Online version of the 2012-13 Department of Health and Ageing Annual Report

Outcome 2: Access to Pharmaceutical Services

Access to cost-effective medicines, including through the Pharmaceutical Benefits Scheme and related subsidies, and assistance for medication management through industry partnerships

Page last updated: 29 October 2013

Major Achievements

  • Continued to give Australians affordable access to medicines by approving or listing 87 new Pharmaceutical Benefits Scheme (PBS) medicines, or extensions to existing listings, at a net cost of around $1.8 billion.
  • Achieved value for Australian taxpayers by delivering further savings through the Expanded and Accelerated Price Disclosure program. Price changes in 2012-13 and beyond will reduce the forward estimates by a further $2 billion, with a total of around $4 billion in savings since these reforms began in 2010.
  • Completed post market reviews of medicines used to treat Alzheimers disease and Atrial Fibrillation. This has led to improvements in the quality use of medicines, and easier access, where appropriate, for consumers and savings to the Australian community.
  • Enabled people in residential aged care facilities to better manage medications through the Supply and Claiming from a Medication Chart in Residential Aged Care Facilities initiative, which by March 2013, was used in around 20 sites in the initial phase.
  • Helped more than 30,000 Australians to better manage their medication through the MedsChecks and Diabetes MedsChecks programs. This, in turn, supported and improved peoples’ adherence to the quality use of medicines.


  • Contesting a legal challenge to the Expanded and Accelerated Price Disclosure program.
  • Ensuring a sustainable, efficient and transparent funding model for chemotherapy medicine infusions under PBS arrangements.


This is a doughnut chart and a table that summarises the results for all deliverables and key performance indicators in outcome 2 during 2012-13. The results show that 81.8% were met compared with 86.2% in 2011-12, 18.2 % were substantially met compared with 8.6% in 2011-12 and 0% were not met compared with 5.2% in 2011-12.

81.8% MET



Period Met Substantially met Not met
2012-13 81.8% 18.2% 0.0%
2011-12 86.2% 8.6% 5.2%

Programs contributing to Outcome 2


Figure 2.1: Government PBS expenditure and cost per capita, 2009-10 to 2012-13

The figure is a column chart which shows Government PBS expenditure and cost per capita (both represented on the y-axis) from 2009-10 to 2012-13 (denoted on the x-axis). The table shows a steady increase indicating that government expenditure was approximately $8.4 billion in 2009-10, $8.9 billion in 2010-11, and $9.1 billion in 2011-12, followed by a slight dip in expenditure to $8.9 billion in 2012-13.

Figure 2.2: Urban and Rural Pharmacies, 30 June 2009 to 30 June 2013

Figure 2.2 is a horizontal line chart which shows the number of urban and rural pharmacies from 30 June 2009 to 30 June 2013 (denoted on the x-axis). The chart indicates a rise in the number of urban pharmacies between 2012 and 2013 from 4,286 to 4,500 whereas there was a slight decline in the number of rural pharmacies between 2012 and 2013 from 955 to 851. The total number of pharmacies have steadily increased over the years from 2009 to 2013.

Note – As a result of the update of the Pharmacy Access/Remoteness Index of Australia (PhARIA) classifications, 118 pharmacies were reclassified from rural to urban.

Outcome Strategy

Outcome 2 aims to provide reliable, timely and affordable access to cost-effective, sustainable and high quality pharmaceutical services and medicines. In 2012-13, the Department worked to achieve this Outcome by managing initiatives under the programs outlined below.

Program 2.1: Community pharmacy and pharmaceutical awareness

Program 2.1 aims to support timely access to medicines and pharmacy services. Support timely access to medicines and pharmacy services through the Fifth Community Pharmacy Agreement (the Fifth Agreement).

The Department continues to ensure that all eligible Australians continue to have timely access to PBS medicines and other professional services through the Fifth Agreement. The Fifth Agreement provides funding to remunerate pharmacists for dispensing PBS medicines and provides pharmacists with a range of professional programs and services which enable them to better service the community.

The medication management continuum is a key focus under the Fifth Agreement. It includes Clinical Interventions, MedsChecks and Diabetes MedsChecks, and Home Medicines Reviews. This approach allows for a graduated focus on helping people with their medication management needs.

Currently more than 80% of pharmacies participate in clinical interventions. The Fifth Agreement introduced this continuum arrangement to assist with medication management. Uptake has been higher than anticipated and the Department, in consultation with key stakeholders, is considering various approaches to ensure medication management programs are sustainable.

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Program 2.2: Pharmaceuticals and pharmaceutical services

Program 2.2 aims to provide access to cost-effective, innovative, clinically effective medicines to all Australians, and ensure the sustainability of the PBS.

List cost-effective, innovative, clinically effective medicines on the PBS

The PBS aims to provide Australians with timely access to a wide range of affordable and cost-effective medicines. In 2012-13, the PBS subsidised around 750 medicines available in more than 1,970 forms and marketed as more than 4,500 differently branded items.

In 2012-13, the Government approved or listed 87 new PBS medicines, or extensions to existing listings, at a net cost of around $1.8 billion over the forward estimates. In 2012-13, the following high-cost medicines, including the two new breakthrough and innovative medicines to treat hepatitis C, were listed.

Table 2.1: High-cost medicines listed in 2012-13

Medicine Indication Listing date Estimated number of patients per annum Estimated expenditure – five years (fiscal)
Ticagrelor Acute Coronary Syndrome 1 August 2012 60,000 $116.7m
Pregabalin Chronic nerve pain 1 March 2013 270,000 $452.7m
Boceprevir and Telaprevir Hepatitis C 1 April 2013 3,900 $219.3m

On 30 June 2013, the Minister for Health and the Minister for Medical Research announced that the Australian Government had approved the PBS listing of many new medicines, including three groundbreaking medicines to treat cancer:

  • Abiraterone (Zytiga®) for the treatment of prostate cancer;
  • Ipilimumab (Yervoy®) for the treatment of advanced melanoma; and
  • an oral form of vinorelbine (Navelbine®) for the treatment of advanced breast cancer.

The new subsidies for these three cancer medicines will cost the Australian Government more than $430 million over four years.

As required under Section 99YBC of the National Health Act 1953, an independent review into the impact of PBS Cost Recovery was undertaken with the report tabled in both Houses of Parliament on 19 September 2012.

The report contained four recommendations, ‘that the Government’:

  • re-evaluate the activities subject to PBS Cost Recovery to ensure that costs for all current activities associated with the evaluation and listing process, such as the cost of maintaining risk share agreements, are updated to reflect current practice;
  • consider whether total Government expenditure on a medicine also be considered in deciding whether to grant a fee exemption or waiver, even for those applications, which like the medicines on the Life-Saving Drug Program, involve small patient numbers but millions of dollars in expenditure, as blanket exclusions based solely on the number of patients likely to be treated do not always reflect the profitability of the medicine;
  • develop ways in which structured consultation with consumers can be implemented to better inform PBS processes; and
  • restructure the terms of reference for future reviews of the Cost Recovery program be structured to better align the terms of reference with the data sources available.

Increase the sustainability of the PBS

Reforms to the PBS, including price disclosure, are helping to ensure its ongoing sustainability into the future.

Price disclosure helps to ensure that Australian taxpayers benefit from discounts and incentives provided by manufacturers for medicines where there is more than one brand on the PBS. This reduces the price paid by Government for many medicines, which helps to ensure the sustainability of the PBS. In some cases, consumers will also pay less for each PBS prescription.

The price disclosure reforms of 2010 have resulted in further price reductions for many PBS medicines. In the first year of the 2010 reforms, $1.9 billion in savings were achieved over the forward estimates period. Price changes in 2012-13 and beyond will reduce the forward estimates by a further $2 billion, with a total of around $4 billion in savings since these reforms began in 2010.

On 6 December 2012, the Federal Court ruled in favour of a Sanofi-Aventis challenge to 1 December 2012 price disclosure reductions for risedronic acid and docetaxel, resulting in a full reversal of the 23.09% reductions for risedronic acid and a change in the docetaxel reduction from 76.83% to 76.20%. The corrected prices were included in the January 2013 Schedule of Pharmaceutical Benefits. The ruling also affected the way calculations were performed in the 2013 Main Cycle46 (for 1 April 2013). In response, the Department amended the National Health (Pharmaceutical Benefits) Regulations 1960 to reflect the decisions made by the Federal Court and has proceeded to calculate all subsequent Experienced and Accelerated Price Disclosure (EAPD) cycles using the new regulations.

National Medicines Policy

Australia’s National Medicines Policy (NMP) is the overarching framework that guides the Department in maintaining the community’s access to, and quality use of, medicines. The NMP has four central objectives: timely access to the medicines that Australians need, at a cost individuals and the community can afford; medicines meeting appropriate standards of quality, safety and efficacy; quality use of medicines; and maintaining a responsible and viable medicines industry.

The Department continues to collaborate with consumers, clinicians and all sectors of industry as part of its ongoing discussions on NMP issues. This engagement is important approaching the expiry of the Memorandum of Understanding (MOU) with Medicines Australia in June 2014.

The Department, on behalf of the Australian Health Minsters Advisory Council, oversaw the publishing of the Australian Medicines Handbook Children’s Dosing Companion in July 2013. The principal goal of the companion is to ensure health professionals have access to information on the safe delivery of commonly used medicines in Australia for children up to 18 years of age. The first edition contains information on 230 medicines. Updates to the companion will be published every six months.

The Department revised and published the Guiding Principles for Medication Management in Residential Aged Care Facilities in October 2012. This includes current evidence, policies and practices with the aim of promoting the safe and quality use of medicines in residential aged care facilities. The guidelines were distributed to pharmaceutical and aged care stakeholders.

Post Market Reviews

Post-market monitoring has been designed to improve patient safety, and quality use of medicines through a coordinated governance framework that draws on existing programs and data sets to monitor the actual use of medicines in clinical practice. This will allow the earlier identification of quality use of medicines issues including adverse events, improving prescribing and dispensing (through an enhanced ability to target education and support) and improve the sustainability of the PBS in the longer term through the integration of routine assessment of medicines use in the real world, including cost-effectiveness reviews for subsidised medicines

In 2012-13, the Department completed a number of reviews including of Anticoagulation Therapies in Atrial Fibrillation and PBS listed anti-dementia medicines for Alzheimers disease, and began two further reviews into products used in the management of diabetes and PBS medicines used to treat asthma in children.

The reviews have contributed to improved quality use of medicines for the Australian community. For example, the review of anti-dementia medicines used to treat Alzheimers disease has led to price reductions for these medicines, improving the sustainability of the PBS and resulted in changes in the assessment process required to establish patient eligibility for continued subsidisation. This ensures access to these medicines is made easier for patients benefiting from treatment. It also reduces red tape for clinicians.

PBS Sustainability

The Trends in and Drivers of Pharmaceutical Benefits Scheme Expenditure Report jointly developed by the Department and Medicines Australia was released in May 2013. The report aims to inform future policy discussions between the Department and pharmaceutical industry stakeholders and provides an agreed and authoritative background to discussions on PBS expenditure and sustainability. This report demonstrates PBS growth is being driven by new medicine listings and increases in demand for existing medicines as well as an ageing population. It also confirms price disclosure and other policies are improving PBS sustainability, through growth in generic medicines.

The Department, on behalf of the Government, is seeking to recover compensation from pharmaceutical companies for losses incurred as a result of delays in the listing of generic medicines on the PBS arising out of unsuccessful legal challenges by pharmaceutical patent owners. The Department has commenced proceedings in the Federal Court in separate cases against Sanofi and Wyeth for losses arising out of delayed listing of generic versions of clopidogrel and venlafaxine, respectively.

Pharmaceutical Benefits Consolidated Information System (PharmCIS)

PharmCIS, implemented on 1 December 2012, is a submission processing information technology system that supports the processes of evaluating, pricing and listing medicines on the PBS. The new information system has modernised the PBS data infrastructure providing a consolidated view of all PBS Schedule information and delivering consistent and reliable information for improved decision making. The introduction of the new system has provided the opportunity to better structure information and data (for example PBS restrictions text) that allows downstream recipients of PBS data the capacity to more easily and automatically use the data and provides greater clarity for prescribers and dispensers.

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Program 2.3: Targeted assistance – pharmaceuticals

Program 2.3 aims to improve access to new and existing medicines for patients with life threatening conditions.

Improve access to new and existing medicines for patients with life threatening conditions

The Life Saving Drugs Program provides patients with financial assistance to access expensive and ‘life saving’ drugs not available on the PBS. In 2012-13, the Life Saving Drugs Program provided 228 eligible patients with fully subsidised access to expensive, life saving medicines for very rare life threatening conditions. During the year, 10 medicines were funded through the program for the treatment of seven separate disorders including: imiglucerase (Cerezyme®), velaglucerase (VPRIV®) and miglustat (Zavesca®) to treat Gaucher disease; agalsidase alfa

(Replagal®) and agalsidase beta (Fabrazyme®) for Fabry disease; laronidase (Aldurazyme®) for Mucopolysaccharidosis (MPS) Type I; idursulfase (Elaprase®) for MPS Type II; galsulfase (Naglazyme®) for MPS Type VI; alglucosidase alfa (Myozyme®) for infantile-onset Pompe disease; and eculizumab (Soliris®) for Paroxysmal Nocturnal Haemoglobinuria.

Each condition has separate eligibility guidelines, developed and administered with the advice of an expert disease advisory committee.

Global shortages of Fabrazyme® and Cerezyme® in 2012-13 continued to have an impact on the availability of these medicines through the Life Saving Drugs Program for treating Fabry and Gaucher diseases. The Department worked with industry and clinical advisory committees to ensure the best outcome for patients receiving treatment through the program. The supply shortages of Fabrazyme® and Cerezyme® were resolved in 2012-13, and eligible patients will continue to receive treatment through the program.

In 2013-14, the Department will continue to work with industry to finalise Deeds of Agreement for terms of supply for all medicines supplied through the Life Saving Drugs Program.

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Program 2.4: Targeted assistance – aids and appliances

Program 2.4 aims to provide support for people that require specific medical aids and appliances, for those people with diabetes, people who require a stoma and dressings for individuals with Epidermolysis Bullosa.48

Provide support for people with diabetes

The Department ensures that people with diabetes have timely, reliable and affordable access to products and services that help them effectively self-manage their condition. In 2012-13, the Department worked with Diabetes Australia to continue the effective delivery of the National Diabetes Services Scheme (NDSS). This also included work to progress three independent reviews which assess current arrangements under the scheme, to identify potential efficiencies for product supply and delivery, product listing, and registrant support services. These reviews, the final of which were completed in early 2013, will be supplemented by a consultation process that began in June 2013 and will draw together findings of the three reviews to inform future arrangements.

Assist people with a stoma by providing stoma related products

The Department continued to support the revised program pricing and listing framework for the Stoma Appliance Scheme, including listing 22 new products on the scheme. These new products, while being cost neutral to the scheme, have offered a wider choice of subsidised products. In addition, a review of price premiums applied to products has begun as a result of a 2012-13 Budget measure. In April 2013, price premiums were added to 22 products and removed from 23 products, following a review by the Stoma Product Assessment Panel. Further reviews will take place in 2013-14.

Improve the quality of life for people with Epidermolysis Bullosa

The Department has continued to provide access to clinically appropriate dressings for people with Epidermolysis Bullosa51 through the National Epidermolysis Bullosa Dressing Scheme. The scheme continues to assist people with Epidermolysis Bullosa by reducing the financial burden associated with purchasing necessary dressings.

Outcome 2 – Financial Resource Summary

Program (A) Budget Estimate 2012-13
(B) Actual 2012-13
Variation (Column B minus Column A)
Program 2.1: Community Pharmacy and Pharmaceutical Awareness
Administered Expenses
Ordinary Annual Services (Annual Appropriation Bill 1) 333,854 319,430 ( 14,424)
Departmental Expenses
Departmental Appropriation1 6,784 6,896 112
Expenses not requiring appropriation in the current year2 157 264 107
Total for Program 2.1 340,795 326,590 ( 14,205)
Program 2.2: Pharmaceuticals and Pharmaceutical Services
Administered Expenses
Ordinary Annual Services (Annual Appropriation Bill 1) 190,182 189,709 ( 473)
Special appropriations
National Health Act 1953 - Pharmaceutical Benefits 9,466,358 8,645,529 ( 820,829)
Departmental Expenses
Departmental Appropriation 1 36,521 36,300 ( 221)
Expenses not requiring appropriation in the current year 2 1,191 2,303 1,112
Total for Program 2.2 9,694,252 8,873,841 ( 820,411)
Program 2.3: Targeted Assistance - Pharmaceuticals
Administered Expenses
Ordinary Annual Services (Annual Appropriation Bill 1) 151,016 139,096 ( 11,920)
Departmental Expenses
Departmental Appropriation 1 3,292 3,347 55
Expenses not requiring appropriation in the current year 2 76 128 52
Total for Program 2.3 154,384 142,571 ( 11,813)
Program 2.4: Targeted Assistance - Aids and Appliances
Administered Expenses
Ordinary Annual Services (Annual Appropriation Bill 1) 745 538 ( 207)
Special appropriations
National Health Act 1953 - Aids and Appliances 284,592 282,600 ( 1,992)
Departmental Expenses
Departmental Appropriation 1 3,292 3,346 54
Expenses not requiring appropriation in the current year 2 76 128 52
Total for Program 2.4 288,705 286,612 ( 2,093)
Outcome 2 Totals by appropriation type
Administered Expenses
Ordinary Annual Services (Annual Appropriation Bill 1) 675,797 648,773 ( 27,024)
Special appropriations 9,750,950 8,928,129 ( 822,821)
Departmental Expenses
Departmental Appropriation 1 49,889 49,889 -
Expenses not requiring appropriation in the current year 2 1,500 2,823 1,323
Total expenses for Outcome 2 10,478,136 9,629,614 ( 848,522)
Average Staffing Level (Number) 230 234 4
  1. Departmental appropriation combines 'Ordinary annual services (Appropriation Bill 1)' and 'Revenue from independent sources (s31)'
  2. 'Expenses not requiring appropriation in the budget year' is made up of depreciation expense, amortisation, make good expense and audit fees. This estimate also includes approved operating losses - please refer to the departmental financial statements for further information.

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