The Times Australia
The Times World News

.

The price of PBS medicines is coming down. But are we helping the right people?

  • Written by Yuting Zhang, Professor of Health Economics, The University of Melbourne
The price of PBS medicines is coming down. But are we helping the right people?

Some Australians will be paying less for prescription medicines from January, in a move announced this week[1] and designed to ease cost-of-living pressures.

Prime Minister Anthony Albanese said[2] the maximum price of Pharmaceutical Benefits Scheme (PBS) medicines would drop from A$42.50 to $30, at a cost to taxpayers of $765.3 million[3].

There is no reduction for concession-card holders, who will continue to pay up to $6.80[4].

Cutting the cost of medicines this way is a welcome move. But the government has missed a chance to better target cost cuts to certain patient groups, for specific medical conditions and for generic drugs.

Australians are going without medicines

Australians are currently paying more[5] for their prescription medicines than some similar countries, including the United Kingdom, Germany, the Netherlands and New Zealand.

And we know many Australians can’t afford[6] to fill their scripts.

Just under 7%[7] of older Australians said they didn’t buy their prescribed medications because they were too expensive, a higher proportion than other similar countries. For the UK, this figure was about 3%, in New Zealand it was just under 5%.

This is a problem because people who cannot afford to buy essential medicines have worse health and higher mortality[8]. Forgoing medicines may also lead to more health costs in the future, as conditions go untreated and complications arise, leading to emergency care and hospital visits.

So reducing the price of prescription medicines, as announced this week, will mean more people will be able to afford them, with the health and other benefits this brings.

Read more: Last year, half a million Australians couldn't afford to fill a script. Here's how to rein in rising health costs[9]

Can we better target the price cuts?

People who cannot afford to fill their scripts are more likely[10] to have a below-average income, be Indigenous, be adults under 65, and have little input in decisions about their medical treatment. A high price for medicine at the pharmacy (known as a co-payment) is another big factor.

So other countries use a variety of strategies to make it easier for people to afford to fill their scripts. These include:

  • reducing the price of medicines (reducing the co-payment)

  • varying the co-payment by patient characteristic (for instance, income, age and health needs)

  • promoting the discussion of medicines and their costs between providers (such as doctors, pharmacists) and patients.

Australia already has different co-payments[11] – one for general patients and a much lower one for concession-card holders.

There is no firm evidence concession-card holders are forgoing medicines at a different rate to the general population because of costs. So, it makes sense to target any price cuts to the general population, with its higher co-payment.

Emergency department sign with arrow
We could make certain drugs cheaper to encourage people to use them, preventing a trip to hospital. Shutterstock[12]

But there are ways of lowering the co-payment for certain medicines, in particular those that control life-threatening conditions and prevent hospitalisation.

These medicines include[13] those used to treat asthma, severe mental disorders (such as severe depression, schizophrenia, bipolar disorder), heart diseases and diabetes.

The government could consider lowering the co-payment for these medicines, especially for people with multiple chronic conditions and on lower incomes.

Read more: What is the PBS safety net and is it really the best way to cut the cost of medicines?[14]

What else could we do?

This latest announcement only affects medicines costing more than $42.50. The patient pays this co-payment and the government covers the rest. But these accounted for only 70% of PBS drugs[15] dispensed in 2020–21.

A total of 30% of PBS subsidised medicines are cheaper than the co-payment, so the patient pays the full cost.

Most of these cheaper drugs are generic drugs – ones no longer under patent protection. So lowering the co-payment will unlikely affect the cost of these.

If we were hoping to cut the cost of medicines even further, we need to target these generic drugs, which Australians generally pay more for[16] than people in countries including Canada, New Zealand, Japan and many member states of the European Union.

One reason is these countries set a price for each generic drug by using the best price obtained by other comparable countries. If Australia adopted this international benchmarking pricing, we could be saving even more at the pharmacy.

Read more: Explainer: what is Medicare and how does it work?[17]

References

  1. ^ announced this week (www.news.com.au)
  2. ^ said (www.pm.gov.au)
  3. ^ $765.3 million (www.alp.org.au)
  4. ^ $6.80 (www.pbs.gov.au)
  5. ^ paying more (bmjopen.bmj.com)
  6. ^ can’t afford (theconversation.com)
  7. ^ Just under 7% (bmjopen.bmj.com)
  8. ^ higher mortality (www.ncbi.nlm.nih.gov)
  9. ^ Last year, half a million Australians couldn't afford to fill a script. Here's how to rein in rising health costs (theconversation.com)
  10. ^ are more likely (journals.sagepub.com)
  11. ^ different co-payments (www.pbs.gov.au)
  12. ^ Shutterstock (www.shutterstock.com)
  13. ^ include (www.nejm.org)
  14. ^ What is the PBS safety net and is it really the best way to cut the cost of medicines? (theconversation.com)
  15. ^ only 70% of PBS drugs (www.aihw.gov.au)
  16. ^ generally pay more for (grattan.edu.au)
  17. ^ Explainer: what is Medicare and how does it work? (theconversation.com)

Read more https://theconversation.com/the-price-of-pbs-medicines-is-coming-down-but-are-we-helping-the-right-people-190137

Times Magazine

Building an AI-First Culture in Your Company

AI isn't just something to think about anymore - it's becoming part of how we live and work, whether we like it or not. At the office, it definitely helps us move faster. But here's the thing: just using tools like ChatGPT or plugging AI into your wo...

Data Management Isn't Just About Tech—Here’s Why It’s a Human Problem Too

Photo by Kevin Kuby Manuel O. Diaz Jr.We live in a world drowning in data. Every click, swipe, medical scan, and financial transaction generates information, so much that managing it all has become one of the biggest challenges of our digital age. Bu...

Headless CMS in Digital Twins and 3D Product Experiences

Image by freepik As the metaverse becomes more advanced and accessible, it's clear that multiple sectors will use digital twins and 3D product experiences to visualize, connect, and streamline efforts better. A digital twin is a virtual replica of ...

The Decline of Hyper-Casual: How Mid-Core Mobile Games Took Over in 2025

In recent years, the mobile gaming landscape has undergone a significant transformation, with mid-core mobile games emerging as the dominant force in app stores by 2025. This shift is underpinned by changing user habits and evolving monetization tr...

Understanding ITIL 4 and PRINCE2 Project Management Synergy

Key Highlights ITIL 4 focuses on IT service management, emphasising continual improvement and value creation through modern digital transformation approaches. PRINCE2 project management supports systematic planning and execution of projects wit...

What AI Adoption Means for the Future of Workplace Risk Management

Image by freepik As industrial operations become more complex and fast-paced, the risks faced by workers and employers alike continue to grow. Traditional safety models—reliant on manual oversight, reactive investigations, and standardised checklist...

The Times Features

Is our mental health determined by where we live – or is it the other way round? New research sheds more light

Ever felt like where you live is having an impact on your mental health? Turns out, you’re not imagining things. Our new analysis[1] of eight years of data from the New Zeal...

Going Off the Beaten Path? Here's How to Power Up Without the Grid

There’s something incredibly freeing about heading off the beaten path. No traffic, no crowded campsites, no glowing screens in every direction — just you, the landscape, and the...

West HQ is bringing in a season of culinary celebration this July

Western Sydney’s leading entertainment and lifestyle precinct is bringing the fire this July and not just in the kitchen. From $29 lobster feasts and award-winning Asian banque...

What Endo Took and What It Gave Me

From pain to purpose: how one woman turned endometriosis into a movement After years of misdiagnosis, hormone chaos, and major surgery, Jo Barry was done being dismissed. What beg...

Why Parents Must Break the Silence on Money and Start Teaching Financial Skills at Home

Australia’s financial literacy rates are in decline, and our kids are paying the price. Certified Money Coach and Financial Educator Sandra McGuire, who has over 20 years’ exp...

Australia’s Grill’d Transforms Operations with Qlik

Boosting Burgers and Business Clean, connected data powers real-time insights, smarter staffing, and standout customer experiences Sydney, Australia, 14 July 2025 – Qlik®, a g...