The Commonwealth subsidises medicines that are necessary to maintain the health of the community in a way that is cost effective.
This is achieved by carefully assessing the therapeutic benefits and costs of medicines, including comparisons with other treatments where appropriate. If a medicine is found to be acceptably cost-effective, then government negotiates its price with the supplier.
A medicine is considered cost effective by the PBAC if, for significant medical conditions, the improvements in health outcomes justify the additional costs to the Scheme (and any harms) compared with its main alternate therapy.
A number of strategies help ensure that medicines listed on the PBS provide affordable medicines for patients and an affordable scheme for taxpayers including:
- Thorough independent evaluation of evidence for clinical and cost effectiveness
- Specifying maximum quantities and number of repeat prescriptions
- Restricting medicines to specific therapeutic uses
- Regularly reviewing which medicines are listed on the PBS and their prices
- Negotiating pharmacists’ fees and allowances
- Monitoring medicine use
- Educating prescribers and consumers.
An acceptably cost-effective medicine can be recommended for listing if:
- It treats or prevents significant medical conditions that are not covered, or only partially covered, by currently listed drug(s)
- It is more effective and/or less harmful than a currently listed drug
- It is as effective and safe as an existing listed drug.
Community need and/or benefit are also considered.