PBS Chemotherapy Medicines Review

Review of Chemotherapy Funding Arrangements

Page last updated: 26 November 2014


In May 2013, the then Minister for Health and Ageing announced increased interim funding for chemotherapy and directed the Department to undertake a comprehensive review of chemotherapy funding arrangements, with a view to putting in place a longer term solution to issues that had been raised by stakeholders.

Between 1 July and 31 December 2013, an additional $60 per chemotherapy infusion prepared under Pharmaceutical Benefits Scheme arrangements is being provided to ensure the ongoing viability of chemotherapy services.

The review of chemotherapy funding arrangements reported to the Minister for Health in October 2013 with recommendations for long-term arrangements for the funding of chemotherapy services.

Senate enquiry

On 7 February 2013 the Senate referred the following matter to the Senate Community Affairs Committee for inquiry and report:

    (a) the supply of chemotherapy drugs such as Docetaxel, particularly in relation to:
      1. patient access to treatment,
      2. cost to pharmacists and suppliers, and
      3. cost to the private and public hospital systems;
    (b) any long-term sustainable funding models for the supply of chemotherapy drugs, including Docetaxel; and

    (c) any related matters.

The committee presented its final report in May 2013. The committee recommended that the government and industry parties, through the review, continue the examination of issues in chemotherapy drug pricing to ensure that existing funds under the Fifth Community Pharmacy Agreement as already agreed are appropriately directed to reflect the costs and benefits of the supply of chemotherapy drugs, and to ensure the ongoing supply of these drugs across all services, particularly in rural and regional areas.

The government’s response to the committee’s report was tabled in Parliament in November 2014.
Response to the Senate Community Affairs References Committee Report (PDF 156 KB)
Response to the Senate Community Affairs References Committee Report (RTF 1623 KB)

    New Funding arrangements

    The Prime Minister, Tony Abbott, and the Minister for Health, the Hon Peter Dutton, have announced more than $82 million in funding under the Pharmaceutical Benefits Scheme (PBS) to support the dispensing of chemotherapy medicines across Australia.

    From 1 January 2014 pharmacies and hospitals will now receive a total of $152.66 for every chemotherapy infusion they compound and dispense under the PBS ‘Efficient Funding of Chemotherapy’ (EFC) Schedule, for 18 months until June 30 2015. This is an increase of $60 above the base funding previously provided of $77.66 in fees for compounding and dispensing of chemotherapy medicines and the $15 average retail mark-up already paid to pharmacies.

    The funding will enable hospitals and pharmacies to continue to deliver infusions to the 150,000 cancer patients who undergo treatment each year.

    Like all pharmacy remuneration, chemotherapy funding beyond this time will be considered as part of any future agreement for pharmacy services under the PBS.

    Review of Funding Arrangements for Chemotherapy Services


    Preparation and supply of chemotherapy infusions is a niche area of pharmacy practice requiring both capital investment and specialised knowledge. In Australia, fewer than sixty pharmacies (one per cent) supply 80 per cent of chemotherapy infusions funded under the Pharmaceutical Benefits Scheme (PBS). Chemotherapy infusions are administered to patients in the hospital or day clinic setting with approximately 60 per cent of infusions administered through private hospitals and day procedure centres and 40 per cent administered through public hospitals. In 2012 13, the PBS subsidised around 830,000 chemotherapy infusions at a cost to the Australian Government of $570 million.

    Following concerns from a range of stakeholders that reductions in the ex manufacturer price of some chemotherapy medicines would make chemotherapy services unviable, the ‘Review of Funding Arrangements for Chemotherapy Services’ was conducted. This Review was undertaken by the Department of Health with the assistance of four independent experts from the fields of health administration, pharmacy, medical oncology and oncology nursing. The Review process included both formal and informal consultation with the pharmacy sector, as well as a formal consultation process with consumers, conducted by the Consumers Health Forum.

    Key Findings

    • Product quality, patient safety and necessary associated services for chemotherapy are currently provided to a generally high standard.
    • In the past, excessive margins available from medicine price discounts had delivered substantial profits and provided the capacity and flexibility for providers to divert PBS funds into areas outside of PBS responsibility and enabled the introduction of inefficient supply models.
    • There is a high level of complexity with many different models of chemotherapy pharmaceutical service provision, each with differing commercial arrangements between the hospitals, pharmacies and oncologists involved:
      • Economies of scale and location have driven an increased use of out-sourced infusion compounding through commercial third party compounders.
      • Some of these delivery models involve commercial or equity relationships between pharmacists, oncologists and hospitals.
      • Chemotherapy services have shifted from the public sector to the private sector over time, transferring medicine costs to the PBS.
    • Now that the price disclosure measure has removed the excessive profit margins for multi brand medicines, remuneration available thorough PBS mark-ups and fees under the Efficient Funding of Chemotherapy arrangements may no longer be sufficient to adequately meet the costs of compounding and supply for the average pharmacy.
    • Data provided by a sample of pharmacies indicate that there may be a deficit in funding however there are limitations in the verifiability and representativeness of the data due to the small number of data sets and inconsistencies between reported costs.
    • Beyond funding, efficiency benefits could be achieved by reducing the complexity and administrative burden associated with chemotherapy reimbursement on the PBS.

    Review of Chemotherapy Funding Arrangements - The Report

    Review Report (PDF 1816 KB)
    Review Report (Word 1943 KB)

    Appendix A (PDF 421 KB)
    Appendix A (Word 27 KB)

    Appendix B (PDF 244 KB)

    Appendix C (PDF 133 KB)
    Appendix C (Word 19 KB)

    Appendix D (PDF 560 KB)
    Appendix D (Word 90 KB)

    Appendix E (PDF 262 KB)
    Appendix E (Word 16 KB)

    Appendix F (PDF 808 KB)
    Appendix F (Word 321 KB)

    Appendix G (PDF 258 KB)
    Appendix G (Word 15 KB)

    Appendix H (PDF 1823 KB)

    Appendix I (PDF 438 KB)
    Appendix I (Word 19 KB)

    Appendix J (PDF 438 KB)
    Appendix J (Word 19 KB)

    Appendix K (PDF 325 KB)

    Terms of Reference for the Chemotherapy Medicines Review

      1. The Review will investigate and report on:
        1. Current arrangements for funding of chemotherapy services;
        2. How those arrangements have changed over time;
        3. How chemotherapy services are provided, including in relation to:
          1. Different hospital and community settings
          2. Different business models
          3. Use of third party compounders
          4. Integration of hospital, pharmacy and oncology services;
        4. The involvement of public and private hospitals in providing chemotherapy services, including
          1. the extent to which each sector provides services
          2. differences by state
          3. how that service mix has changed over time
          4. current trends in that service mix
          5. any implications for community pharmacy or the Pharmaceutical Benefits Scheme
          6. any implications for private hospitals and private health insurers;
        5. Cost structures associated with provision of chemotherapy services – dispensing, support, administration and clinical services;
      2. The Review will provide advice on funding arrangements appropriate to the efficient supply of chemotherapy services by community pharmacy.
      3. The Review will provide advice on any other relevant matters in relation to securing efficient and effective provision of chemotherapy services.
      4. The Review will ensure appropriate consultation with relevant stakeholders.
      5. The Review will report to the Minister for Health by October 2013.

    Aim of the Review

    The aim of the Review was to identify options for a long term and sustainable funding model that identifies and appropriately manages all components of chemotherapy dispensing and supply and is not dependent on the cross-subsidisation from the price of chemotherapy medicines for the viability of chemotherapy services.

    The Review was not limited to the chemotherapy dispensing services funded from the PBS. It also considered the funding of clinical services delivered as part of a cancer patient’s chemotherapy treatment, and the different business models in the private and public health sectors that provide chemotherapy services and how these services have changed since the Efficient Funding of Chemotherapy (EFC) funding arrangements were implemented in December 2011.


    To inform this review, the Department of Health released a Discussion Paper to seek specific information to assist the understanding of the existing issues associated with chemotherapy funding. All interested parties were invited to make a submission to the review. A spreadsheet was provided to facilitate the provision of data to support various submissions views.

    Submissions have closed. Any queries can be directed to the Chemotherapy Review team via email or on (02) 6289 7595.

    Please be aware that all submissions provided are publicly available on our website, unless specifically requested otherwise, and will remain there indefinitely. All data provided has been treated confidentially, and was not included on the website with submissions.

    Submissions will be shared with relevant Commonwealth agencies and any consultants engaged to assist with the review.

    Submitters should be aware that confidential submissions may still be subject to access under freedom of information law, court proceedings or Government requests.

    The Review team also held 27 meetings/teleconferences with relevant stakeholders, providing them with further opportunity for input to the review, particularly seeking specific information around costs and complexities.

    Discussion Paper - Call for Submissions (PDF 561 KB)
    Discussion Paper - Call for Submissions (Word 129 KB)

    Review Submissions

    Review process

    The review was undertaken in three phases:
    a. Dissemination of a discussion paper for public responses;
    b. A consultation phase involving submissions from the public and bilateral meetings with a range of stakeholders. This phase was completed in August 2013; and
    c. Analysis of the public submissions and other information provided and preparation of a report provided to the Minister for Health in October 2013.

    The Review reported to the Minister for Health in October 2013.

    Experts guiding the review

    Health Administration

    Mr Mike Wallace, former deputy-director general of NSW Health, and current Chief Operating Officer at the Australian Commission on Safety and Quality in Healthcare (ACSQHC, was appointed to guide the review
    Mr Wallace has considerable experience in health administration, particularly in public sector health, and has undertaken a number of high-profile health reviews.


    Mr Michael Ryan from PharmConsult, an independent specialist consulting firm which provides advice on medication management and pharmacy service issues, was engaged to provide strategic and pharmacy-related analysis into the review and provide advice in relation to options development and data validation.


    Professor Stephen Clarke, a medical oncologist, was engaged to ensure the review is appropriately informed from the prescribers’ perspective, to provide strategic advice and to assist with options for development.

    Oncology Nursing

    Ms Sally Health, an oncology nurse, was engaged to assist the Department in gaining a detailed understanding of the sectoral differences and issues in chemotherapy supply, and the professional separation of functions.

    Consumer consultation

    The Consumers Health Forum of Australia (CHF) was engaged by the Department to consult directly with consumers and consumer groups, with a particular focus on rural and regional areas. CHF hosted targeted consultation meetings, managed an online consultation platform, and held several teleconsultations with health consumer groups and individuals. CHF provided the Department with a report with recommendations based on issues raised via these consultation methods to inform the review.
    CHF have completed the consumer focused consultations, via a discussion paper for CHF voting members, online survey and online discussion forum.

    Review Outcomes – Questions and Answers

    Question and Answer document (PDF 352 KB)
    Question and Answer document (Word 29 KB)

    Contact for further information about the Review

    Contact the submissions officer on (02) 6289 7595 or via email.

    Submissions to the Review

    Submission NumberSubmitted by
    1Cancer Voices Australia (PDF 251 KB)
    Cancer Voices Australia (Word 96 KB)
    2National Pharmacies (PDF 147 KB)
    National Pharmacies (Word 36 KB)
    3Cancer Australia (PDF 180 KB)
    Cancer Australia (Word 118 KB)
    4Tasmanian Department of Health and Human Services (PDF 246 KB)
    Tasmanian Department of Health and Human Services (Word 171 KB)
    5Clinical Oncological Society of Australia & Cancer Pharmacists Group (PDF 118 KB)
    Clinical Oncological Society of Australia & Cancer Pharmacists Group (Word 87 KB)
    6The Society of Hospital Pharmacists of Australia (PDF 160 KB)
    The Society of Hospital Pharmacists of Australia (Word 164 KB)
    7Anonymous (PDF 43 KB)
    Anonymous (Word 56 KB)
    8Queensland Health (PDF 9760 KB)
    Queensland Health (Word 551 KB)
    9Slade Pharmacy Services (PDF 362 KB)
    Slade Pharmacy Services (Word 397 KB)
    10Medibank Private (PDF 62 KB)
    Medibank Private (Word 149 KB)
    12Australian Private Hospitals Association (PDF 263 KB)
    Australian Private Hospitals Association (Word 161 KB)
    13Medicines Australia (PDF 6396 KB)
    Medicines Australia (Word 303 KB)
    14Mater Hospital (PDF 373 KB)
    Mater Hospital (Word 36 KB)
    15The Wesley Pharmacy (PDF 209 KB)
    The Wesley Pharmacy (Word 349 KB)
    16Healthcare at Home Australia (PDF 251 KB)
    Healthcare at Home Australia (Word 48 KB)
    17Joondalup and Southwest Hospital Pharmacies (PDF 404 KB)
    Joondalup and Southwest Hospital Pharmacies (Word 210 KB)
    18Catholic Health Australia (PDF 416 KB)
    Catholic Health Australia (Word 70 KB)
    19CanSpeak (PDF 3673 KB)
    CanSpeak (Word 237 KB)
    21APHS Pharmacy Services (PDF 1392 KB)
    APHS Pharmacy Services (Word 2654 KB)
    22Community Pharmacy Chemotherapy Services Group (PDF 32257 KB)
    Community Pharmacy Chemotherapy Services Group (Word 6314 KB)
    23UnitingCare Health (PDF 233 KB)
    UnitingCare Health (Word 440 KB)
    24Bupa (PDF 38 KB)
    Bupa (Word 112 KB)
    25Sydney Adventist Hospital (PDF 596 KB)
    Sydney Adventist Hospital (Word 339 KB)
    26Breast Cancer Network Australia (PDF 198 KB)
    Breast Cancer Network Australia (Word 138 KB)
    27South Australia Health (PDF 407 KB)
    South Australia Health (Word 89 KB)
    28Medical Oncology Group of Australia (PDF 450 KB)
    Medical Oncology Group of Australia (Word 389 KB)
    29Pharmacy Guild of Australia (PDF 7862 KB)
    Pharmacy Guild of Australia (Word 13601 KB)