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Proposed outline of short discussion on the benefits of the pbs to the australian community

The Benefits of the Pharmaceutical Benefits Scheme to the Australian
Community and the Impact of Increased Copayments

The Pharmaceutical Benefits Scheme (PBS) has served the Australian community well. Increased growth in the cost of the PBS over the last decade is due to a number of factors. These include the listing of new, more expensive medicines on the PBS; the growth in the numbers of people eligible for health concession cards; and a focus on diagnosing and treating chronic illness particularly asthma, diabetes, mental illness and heart disease. This article argues that increases in the present system of ‘copayments’ for medicines will not contribute to improving the equity, effectiveness or efficiency of the health system, particularly for those using the health system most. The concern of government about the recent high rate of growth in the PBS needs to be placed in a broader context. PBS expenditure growth is not new, as the PBS has grown at an average rate of 10% per annum over the last decade. The growth in recent years, however, has been dramatic: in 2000/2001, growth was about 19%. The government is concerned about its ability to continue to fund such a high growth program. However, it would be flawed policy if the recent high growth justified major policy change that did not take into account the benefits of the PBS. Appropriate prescription and use of medicines is also saving the health budget through assisting people with chronic conditions to stay in the workforce or live independently in the community. Interventions such as the educational approach of the National Prescribing Service provide evidenced-based information and education to prescribers to encourage them to make informed decisions about prescribing. This approach has provided major savings to the PBS. Traditional financing options for handling the increase in PBS cost include: exploring ways to limit expenditure growth, cutting other health programs to fund expenditure growth; or raising more revenue through the taxation system to fund expenditure growth. In public policy terms, the definition of the current problem has been too narrowly defined, i.e. to curb dramatic growth in the PBS. The PBS was designed to provide essential medicines to those who need them at a price they can afford. As such, the PBS is a key instrument to underpin the governments’ approach to economic, health and social policy. The level of concern about PBS growth also indicates a lack of long-term strategy in relation to the PBS and the objectives of the National Medicines Policy. For example, there is a tendency to look at the last two years when PBS growth has been very dramatic and assume that growth will continue at the same pace. However, this ignores the fact that in the years 2000 and 2001 around half of the rapid growth was due to two new drugs listed on the PBS (Celebrex and Zyban) and the prescribing of cholesterol lowering medicines (APAC, 2001). Given current trends new, more expensive medicines will continue to be a cost driver and a pressure point. Nevertheless, there has been steady growth in the PBS over the last decade despite policy attempting to contain this growth. Policies introduced in the last decade to contain growth include user charges such as copayments for concession card holders, generic pricing policies and therapeutic group premiums. Factors contributing to the growth of the PBS include: • the growth in the number of people eligible for concession medicines; Health Issues, 2002, Number 71, pp. 17-20. • technological developments and changing demographics; • newer, more expensive medicines developed for the treatment of chronic conditions such as heart disease, cancer, and mental illness; • more emphasis on diagnosing and treating major chronic conditions; • the national health priorities focusing attention on conditions such as depression, diabetes and asthma, and bring with this incentives designed to encourage general practitioners to diagnose and treat these conditions; and • an ageing population placing more demands on health services and prescription medicines to prevent illness, manage chronic conditions and to maintain people in the community. Who Benefits from the Current Situation?
Currently Australia has a reasonably equitable system for people who need prescription medicines. The PBS subsidises medicines listed to enable those who need prescription medicines to obtain their medicines at an affordable price. (For the purposes of the PBS general patients pay $22.40 and concessional patients pay $3.60 per prescription.) The PBS is underpinned by a safety net for both concessional and general patients. From January 2002, concessional patients who pay more than $187.20 within a calendar year have additional prescription medicines free-of-charge for the remainder of the year. General patients who pay $686.40 or more for prescriptions in a year then have the remainder of their medicines at the concessional rate (Health Insurance Commission, 2002). However, many people with chronic conditions are not eligible for concessional medicines so pay the full general copayment and struggle financial as a result. The safety net amount is set too high for some with chronic conditions and they may never reach it because of the sporadic nature of their illness, asthma being a good example. What Increasing Copayments Cannot Do
Increasing copayments for concessions and general patients is one approach to reducing the costs to the taxpayer of further growth in the PBS. However, this approach does not address the reasons the PBS is growing and is likely to produce negative consequences for those who use medicines most. An increase in copayments in isolation from other measures is also unlikely to increase consumer awareness and knowledge of the wise use of medicines or contribute to changing prescribing behaviour in the long term. Copayments are unlikely to change the trend for new, more expensive drugs to be preferred by prescribers and consumers over cheaper generic or non-drug approaches. To achieve a better understanding of the need to use medicines wisely, specific education and information strategies are required to inform consumers of the available choices and savings that can be made on medicines. At present, consumers rely on their general practitioner for diagnosis and treatment of chronic conditions. They generally do not have access to prescribing information or information on the range of treatment options. When a medicine is prescribed they are reliant on the professional knowledge and judgement of the doctor who is treating them. Those who use medicines most and who benefit most from the PBS are concession patients; the old, low paid and the chronically ill (M-Tag, 1999). This is consistent with the aims of the PBS and the national medicines policy (National Medicines Policy, 2000). What Increasing Copayments Can Do
McAuley cites local research that suggest copayments do have an effect on reducing demand for health care and that: “They have a disproportionate impact on the poor and the sick, and they do not result in a more discriminating use of health services” (McAuley, 1998). Health Issues, 2002, Number 71, pp. 17-20. Canadian Researchers for the Premiers Council on Health Wellbeing and Social Justice concluded that: “In a major experiment with user charges conducted in the United States by the Rand Corporation, researchers found that user charges were about equally likely to deter patients from using both unnecessary and necessary services”(Stoddart et al, 1993). Research conducted in two Canadian States in the 1970’s and 1980’s showed a greater impact on low-income people from price increases. In Saskatchewan user charges for a doctor’s consultation reduced the use of physician services more for low-income people. The researchers summarised the impact as transferring costs from public to private budgets with the burden falling disproportionately on sicker members of the community. The Ontario study on the impact of user charges confirms that user charges had a greater impact on low-income people as they responded by reducing their use of physician services or they delayed seeking care because of the cost (Stoddart et al, 1993). A change in the current policy of consumer copayments for medicines could add to the hardship experienced by those consumers who struggle to pay the costs of medicines needed for treating a chronic condition. Research undertaken by the Consumers Health Forum (CHF) looking at those with chronic conditions not eligible for concessions, described strategies adopted by people to cope with payments for health care. These strategies include people budgeting by not taking all their medicines, taking lower doses than prescribed, or one family member going with out medicines so they could afford medicines for other family members (Stoddart et al, 1993). The impact of increased copayments on those eligible for concessions on low-incomes
also needs consideration. Many older people for example are taking a number of
medicines to manage more than one chronic condition. Increasing their copayments
could result in them not taking all essential medicines due to the additional costs. This
would compromise the PBS’s underlying principle of providing timely access to medicines
to Australians in need, at a cost individuals and the community can afford.
Canadian research was also undertaken in Quebec in the late 90’s on the effects of increases in copayments for medicines for social security recipients and other beneficiaries. This research showed that the impact of increased copayments on social assistance recipients caused an increase in hospitalisations/institutionalisation, physician visits and emergency department visits of 194%, 22% and 106% respectively. For older people in Quebec increased copayments showed increases in hospitalisations, physician visits and emergency department visits of 35%, 13% and 50% respectively (Lexchin, 2001). Implications of Changes to the PBS
At present low-income people with chronic conditions who qualify for a concession card use prescription medicines as a component of their strategy for maintaining their quality of life in the community. A cap on the copayment protects people as does the safety net ensuring access to medicines free of charge once the concession safety net amount is paid. According to the CHF research, those not eligible for concession cards on low-incomes with a chronic condition are struggling to afford essentials including medicines and other health related expenses such as general practitioner and specialist consultation charges. Policy changes such as higher copayments for general and concessional patients could result in poorer health outcomes for already disadvantaged people. Other consequences will include higher costs to the social security system and the health system. The CHF research explains that low-income earners who do not qualify for concession cards question whether they should stay in the workforce (CHF, 1999). Low-income earners who would like to work at least part time are confronted with a tough decision when a relatively small amount of additional income means they no longer qualify for Health Issues, 2002, Number 71, pp. 17-20. concessional medicines. The unintended consequences of increased copayments such as people leaving the workforce early or not taking up employment opportunities in order to qualify for concession cards is a policy issue. This would have long-term social and economic implications for Australia given the projected shortages of skilled people (Access Economics, 2001). Other policy options include the introduction of differential copayments as a mechanism for access to expensive new medicines not listed on the PBS. This sort of policy change also needs careful analysis to ensure that it does not build inequities into the health system. An independent analysis of the implications of such a policy change is needed with a focus on the impact on equity, and equally importantly, the factors driving the price of new medicines. Potentially some consumers who could afford to pay could have access to these medicines. This raises questions about the role of the private prescription market and the impact on health outcomes and health costs in the future. A two-tiered system could develop where those who could afford to pay for expensive new medicines not listed on the PBS had access and those who could not afford to pay were denied access and choice of treatment. The options the government is considering for controlling the growth in the cost of the PBS need to protect the health and financial status of vulnerable groups. It is important to think through the impact of increased copayments on the quality use of medicines and the hospital system. Policy decisions based solely on short-term objectives will almost certainly have unintended consequences. If people stop taking essential medicines because they cannot afford them more illness is likely. Also likely is more cost shifting from the community to hospitals and a more inequitable distribution of health services and treatments. How to Ensure Access to Medicines for all Australians?
Sustaining the PBS for current and future generations is a priority to ensure equitable access to medicines. Any changes to the current system of copayments should ensure the principle of equity applies to protect those with chronic conditions who need medicines to maintain themselves in the community. Concession cards could be reviewed to take into account those with chronic conditions on low-incomes who are not currently eligible for medicines at the concession price. More emphasis is needed to ensure Aboriginal people and people from diverse cultural backgrounds understand and make use of their entitlements through the PBS. A broader public policy discussion is needed about the financing of the PBS to ensure that Australians have equity of access to essential medicines in the future. More resources are needed for education of both prescribers and consumers about appropriate use and the role of medicines in maintaining health and preventing illness. A longer-term approach to sustaining the PBS is needed. This could include the following recommendations: 1. Access to Consumer Medicines Information (CMI) for consumers and consumer education about the role of medicines and non-drug approaches to maintaining health and preventing further illness. 2. More information and education for consumers and prescribers about the PBS, the 3. More emphasis on the role of allied health professionals in assisting people to manage medicines and provide support and education about non-drug approaches to maintaining health. 4. A campaign on the PBS safety net aimed at those who use medicines the most (older people, those with chronic illness and families on low-incomes) to ensure they are fully informed of their entitlements through the PBS safety net. Health Issues, 2002, Number 71, pp. 17-20. 5. More information and explanation for consumers and prescribers of the role of generic medicines and ways of achieving savings on prescription medicines. 6. Discussion of the recommendations in the CHF’s report, Costs of Chronic Illness and Conclusion
The intention of increased copayments is to send a price signal to consumers to reduce their use of unnecessary medicines. However, those who cannot afford the increased copayments may not use essential medicines appropriately and are likely to use more hospital and emergency services. The solutions to the problem of rising costs of the PBS need a longer-term analysis of the benefits of using medicines against the costs of the PBS. Research is needed on the contribution made by the PBS to better health outcomes for individuals and the community. More emphasis is needed on health promotion, non-drug approaches such as smoking cessation and the role of diet and exercise in the prevention of further illness. Combining these approaches with education about the wise use of medicines makes a contribution to sustaining the PBS for future generations. Finally, PBS policy does not work in isolation to other public policy. There is a link between how much Australians as a community value access to essential medicines and the wellbeing of their economic, social and health policy. It is ironic that the discussion concerning increasing copayments is about containing expenditure growth when copayments and safety nets require administrative systems which carry their own costs. The unintended consequences of restricting access to affordable medicines in terms of the lost productivity of people with chronic conditions and the increased pressure on already overburdened hospitals needs to be considered. It is time to address the real causes of growth in the PBS in order to ensure its sustainability for future generations of Australians. Jan Donovan represents the Council on the Ageing (Australia) as a consumer representative on the Pharmaceutical Advisory Council. References
Access Economics, 2001, Population Ageing and the Economy, Public Affairs, Parliamentary & Access Branch, Commonwealth Department of Health and Ageing, Canberra. APAC Speaking Notes on PBS, Canberra 2001 (unpub.). Consumers’ Health Forum, 1997, Costs of Chronic Illness and Quality Use of Medicines, Consumers Health Forum, Canberra. Consumers’ Health Forum, 1999, Easing the Burden: The Pharmaceutical Benefits Scheme and People with Chronic Conditions, Consumers Health Forum, Canberra. Health Insurance Commission, 2002, Your Health Matters, Health Insurance Commission, Canberra. Lexchin, Joel, 2001, A National Pharmacare Plan: Combining Efficiency and Equity, Canadian Centre for Policy Alternatives. McAuley, P., 1998, Health Financing Workshop, Consumers Health Forum, Canberra, p. 49. Health Issues, 2002, Number 71, pp. 17-20. M-Tag, 1999, Report on the Australian System of Pharmaceutical Financing and Delivery Vol. 1: Efficiency and Equity Implications of Public Verus Private Funding of Pharmaceuticals, M-Tag Pty Ltd. National Medicines Policy, 2000, Public Affairs, Parliamentary & Access Branch. Commonwealth Department of Health and Ageing. Stoddart, G. L., Barer, M., Evans, R.G., & Bhatia, V., 1993, Why Not Users Chargers? The Real Issues: A Discussion Paper, The Premiers Council on Health Wellbeing and Social Justice, Ontario, Canada, p. 5. Health Issues, 2002, Number 71, pp. 17-20.


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