Healthy Skepticism Library item: 5802

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Publication type: news

Breusch J.
OECD urges higher drug co-payments
The Financial Review ( Australia) 2006 Aug 4

Full text:

OECD urges higher drug co-payments
Author: John Breusch
Date: 04/08/2006
The Financial Review, Page: 25

The federal government should increase the surcharges paid by patients
for drugs under the pharmaceutical benefits scheme, according to the
Organisation for Economic Co-operation and Development.

In its annual survey of Australia, released earlier this week, the OECD
argued that higher co-payments would give the public a better idea of
how much the $6.8 billion PBS costs the government, helping to rein in
the cost of the subsidised drug scheme.

The federal government is talking to drug makers, pharmacists and
doctors about its plans to further cut the cost of the PBS, which is
expected to be one of the fastest-growing sources of government spending
in coming decades.

The talks are being held despite the success the government has had in
recent years in reducing the growth in the PBS to less than the rate of
inflation. The scheme had been running at a double-digit rate for much
of the past decade.

The OECD acknowledged the recent slowdown in the PBS, but called for
further reform. Co-payments are indexed to rise in line with inflation,
and thus have been growing much slower than the broader PBS in the past
decade.

“Given that a rationale for co-payments is to promote consumer awareness
of underlying costs, it would be better to explore alternative
indexation arrangements for PBS co-payments,” the OECD said.

A key measure that helped the government rein in the cost of the PBS was
its controversial decision to raise co-payments from $23.70 to $28.60
for standard prescriptions and from $3.80 to $4.60 for concession-card
holders.

But the OECD said such unpopular moves could be avoided by indexing
co-payments to a measure that grew faster than inflation, such as wages
growth or the average subsidy paid under the PBS.

But it acknowledged that any changes must be pursued with caution.

“A difficulty with any such increase is that the heaviest burden will be
on low-income earners and there is also a risk that if patients go
without necessary medication then other medical costs, such as hospital
care, may increase by more than any savings on pharmaceuticals,” it said.

Australian Medical Association president Mukesh Haikerwal condemned the
proposal, saying that after the last increase in the co-payment,
patients were already struggling to pay for their medicines and to
maintain their intake of drugs critical to their health. “The last thing
they need is another slug on their co-payment.”