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Report Time for PBS Reform

The 2007 legislation introduced to support the implementation of PBS reform required the Minister for Health and Ageing to present to Parliament a report on reform’s current and likely future impacts.

The report was released earlier this year and below are some key findings:

Statutory price reductions

On 1 August 2008, 450 PBS items across 89 F2T drugs received the full 25 per cent price reduction, while 13 items across all five single brand drugs on F2T received the first instalment of the phased price reduction. This resulted in an overall estimated reduction of $263 million in PBS outlays in 2008–09 for F2T drugs. And, on the same date, 449 PBS items listed on F2A received a two per cent price reduction. Price reductions from F2A are estimated to have reduced PBS outlays by $11 million in 2008–09.

Price disclosure

From December 2009, 38 drugs became subject to price disclosure. Price reductions were determined for seven drugs:

Drug Price reduction
Doxorubicin inj. 63.54%
Meloxicam 14.57%
Mitozantrone inj. 34.43%
Ondansetron inj. 15.37%
Fluconazole 55.26%
Vancomycin inj. 71.80%
Carvedilol 27.29%

Due to implementation delays, there is still no information available on the savings from these price reductions.

Impact on manufacturers and wholesalers

It is estimated that PBS expenditure on the ex-manufacturer price fell by $341 million in 2008–09, while wholesaler margins were $25.6 million lower than would otherwise have been expected. The additional funding of $22 million to CSO available to wholesalers would, however, have partially offset the reduction in wholesaler margin that occurred in 2008–09.

Forecast savings from reform

The total savings to Government from reforms over the forecast period of 2008-09 to 2017-18 are between $3.6 billion and $5.8 billion. The estimated contribution of the price disclosure component of the reforms is between $2.2 billion and $4.4 billion.

The full report can be viewed on the PBS website.

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