certain kinds of patients and is considered by the Government to be good value for money. This process of assessing a medicine in Australia is one of the most rigorous in the world. In fact, it has been argued that this process has been so stringent that some valuable medicines have not been listed.

What can we do to get better value from our medicines?

The key to using medicines well is for doctors to have upto- date scientific information so they can prescribe them to the right patients and then help patients to use them properly. Pfizer Australia is involved in many initiatives to give doctors better information about diseases and about the patient groups that would benefit the most from treatment with our medicines. Pfizer Australia is also working to make doctors fully aware of the uses of our products that the Federal Government is willing to reimburse under the PBS.

However, if medicines are not taken as prescribed then no health benefit is achieved. Pfizer Australia is active in finding ways to remind patients that taking the full course of their medicines is the best thing for their health.

The Pfizer Australia View

• New medicines are providing many exciting new treatments which save lives and improve quality of life for Australians.
• By keeping people out of hospitals, nursing homes and doctor's surgeries, new medicines free up resources for other government health expenditure.
• Medicines can reduce the cost of poor health to families, governments and the economy and improve national productivity.
• Pfizer Australia supports the PBS and would like to see it properly funded into the future to ensure Australians have access to the latest and best medicines.
• Pfizer Australia is dedicated to producing medicines that do a better job than other medicines already available.