Philosophical Conversations Public Opinion Junk for code
parliament house.gif
Think Tanks
Oz Blogs
Economic Blogs
Foreign Policy Blogs
International Blogs
Media Blogs
South Australian Weblogs
Economic Resources
Environment Links
Political Resources
South Australian Links
"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

heath: cost containment of PBS? « Previous | |Next »
May 8, 2007

Dr Lesley Russell, a former health policy adviser to the ALP, has an op-ed in the The Age about the forthcoming legislative package introduced into Parliament by Tony Abbott, the commonwealth Health Minister This legislation will implement changes to the Pharmaceutical Benefits Scheme (PBS) scheme that build on the 12.5 per cent generic price reduction policy introduced in August 2005. Behind this sits the Intergenerational Report and the need to contain health care costs, especially the projected growth in the expenditure of the PBS.

The op-ed gives an insight into neo-liberal mode of health governance. Russell says that:

That policy has proved a bonanza for the Treasury coffers, but costly for consumers. The mid-year economic and fiscal outlook showed that for the first half of this financial year, PBS savings were $270 million more than expected and more than covered the $225 million spent on newly listed medicines. But patients' out-of-pocket costs for their essential medicines continue to rise due to premiums added by manufacturers and fees added by pharmacists that do not count towards the PBS safety net, the threshold for which has also increased.There is nothing in this new legislation that will guarantee that consumers will pay less for their PBS prescriptions, and there is every reason to believe that they will pay more.

She says that a major flaw in the Government's package is that it does nothing to build and support a domestic generic pharmaceutical industry so that it can provide real competition leading to the sort of price reductions the introduction of generics brings in other developed countries.

Russell adds that:

In the guise of protecting the sustainability of the PBS, the Government has increased co-payments by 21 per cent, increased the safety net thresholds, and allowed brand premiums and special patient contributions to be applied to one in six medicines listed with no attempt to measure the impact on the health-care system and on health outcomes in the population. The huge savings are not reinvested in health care, despite the growing need for programs to tackle prevention and better management of chronic illness.

What we have with the Howard Government is a focus on costs and budgets rather than health outcomes. Government is seen as a corporate entity with an obsession about debt and finance. So the neo-liberal strategy is for costs to be moved off budget through user pays and onto the community. Through cost shifting the community comes to bear an ever greater part of the growth in outlays.

| Posted by Gary Sauer-Thompson at 10:43 AM | | Comments (2)


I remember a lot of stuff on telly in the lead up to AUSFTA. In one memorable scene in one doco, convoys of older Americans were last seen steaming of to Canada or Mexico to break the pharmaceuticals industry stranglehold on pricing; happily filling up their car boots with crates of cheap pills just'cross the border before happily heading back having beaten the rip-off.
The yanks hate our system because it sets a bad example to american consumers as to what prices for medicine should and could really be. So the "Bennelong Group" government wants to bring in "evergreening" by stealth, to appease the yanks without offending local punters.

it is partly about cost containment as the federal health budget is getting bigger and bigger with an ageing population.

So the consumer has to pay more through co-payment. What Russell does not address is whether or not we can address the issue of better health care whilst reducing the heavy reliance on drugs.