Medicines can contribute to the quality of life of Australians by curing or relieving the symptoms of illness. They can also prevent complications in existing health conditions or delay the onset of disease.

In 2017–18, Australians spent an estimated $22.3 billion on medicines (including both prescribed and over-the-counter)—which includes spending by governments, non-government sources and individuals (AIHW 2019).

Medicines can be obtained in a number of ways including via prescription provided by a general practitioner (GP), specialist or other health practitioner; to admitted patients in hospital; and purchased over the counter from community pharmacies or other outlets (such as supermarkets). Presently a complete data source for all medicines is not available.

The focus of the medicines described in this section is those provided under the Pharmaceutical Benefits Scheme (PBS) and Repatriation Pharmaceutical Benefits Scheme (RPBS). Typically, these PBS and RPBS medicines are dispensed through community pharmacies and private hospitals, although some are available through eligible public hospitals to day patients and patients on discharge, or through other arrangements such as the Remote Area Aboriginal Health Services.

In 2017–18, 302.6 million prescriptions were dispensed under the PBS and RPBS—an increase of 1.5% on 2016–17.

What is the PBS and the RPBS?

The PBS and the RPBS are Australian Government programs that subsidise the cost of many medicines in Australia. The PBS is available for current Medicare card holders and the RPBS for Department of Veterans’ Affairs Health Card holders.

The PBS began in 1948 and has expanded over time. Today, around 5,300 brands of medicines, used to treat a wide range of health conditions, are listed on the Schedule of Pharmaceutical Benefits. The RPBS subsidises pharmaceuticals available under the PBS and additional medicines and items (for example, wound dressings) for eligible veterans, war widows and widowers, and their dependants.

Spending on prescription medicines

In 2017–18, the Australian Government recorded $11.9 billion in spending on all PBS and RPBS medicines—$485 per person. This was a decrease of 2.9% in spending compared with 2016–17, largely related to a decrease in demand for relatively high cost hepatitis C medicines. Demand for these medicines peaked in 2016 following PBS listing of new hepatitis C medicines, and subsequently declined as these medicines resulted in a sustained virological response for many people (see section below).

This trend increased the average price of PBS medicines and, therefore, a slightly different picture emerges after adjusting for inflation: on this basis, Australian Government spending increased 1.8% between 2016–17 and 2017–18 (in real terms)—slightly less than the average yearly growth rate in the five years to 2017–18 of 2.4%.

The Australian Government uses a range of mechanisms to manage the sustainability of the PBS, including price disclosure, statutory price reductions, and agreements such as Special Pricing Agreements and Risk Sharing Agreements (Department of Health 2017b, 2018b, 2020a, 2020b). 

For all prescriptions dispensed in 2017–18, 70% were above co-payment—indicating that the patient paid the relevant co-payment and the remaining cost was subsidised by the Australian Government (see Figure 1). The remaining 30% of medications were under the co-payment threshold (and so the patient paid the full cost of the medicine and no government subsidy was applied). 

In total, consumers paid $3.0 billion towards PBS and RPBS prescriptions (for both above and under co-payment prescriptions), which was 20% of the total expenditure on PBS and RPBS medicines in 2017–18. The Australian Government contributed the remaining 80% of total expenditure.

What is the ‘co-payment’?

Under the PBS and the RPBS, the Australian Government sets a maximum ‘co-payment’ amount that people pay towards the cost of their medicines. The Australian Government pays pharmacies the difference between a consumer’s co-payment and the PBS price of a medicine, as listed on the Schedule of Pharmaceutical Benefits. Some prescriptions are priced below the co-payment amount for a patient, so the consumer pays the total cost and the government does not contribute.

Prescriptions priced above the maximum co-payment for a patient are referred to as ‘above co-payment’ prescriptions, and attract a subsidy from the Australian Government. Those priced below are referred to as ‘under co-payment’ prescriptions, and don’t receive a subsidy.

The maximum co-payment a patient pays depends on their level of entitlement; for example, whether a patient has concessional status and/or whether the safety net threshold (which determines an upper limit for patient co-payments) has been met. Current and historical co-payments can be found on the PBS website.

This graph displays the total PBS and RPBS prescriptions, as well as government expenditure in current and constant prices for the financial years 2013–14 and 2017–18. It provides the ability to view measures by volume and age-standardised rates for the population. In 2017–18 there were a total of 302.6 million prescriptions supplied to patients. Concessional non-safety net prescriptions were the largest single category of prescriptions, accounting for 149.9 million prescriptions in total of which over 99.5% where above co-payment prescriptions.

Types of prescribed medicines dispensed

In 2017–18, medicines used to treat cardiovascular conditions were the most commonly dispensed.  These medicines accounted for 94.5 million PBS and RPBS prescriptions (31% of all PBS and RPBS prescriptions in 2017–18), and 8.4% of government expenditure. Cardiovascular medicines include cholesterol-lowering medicines (such as statins)—raised cholesterol is a major risk factor for developing cardiovascular disease. See Biomedical risk factors for more information.

How are medicines grouped?

Medicines are organised into Anatomical Therapeutic Chemical (ATC) classification groups according to the body system or organ on which they act (see the World Health Organization Collaborating Centre for Drug Statistics Methodology for further information on the ATC classification system.

Also dispensed in high volumes were nervous system medications (22% of all PBS and RPBS prescriptions), which include analgesics (painkillers), antipsychotics and antidepressants. While antineoplastic and immunomodulating agents accounted for only 1.5% of all prescriptions, they had the highest government expenditure (32%), and the highest increase in expenditure among ATC groups between 2016–17 and 2017–18. These medicines are commonly used to treat cancer and other conditions such as multiple sclerosis and Crohn’s disease.

Hepatitis C medicines

New direct-acting antiviral medicines used to treat people with chronic hepatitis C were listed on the PBS and RPBS in March 2016. These medicines experienced an initially high uptake, but their use has since begun to decline as use of the drugs can result in a sustained virological response for a high proportion of people (Department of Health 2017a). In the last 3 months of the 2015–16 financial year (the first full quarter after these medicines were available under PBS/RPBS arrangements), there were 56,200 prescriptions for these medicines. In current prices, this amounted to expenditure of $947.2 million by the Australian Government.

In the last quarter of 2016–17, there were 27,300 prescriptions for the direct-acting antiviral medicines, with a total Australian Government expenditure of $430.5 million. By the last quarter of 2017–18, the number of prescriptions for hepatitis C medicines supplied to patients had fallen by 52% (compared to the last quarter of 2016–17) to 13,100, and government expenditure had fallen by 37% to $273.0 million.  

The availability of these medicines accounts for the large changes in government expenditure for the anti-infectives for systemic use ATC group between 2015–16 and 2017–18 (Figure 2).
 

This chart displays the above co-payment prescriptions, total prescriptions, government expenditure and patient expenditure measures for PBS prescriptions per year by ATC group. The measures can be viewed by volume, crude rate and age standardised rates for the population. Cardiovascular system medicines had the highest volume of prescriptions in 2017–18, with a total of 94.5 million prescriptions (with over $1 billion of Government expenditure). Antineoplastic and Immunomodulating agents had the most Government expenditure in 2017–18, at approximately $3.8 billion. Antiparasitic products, insecticides and repellents had both the lowest volume of prescriptions and expenditure for the financial year.

Top 10 prescribed medicines

As noted, medicines used to treat cardiovascular conditions account for the highest volume of PBS and RPBS prescriptions compared with other ATC groups. Consistent with this, the medicines with the most prescriptions are the cholesterol-lowering medicines Rosuvastatin and Atorvastatin. After these medicines, Esomeprazole and Pantoprazole (medicines used to treat gastric reflux and ulcers) have the highest number of prescriptions; these fall under the alimentary tract and metabolism ATC group. 

The medicines accounting for the most government expenditure has been less consistent over the last 5 years, mainly because of the listing of new drugs used to treat hepatitis C between 2015–16 and 2017–18. See Figure 3 (below) for a listing of the top 10 medicines over the last 5 years by selected measures.
 

This displays the top ten PBS and RPBS medicines for the financial years between financial years 2013–14 and 2017–18. Top ten medicines can be selected for the total prescriptions, above co-payment prescriptions, and government expenditure (in constant or current prices). Rosuvastatin had the highest volume of prescriptions in 2017–18, closely followed by Atorvastatin. Both these drugs are used to lower cholesterol. In 2017–18 there were no drugs falling into the top ten medicines in terms of both prescriptions and Government expenditure, which contrasts with 2013–14 where Atorvastatin, Rosuvastatin and Esomeprazole were in the top 10 in terms of both prescriptions volume and expenditure.

Medicines made available under special arrangements

Programs under section 100 of the National Health Act 1953 enable alternative arrangements to access medicines where these arrangements are considered more appropriate. These include the following programs: Highly Specialised Drugs; Efficient Funding of Chemotherapy; Botulinum Toxin; Growth Hormone; In Vitro Fertilisation (IVF); Opiate Dependence Treatment and Remote Area Aboriginal Health Services. Some medicines covered by s.100 arrangements are restricted to specific conditions, supplied through hospitals, require specialised medical supervision, and/or are high in cost.

In 2017­–18, the Highly Specialised Drugs (HSD) and Efficient Funding of Chemotherapy (EFC) programs accounted for 50% and 42% of all accrued expenditure for s.100 programs respectively (Department of Health 2018a).

While government spending on all medicines available through normal PBS arrangements has remained relatively stable, spending on s.100 programs has been increasing—it grew 44% in the 5 years between 2013–14 and 2017–18, which equates to an average annual increase of 9.6%. In contrast, spending on medicines through normal PBS arrangements has increased by 1.5% in total over the 5 years (adjusted for inflation).

The increased cost of the s.100 programs may be due to the steady rise in prescriptions for medicines such as Pembrolizumab (available through the EFC program) and Lenalidomide (available through the HSD program), which are used to treat cancers. Furthermore, the recent introduction of new medicines such as Nivolumab (also used to treat cancers such as melanoma and non-small cell lung cancer) and Sofosbuvir combinations used to treat hepatitis C are a significant source of s.100 program expenditure.

Who can prescribe medicines?

Medicines are primarily prescribed by medical practitioners (GPs and specialists), however certain other types of health practitioners can also prescribe selected medicines.  

In 2017–18, GPs prescribed the most PBS and RPBS medicines—around 89% of all prescriptions dispensed. The most commonly dispensed medicines, by authorised occupational group, are outlined in Table 1.

Table 1: Most common medicines by number of prescriptions dispensed, by selected occupational groups, 2017–18

Occupational group

Most common medicines

Used to treat…

GPs

Rosuvastatin, Atorvastatin;

Esomeprazole, Pantoprazole

High cholesterol;

Gastric reflux and ulcers

Specialists

Latanoprost;

Methylphenidate

Glaucoma and other eye diseases;

Attention deficit hyperactivity disorder

Dentists

Amoxicillin

Bacterial infections

Optometrists

Latanoprost;

Fluorometholone

Glaucoma and other eye diseases;

Eye conditions due to inflammation or injury

Nurse practitioners

Cefalexin;

Atorvastatin;

Esomeprazole, Pantoprazole

Bacterial infections;

High cholesterol;

Gastric reflux and ulcers

Midwives

Cefalexin

Bacterial infections

Note: Some medicines may be used to treat a variety of conditions (indications) and this article refers to just some of the common conditions treatable by these medicines.

Source: Therapeutic Goods Administration, Consumer Medicines Information (CMI) and Product Information (PI) documents for selected medicines.

Who received these medicines?

In 2017–18, PBS prescriptions were dispensed to 17.0 million Australians (69% of the population).  Population dispensing rates increased with age—young people aged 0–14 had the lowest rates of dispensed prescriptions (173 per 100 people), and the highest rates were among those aged 85 and over (6,077 prescriptions per 100 people). Similar patterns were seen for both males and females (Figure 4).

Over half of PBS and RPBS medicines were dispensed to people aged 65 and over (53%). Within specific age groups, people aged 65 to 74 had the highest number of dispensed prescriptions and accounted for the highest Australian Government expenditure. 

When adjusting for the difference in population age structure, the overall rate of dispensed prescriptions fell slightly (3.5%) between 2013–14 and 2017–18 from 1,137 to 1,097 prescriptions per 100 population (Figure 1). This was particularly the case for above co-payment prescriptions, where age-standardised dispensing rates per 100 people fell 11% (from 847 to 754 per 100 people).

The fall in subsidised prescription rates occurred for all age groups with the exception of those aged 85 and over. It was most apparent for the 55–64 age group, for which the age-specific prescribing rate fell 16%, and the 0–14 age group with a 13% fall. This is at least in part due to the reduction in cost for medicines leading to more scripts to fall under the patient co-payment amount. This flow on effect results from various factors including the introduction of generic medicines onto the PBS and other Australian Government measures focussed on the sustainability of the PBS.
 

This chart displays the above co-payment prescriptions, total prescriptions, government expenditure and patient expenditure measures for PBS and RPBS prescriptions for 2017–18 by age group for females (on the left axis) and males (on the right axis). Patients with unknown demographics are excluded from this visualisation. The measures can be viewed by volume and age-specific rate for the population. In total there were 159.1 million PBS and RPBS prescriptions supplied to patients aged 65 or over in 2017–18, accounting for $5.7 billion of Government expenditure.

Over-the-counter medicines

In addition to prescribed medicines, certain types of medicines and other health care products may be available from supermarkets, health food outlets or from pharmacies without a prescription. Among over-the-counter medicines sold in pharmacies, natural health products were the largest-selling items, with an estimated expenditure in 2016–17 of $1.4 billion. These include vitamin and mineral supplements, herbal medicines, homeopathic preparations and probiotics. Analgesics were the second-largest-selling group ($392.2 million) (Figure 5).

Compared with the previous year, growth in sales in 2016–17 was greatest for smoking cessation aids, at 7.2% and allergy products at 6.9%.
 

This chart displays total expenditure and number of units for medicines available over-the-counter from pharmacies in 2015–16 and 2016–17. Consumers spent an estimated $1,422.2 million on natural health products in 2016–17, retreating slightly from the expenditure of $1,466.6 million in 2015–16, with an approximate increase of 500,000 items.

Where do I go for more information?

For more information on medicines in the health system, see:

References

ABS (Australian Bureau of Statistics) 2011. ABS Australian Demographic Statistics, Jun 2011. ABS cat. no. 3101.0. Canberra: ABS.

ABS 2018. ABS Australian Demographic Statistics, Jun 2018. ABS cat. no. 3101.0. Canberra: ABS.

AIHW (Australian Institute of Health and Welfare) 2019. Health expenditure Australia 2017–18. Cat. no. HWE 077. Canberra: AIHW.

Department of Health 2017a. What is hepatitis C?—fact sheet for consumers. Canberra: Department of Health. Viewed 25 February 2020.

Department of Health 2017b. What are Deeds of Agreement? Canberra: Department of Health. Viewed 25 February 2020.

Department of Health 2018a. Expenditure and Prescriptions Twelve Months to 30 June 2018. Canberra: Department of Health. Viewed 21 February 2020.

Department of Health 2018b. Anniversary Price Reductions. Canberra: Department of Health. Viewed 25 February 2020.

Department of Health 2020a. Price Disclosure. Canberra: Department of Health. Viewed 25 February 2020, 12 March 2020.

Department of Health 2020b. First New Brand Price Reductions. Canberra: Department of Health. Viewed 25 February 2020.

IRI (Information Resources Incorporated) 2018a. National Australia Grocery 2016–17. Unpublished data. Melbourne: IRI.

IRI 2018b. National Australia Pharmacy 2016–17. Unpublished data. Melbourne: IRI.