How does the PBS work?
A. The PBS covers all Australian residents when they fill a prescription for a medicine prescribed under the PBS. From 1 January 2009, if you’re a general patient you pay up to $32.90 for a medicine listed on the PBS. People with concession cards pay $5.30*. These payments are called patient contributions or copayments and are revised annually in line with the Consumer Price Index. *Under current arrangements these amounts are adjusted on 1 January each year.
Drug companies charge high prices for new medicines because they have exclusive patent rights for 20 years. Under the PBS, the Australian Government uses its buying power to negotiate lower prices in return for drugs being listed for public subsidy and therefore being more likely to be prescribed by doctors. The PBS has an advisory committee which compares the price and effectiveness of new drugs with the prices of similar generic medicines whose patents have expired. This ‘reference pricing’ works: the wholesale prices of common prescription medicines are three to ten times lower in Australia than in the US. For example, last year the wholesale price of 500 mg of the antibiotic Keflex (cephalexin) was $5.22 while the US price was $89.83. The wholesale price of 20 mg of Nolvadex (tamoxifen) used for breast cancer treatment was $51.36 in Australia but $150.74 in the US. (1) The PBS makes commonly prescribed medicines available to all Australians at subsidized prices–from $14 to $22 for
