Medicare and the Pharmaceutical Benefits Scheme

Published on 08/02/2015 by admin

Filed under Basic Science

Last modified 22/04/2025

Print this page

rate 1 star rate 2 star rate 3 star rate 4 star rate 5 star
Your rating: none, Average: 0 (0 votes)

This article have been viewed 2279 times

Chapter 8 Medicare and the Pharmaceutical Benefits Scheme

INTRODUCTION — THE HEALTH CARE SYSTEM

The Australian health care system is the product of a diverse range of economic, social, technological, legal, constitutional and political factors, some of which are unique to Australia. However, many of the characteristics of the system have been derived from other countries. The inevitable British influence continued to be highly significant in determining many aspects of the way health services were organised post World War II, when there was considerable opposition from the medical profession and other groups to following the British in introducing a national health service. The voluntary health insurance arrangements introduced in 1953 were based, in part, on similar systems that had become the dominant method of paying for health care in the United States of America.

The Canadian model of universal, taxation-funded health insurance formed the core of the Medibank scheme that commenced in 1975. After an early demise of the system in the late 1970s it was subsequently resurrected in 1984 under the title of Medicare. The tendency to look to North America as the source of technology, funding and organisational initiatives, and the inspiration for new policies has continued up to the present time.

Any health care system will have an impact on the wider social system. Medicare, Australia’s national health insurance scheme, is designed to ensure that all persons have equal access to care in a public health system. This means that all Australians have a stake in ensuring that the public health system functions effectively and thus Medicare can be seen as contributing to social cohesion and solidarity.

The following are the main features of Australia’s health system:[1]

Medicare is designed to ensure that all Australians have equal access to care in a publicly funded system. Medicare Australia works in partnership with the Department of Health and Ageing to achieve the Australian Government’s health policy objectives. It is a prescribed agency under the Financial Management and Accountability Act 1997 (Cth) and is a statutory agency under the Public Service Act 1999 (Cth), within the Department of Human Services.

THE PHARMACEUTICAL AND REPATRIATION PHARMACEUTICAL BENEFITS SCHEMES

The PBS and the RPBS are key components of the Australian health system, facilitating access to a large number of prescribed medicines through government subsidy of the cost. They form an integral part of Australia’s National Medicines Policy 2000 and the implementation of quality use of medicines as discussed in Chapter 2.

The PBS provides Australian residents, and eligible overseas visitors from countries with whom Australia has a reciprocal health care agreement, with subsidised access to approved medicines at an affordable price. At the time of writing reciprocal agreements were in place with nine countries, namely: Finland; Italy; Malta; New Zealand; Norway; Republic of Ireland; Sweden; the Netherlands; and the United Kingdom. The medicines are funded, either partially or wholly, by the Commonwealth Government. The PBS is regulated by the National Health (Pharmaceutical Benefits) Regulations 1960 (Cth), under Part VII of the National Health Act 1953 (Cth). The National Health Act 1953 (Cth) applies to the provision of pharmaceutical, sickness and hospital benefits, and of medical and dental services in Australia. Ministerial determinations and rules that apply to the PBS are periodically released to address specific issues.

The RPBS is subsidised by the Department of Veterans’ Affairs (DVA) through the Veterans’ Entitlements Act 1986 (Cth). The RPBS provides pharmaceutical benefits for veterans and eligible dependants. The range of medicines and dressings available through the RPBS is more comprehensive than those available through the PBS.

Both the PBS and RPBS are administered by Medicare Australia.

HISTORY OF THE PBS AND RPBS

The following is a very brief overview of the history of the PBS and RPBS, with more detailed information available through the Parliamentary library.[2] The RPBS was established in 1919 for war veterans. A similar scheme for non-veterans was proposed in 1944 through the passing of the Pharmaceutical Benefits Act 1944 (Cth). However, the Australian Branch of the British Medical Association challenged the Act and the High Court declared the Act unconstitutional as its provisions went beyond the powers of the Commonwealth.

A subsequent change to the Constitution in 1946 enabled the Commonwealth Government to provide pharmaceutical benefits. A new Pharmaceutical Benefits Act 1947 (Cth) was passed but was again declared unconstitutional and only a few doctors participated on a voluntary basis. In 1950 a scheme was introduced under the Act to provide a list of 139 ‘life saving and disease preventing drugs’ free of charge to the whole community. The PBS was introduced on 1 March 1960 following the promulgation of the National Health (Pharmaceutical Benefits) Regulations 1960 (Cth).

Listing steps

Once a medicine has been approved by the Therapeutic Goods Administration (TGA) to be included in the Australian Register of Therapeutic Goods, an application may be submitted to the Department of Health and Ageing for listing on the PBS. The Pharmaceutical Benefits Advisory Committee (PBAC), an independent statutory body under section 101 of the National Health Act 1953 (Cth), assesses applications for listing on the PBS based on comparative safety, efficacy, cost-effectiveness and clinical information. The membership of PBAC is prescribed in the National Health Act 1953 (Cth), with members being appointed by the Federal Minister for Health. In the case of RPBS items, the recommendations are made by the Repatriation Pharmaceutical Reference Committee (RPRC).

The PBAC considers submissions from industry sponsors, manufacturers, medical bodies, health professionals, private individuals and their representatives. The PBAC makes recommendations and gives advice to the Federal Minister for Health about which medicines should be made available as pharmaceutical benefits, the maximum quantities and repeats, and may also recommend restrictions. Box 8.1 lists the main roles of the PBAC.[3]

Under the National Health Act 1953 (Cth), the PBAC established two sub-committees to help perform its functions. These are the Drugs Utilisation Sub-Committee (DUSC) and the Economics Sub-Committee (ESC). The DUSC was formed by the PBAC in 1988 and monitors the patterns and trends of medicines used through the PBS. The ESC was formed by the PBAC in 1994 and advises on both cost-effective policies and evaluations of cost-effective aspects of major submissions.

Listed medicines are classified as either:

The PBAC makes recommendations about the maximum quantity and the number of repeats that should be available for each item. As a general rule, the maximum quantity to treat acute medical conditions is usually a single pack size (depending on the manufacturer’s packaging). For chronic medical conditions, the maximum quantity and repeats usually allows for up to 6 months’ therapy. As of 1 November 2008, this period has been extended to 12 months for the treatment of certain chronic conditions. An authority system makes provision for patients requiring some high cost drugs, higher than average doses for approved medicines, increases in the listed maximum quantities and/or additional repeats.

When recommending listings, the PBAC provides advice to the Pharmaceutical Benefits Pricing Authority (PBPA) comparing therapeutic outcomes and price considerations. The aim of these comparisons is to determine the cost-effectiveness of pharmaceutical benefits. In addition, the PBPA, following negotiations, makes recommendations as to a ceiling price or price range for an item.

Public Summary Documents (PSDs) are published following PBAC meetings to improve the transparency of the listing process. These documents provide information about recommendations so that stakeholders are aware of the rationale for specific recommendations and gain an improved understanding of the overall PBS listing process. The availability of PSDs is the result of initiatives under the Australian–United States Free Trade Agreement (AUSFTA). In a further attempt to increase transparency, the release of PBAC agendas in advance of meetings was introduced mid-2008.

The schedules

The PBS and RPBS Schedules list all medicines that are available to be dispensed by approved pharmacists or other eligible suppliers at a government-subsidised price. As of 1 December 2006, the Schedules are available online.

Three categories of benefits apply, namely:

Some items are listed for more than one condition and more than one type of benefit may apply.

A palliative care section provides for increased repeats of certain medicines for palliative care patients. A palliative care patient is defined as ‘A patient with an active, progressive, far-advanced disease for whom the prognosis is limited and the focus of care is the quality of life’.[4]

Section 100 programs

Section 100 of the National Health Act 1953 (Cth) provides for alternative supply arrangements when the supply through community pharmacies is unsuitable. Reasons for these alternative supply methods include the cost of storage, requirements for particular controls over dispensing, the need for medical supervision during administration/treatment or constraints on patient access to community pharmacies. These alternative supply arrangements include the following programs:

Also included under Section 100 programs are the:

The Support Allowance Program (negotiated under the Fourth Community Pharmacy Agreement) enables participating pharmacists with subsidised medicines to provide a range of services to support eligible remote area Aboriginal Health Services. (Community Pharmacy Agreements are covered later in this chapter.)

PBS AND RPBS PRESCRIBING

At the time of writing, pharmaceutical benefits may be prescribed by doctors, dentists and optometrists who are approved to prescribe within the PBS. However, discussions have been initiated to enable nurse practitioners and pharmacists to prescribe certain PBS items. Prescribers need a prescriber number, issued by Medicare Australia.

Dentists may prescribe from the Dental Schedule for dental treatment only. As of 1 January 2008, optometrists accredited to prescribe under state or territory legislation (authorised optometrists) can apply for approval as PBS prescribers. Authorised optometrists have a separate Optometrical Schedule from which they may prescribe eye care medicines.

Prescribers need to follow state and territory legislation when prescribing PBS medicines. The list of medicines that may be prescribed under state and territory drugs and poisons legislation may differ from the list of pharmaceutical benefits that may be claimed for under the PBS or RPBS. For example, in Queensland the list of medicines that approved optometrists may prescribe in terms of the Health (Drugs and Poisons) Regulation 1996 differs substantially from the PBS list for authorised optometrists. Similar differences apply to dentists and to a lesser extent doctors. It is therefore important that prescribers ensure that prescriptions written under the PBS fall within the limits of their respective state or territory legislative requirements.

The prescriber should indicate whether a subsidy applies by either marking the PBS or RPBS box on the prescription. Regulation 19 of the National Health (Pharmaceutical Benefits) Regulations 1960 (Cth) provides details about prescription requirements. To be valid, paper-based prescriptions (handwritten or computer generated) must be provided to patients in duplicate. A prescription may only be written for the treatment of one person with up to three pharmaceutical benefit items, except for authority and optometrist items that must be written on individual forms. Pharmaceutical benefits and non-pharmaceutical benefits should not be listed together. However, there are separate arrangements for prescriptions in public hospitals that participate in the public sector pharmaceutical reforms.

New rules were introduced in November 2008 to enable prescribers to write repeat prescriptions for up to 12 months for certain medicines subject to certain criteria being met. The criteria for prescribing under this ruling are that the patient has a stable chronic condition and is under the care of a general practitioner and continues to have regular reviews.

APPROVED SUPPLIERS

The supply of pharmaceutical benefits is provided under sections 85 to 98 of the National Health Act 1953 (Cth), which also permits the Federal Health Minister to make certain determinations regarding supply arrangements.

Pharmaceutical benefits are mainly supplied by ‘approved pharmacists’ under section 90 of the Act. Section 4 defines a pharmacist as:

Under this definition friendly society pharmacies qualify to supply pharmaceutical benefits as a pharmacist. An approved pharmacist is a person approved by the secretary (or delegate) to the Department of Health to carry on business from a designated premises under the scheme. Approved pharmacists are approved to supply pharmaceutical benefits only from a particular pharmacy. The approved pharmacist is entitled to be paid an amount determined by the Health Minister for the provision of the pharmaceutical benefit.

Applications for approval are referred to the Australian Community Pharmacy Authority (ACPA), an independent statutory body under section 99J of the National Health Act 1953 (Cth). The role of the ACPA is to consider applications for approval to supply pharmaceutical benefits under section 90 of the Act and to make recommendations to Medicare Australia.

In making recommendations, the ACPA must comply with the requirements specified in a determination made by the Minister for Health and Ageing under section 99L of the National Health Act 1953 (Cth). The determination currently in force is titled the National Health (Australian Community Pharmacy Authority Rules) Determination 2006, and is referred to as the ‘pharmacy location rules’. These rules prescribe location-based criteria that must be satisfied in order to establish a new pharmacy or relocate an existing pharmacy.

In terms of the National Health (Pharmaceutical Benefits) (Conditions of Approval for Approved Pharmacists) Determination 2007 (No PB 42 of 2007), approved pharmacists are required to comply with the Pharmaceutical Society of Australia’s Code of Professional Conduct and Professional Practice Standards.

Other suppliers include approved doctors, usually practising in isolated areas under section 92, and approved hospitals under section 94, except public hospitals participating in pharmaceutical reforms (refer to Public Hospital Pharmaceutical Reforms below). All suppliers are issued with an approval number by Medicare Australia. Certain pharmaceutical benefits may be provided without charge to doctors who may supply them free to patients for emergency use (doctor’s bag).

DISPENSING PBS AND RPBS PRESCRIPTIONS

Community pharmacies are the principal means, under current health service delivery arrangements through the PBS and RPBS, by which patients are able to access prescribed medicines. The dispensing of PBS and RPBS medicines is therefore one of the main responsibilities in pharmacy practice.

Section 89 of the National Health Act 1953 (Cth) specifies that a person cannot receive a pharmaceutical benefit unless it is supplied by an approved pharmacist on presentation of a prescription written in accordance with the Act. For dispensing a PBS or RPBS medicine, an approved pharmacist receives a mark-up on the price of the medicine as well as a dispensing fee which is reviewed at least annually. Pharmacists get additional reimbursement for supplying extemporaneously prepared products. For an extemporaneous preparation to qualify as a PBS medicine all the ingredients must be listed in the drug tariff section of the Schedule of Pharmaceutical Benefits and be compounded by the pharmacy. The ingredients must conform to the standards of composition or purity prescribed and also comply with standards set out in the Therapeutic Goods Act 1989 (Cth).

Pharmacists may not discount PBS and RPBS medicines when a subsidy applies. This arrangement is in place to ensure that patients always pay the same price for PBS and RPBS subsidised medicines. Pharmacists must also follow their respective state or territory dispensing legislation when dispensing PBS and RPBS medicines. For example, the Dental Book of the PBS lists 5 ampoules of morphine sulfate injection 10mg in 1mL as a benefit on a prescription written by a dentist. However, under the Health (Drugs and Poisons) Regulation 1996 (Qld) dentists are only authorised to obtain, possess, or administer morphine; they are not authorised to prescribe morphine for a patient. Thus, although morphine injection is a benefit on the PBS for dental use, dentists (in Queensland) are not permitted to prescribe the medicine, and if a dentist did prescribe morphine for a patient, a pharmacist could not lawfully dispense the prescription.

Pharmacists may dispense PBS medicines for urgent cases without a written prescription when they receive a verbal (telephone) instruction from a prescriber. Under the PBS the written prescription must be provided to the pharmacist within 7 days. However, state and territory legislation regarding verbal prescriptions may require a shorter period of time to obtain the written prescription and pharmacists therefore need to make sure they also follow their state or territory requirements.

Patient eligibility through one of the following methods must be proven prior to the supply of the medicine:

Patients with the following cards are eligible for a concessional (discounted) pharmaceutical benefit:

Non-PBS/RPBS prescriptions cannot be supplied under the PBS/RPBS and must be supplied as a private prescription where the patient is liable for the full cost of the medicine.

When a PBS prescription is dispensed, the original prescription is submitted to Medicare Australia. Regulation 26 specifies that if a prescription is for repeat supplies, pharmacists need to dispense one repeat only and prepare a repeat authorisation form during dispensing. The repeat authorisation form must be attached to the duplicate prescription. A pharmacist may defer a repeat item on request of a patient.

Various measures have been introduced to deter patients from requesting repeat supplies before the supply is therapeutically necessary. The intention of these measures is to reduce problems associated with patients stockpiling medicines. These measures are the 20-day/4-day rules and the Safety Net 20-day rules, specifying time periods that must lapse before a pharmacist fills further repeats.

The 20-day/4-day rules limit the frequency of repeated supplies where the repeat interval depends on the maximum number of repeats allowed. If the listed maximum number of repeats is five or more, the interval is 20 clear days, except for ophthalmic preparations which may be supplied after 4 days. If the repeat number of supplies is less than five, the interval should be 4 clear days. However, Regulation 25 of the National Health (Pharmaceutical Benefits) Regulations 1960 (Cth) specifies that a supply may be made within this period where the pharmacist reasonably believes that the previous supply was (1) lost, stolen or destroyed, or (2) the supply is necessary to treat the person. In those circumstances the pharmacist must endorse the Medicare Australia copy of the prescription with the words ‘immediate supply necessary’. The Safety Net 20 day rule provides that the supply of some listed medicines under the ‘immediate supply necessary’ provision is excluded from Safety Net contribution calculations.

Regulation 24 of the National Health (Pharmaceutical Benefits) Regulations 1960 (Cth) provides for circumstances during which the quantity of a repeated supply can be directed by the medical practitioner to be supplied on one occasion; for example, when the patient is going overseas and needs to obtain several months’ supply at once. For Regulation 24 to apply, the prescriber must be satisfied that the following conditions apply:

Regulation 19(1)(h) of the National Health (Pharmaceutical Benefits) Regulations 1960 (Cth) specifies that a prescription under Regulation 24 must have ‘Reg 24’ or ‘Regulation 24’ written on it. RPBS prescriptions may be endorsed ‘hardship conditions apply’.

At the time of receiving the medicines, patients or carers need to pay the pharmacy the required amount and acknowledge receipt through signing and dating the receipt. Should a patient not be able to sign, an agent may sign but must include their address. Should neither a patient nor an agent be able to sign, Regulation 31(3) specifies that a pharmacist may sign on the patient’s behalf and certify that the benefit was supplied. Such a certification requires the following details:

Online claiming was introduced to ensure that payments are processed almost instantaneously and provide Medicare Australia with an opportunity to check patients’ entitlements. When a prescription is dispensed, the dispensary software sends the transaction to Medicare Australia for assessment against PBS/RPBS rules and for patient entitlement validation. Online claiming therefore saves the government money as it provides up-to-date information about the patient’s concessional entitlement at the date of supply. Pharmacists receive an incentive payment of 40 cents per item to participate in PBS online.

PATIENT CONTRIBUTIONS AND SUBSTITUTION

To help meet the cost of the PBS and RPBS, patients pay a proportion (a co-payment) for medicines and the government pays the remainder of the cost. The amount paid by the government for pharmaceutical benefits is usually adjusted on 1 January each year in line with the Consumer Price Index. General patients pay more than concessional patients, however, general patients who have reached the Safety Net threshold receive pharmaceutical benefit items at the concessional rate. Patients who have a Safety Net Entitlement Card receive items free, except when compulsory additional charges apply.

Reference pricing links the price of a medicine to the price of other medicines that provide a similar health outcome and is used to determine the three compulsory additional charges, namely:

Brand Price Premium was introduced in 1990 and applies when a particular brand of medicine is dispensed which costs more than the cheaper bioequivalent brand. The patient must pay the price difference, referred to as the Brand Price Premium. Bioequivalent medicines are indicated in the Schedule through flagging: items marked as ‘a’ or ‘b’ may be substituted with items marked in the same way. These are referred to as generic medicines.

For a generic medicine to be listed on the PBS or RPBS, a manufacturer must demonstrate that their product is bioequivalent to the original brand.[6] The responsibility to ensure bioequivalence of generic medicines in Australia therefore lies with the pharmaceutical companies and the TGA. Two medicines are considered bioequivalent when they produce such similar plasma concentrations of the active ingredient that their clinical effects can be expected to be the same.[7] Bioequivalence is usually assessed in a small number of healthy volunteers through administering the two products on separate occasions. The peak plasma concentration (Cmax) and the extent of absorption, represented by the area under the concentration–time curve (AUC) of the generic medicine are then compared with that of the original brand. To be bioequivalent, the 90% confidence intervals (CI) for the ratio of each pharmacokinetic variable must lie between 0.80 and 1.25. This is a numerical index that provides an indication of the certainty of the study results.[8] The amount of active ingredient in the systemic circulation is hence used as a measure of the medicine’s clinical efficacy. Generic medicines must adhere to the same quality of manufacturing codes as branded medicines.[9]

Substitution by pharmacists without reference to the prescriber is permitted where:

There has been increased support by the Australian Government towards the use of generic medicines in an attempt to contain the growth of the PBS and RPBS budgets. These included amendments to the National Health (Pharmaceutical Benefits) Regulations 1960 (Cth) to promote increased generic prescribing. The changes required, as of February 2003, that computer prescribing programs must by default permit brand substitution for PBS prescriptions.[10]

The Therapeutic Group Premium was introduced in 1992 and applies to groups of medicines which have similar safety and health outcomes. Government reimbursement to pharmacists is based on the lowest-priced items within a therapeutic group. The difference between the subsidised price and the price of the medicine, referred to as the Therapeutic Group Premium, has to be paid by the patient unless the prescriber has requested an exemption.

Where agreement between a manufacturer and the government over the subsidised price for an item cannot be reached, certain PBS listed medicines will attract a Special Patient Contribution. The Special Patient Contribution is paid by the patient, unless the prescriber has requested an exemption.

PBS REFORMS

Significant PBS reforms were announced by the government in November 2006 and were introduced in July 2007 following the passing of the National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007 (Cth) (No 111, 2007). These changes were made to ensure the PBS remains affordable to the Australian Government, enabling it to continue to provide Australians with access to cost-effective medicines. The specific aim of the reforms was:[11]

These changes are referred to as PBS reforms and mainly involve price disclosure provisions that apply to pharmaceutical manufacturers and changes to the way PBS-listed medicines are priced. The intended outcomes of these reforms include savings from off-patent medicines and improvements to the listing of medicines. As of 1 August 2007 medicines listed on the PBS were separated into two groups, namely F1 and F2.

F1 medicines are medicines where there is only a single brand listed. F1 medicines are not substitutable whereas F2 medicines are those where there are many brands listed. The amount that the government pays for F2 medicines was reduced through a complicated formulary that will undergo ongoing review.

The reforms also involve an increased push towards generic dispensing and the introduction of financial incentives for pharmacists to dispense generic products when available. This involves the payment of an additional $1.50 to a pharmacist when they dispense a generic medicine.[12] Through this incentive scheme, pharmacists are strongly encouraged to dispense generic medicines.

COMMUNITY PHARMACY AGREEMENTS

One of the main income sources for community pharmacists is dispensing fees under the PBS. These fees are negotiated as part of 5-year cooperative arrangements between the Australian government and the Pharmacy Guild of Australia to formalise the Commonwealth price paid to approved pharmacists for providing PBS and RPBS medicines and other pharmaceutical-related services. These agreements are referred to as Community Pharmacy Agreements (CPAs).

The First CPA (1991–1995) introduced location rules and included pharmacy amalgamation incentives to reduce pharmacy numbers, and a revised dispensing formula that provided for higher professional fees and lower mark-up. Funding was also obtained for the development and implementation of the Quality Care Pharmacy Program (QCPP).

In order to encourage community pharmacies to contribute to the implementation of the quality use of medicines policies, the government has introduced the following funded opportunities as part of the CPAs:

These programs and the associated incentive and remuneration structures represent a conceptual shift at policy level towards the payment for pharmacist professional services. They also create certain challenges for community pharmacists, including changing their practice to enable delivery of these professional services in a financially sustainable model.[13] There is a need to identify strategies that will enable the incorporation of these new professional services into everyday practice.

The newer professional services not only provide pharmacists with the opportunity to expand business practices, but also potentially result in an expansion in legal liability. There is therefore an increased need for the profession to remain abreast of professional developments. As stated by Coppock, ‘… any involvement in the delivery of new services requires careful analysis of the risk factors and strategies to minimise them’.[14]

It is likely that the future of community pharmacy would be influenced substantially by economic factors such as changes in the PBS and the continuation and introduction of financial incentives to provide services through the CPAs.

THE IMPACT OF THE PBS ON PHARMACY PRACTICE

The PBS determines the dispensing fees that pharmacists receive and is a major determinant of their income. PBS compliance requirements have increased over recent years, with PBS dispensing requiring pharmacists to be up-to-date and vigilant regarding a range of complex PBS rules. PBS dispensing also places additional administrative demands on pharmacists. For example, obtaining concession card and Medicare card details, participating in PBS online, the 20-day/4-day rule and Brand Price Premiums. These can deflect pharmacists’ attention away from focusing on therapeutic issues and the provision of patient care during dispensing. Although many of the PBS administrative functions can be delegated to pharmacy support staff, compliance with PBS requirements still places additional burdens on pharmacists. Pharmacists therefore need to be innovative with regard to practice processes in order to minimise the time spent on administrative PBS issues.

The introduction of payments under the PBS for the provision of certain professional pharmacy services influences the development of the profession with regard to increased involvement in medication management services. Pharmacists wanting to provide certain paid professional services are required to undergo additional training and credentialing. For example, pharmacists offering medication management reviews and diabetes and asthma medication assistance services must successfully complete training to be eligible for credentialing with the Australian Association of Consultant Pharmacy. Additionally, pharmacy premises where certain services are offered need to comply with specific criteria to ensure privacy during the provision of these services.

The PBS reforms have a major impact on pharmacies’ profitability and financial sustainability. Ongoing patent expiries affect price margins, which increase a pharmacy’s financial sensitivity. On the other hand, the government push towards generic substitution with pharmacy incentive payments attached to substitution also impact on pharmacy profitability. The net effect of the PBS reforms is, however, unknown. The PBS therefore significantly affects pharmacy practice. Pharmacy managers need to continuously monitor the practice and financial impact of the PBS requirements and changes to ensure the delivery of quality pharmacy services that are profitable and financially sustainable.

Since its inception the PBS has been extended to include access to PBS medicines when a person is admitted to a private hospital or a residential aged care facility (RACF). However, the regulatory and administrative requirements of the PBS do not reflect these unique settings. For example, pharmacists providing services to RACFs are often asked to supply ongoing medicines before the doctor’s visit. This can place the pharmacist in a difficult position of needing to, on the one hand, comply with state and territory legislation and PBS requirements regarding verbal prescriptions. On the other hand, should pharmacists supply the medicines, they carry a risk of not getting paid for supplying the benefit if they do not get the prescription within the required time period. There are more scenarios unique to RACFs and private hospitals that currently make it difficult for pharmacists to provide best patient care while still complying with PBS requirements. A review has therefore been commissioned to undertake a re-evaluation of the PBS supply arrangements in the context of RACFs and private hospitals.[15]

HEALTH INSURANCE ACT 1973 (CTH)

The Health Insurance Act 1973 (Cth) established a government scheme of entitlements, for payment for health services provided to eligible Australian residents. This national health insurance system, known as Medicare, was introduced in 1984 and, until October 2005, was administered by the Health Insurance Commission. Under the Health Services Legislation Amendment Act 2005, the Health Insurance Commission became Medicare Australia which now administers a number of health programs,[16] manages claim processing and arranges payments of benefits for Medicare, including PBS and the RPBS.

The Medicare system is funded from Australian taxation monies and is based on the premise that all Australians should contribute to their own health care according to their ability to pay. Some of the health services included within the scheme under the provisions of the Health Insurance Act 1973 are medical, pathology, diagnostic imaging and radiation oncology. Medicare therefore provides free, or subsidised, access to treatment for public patients in public health care facilities, or through the private sector. Patients undergoing specified dental treatments or treatment by participating optometrists may also be eligible to receive a government contribution through the Medicare system. Medicare benefits and entitlements are fixed by reference to a table of items in the Schedule of fees set by the Australian Government.

When a health professional — for example, a medical practitioner — covered by the Health Insurance Act 1973 treats a patient they can choose to either charge the patient the price for the service as set by the government or charge more than the set rate. If the medical practitioner charges the amount as set, the patient provides their Medicare card and the medical practitioner can bill Medicare Australia directly. This is referred to as ‘bulk billing’. If the medical practitioner charges more than the set rate this is paid by the patient. The patient may claim the set rate back from Medicare Australia. Reimbursement of only the amount as set under the Medicare Schedule for the particular item will be refunded. This means the patient must pay the difference between what they have been charged and the Medicare rate. This difference is referred to as the ‘gap’. There are also ‘Safety-Net’ provisions built into the system that limits the gap payment for those persons with chronic conditions.

A provider identified within the categories contained within the Health Insurance Act 1973 must have a Medicare provider number for their patients to be eligible for the reimbursement. Medicare Australia issues and records the details of those health professionals to whom provider numbers are issued. Provider numbers are now specific to the purpose or service rendered. A provider number allows the health professional to raise referrals to specialist services, request pathology or diagnostic imaging and obtain a Medicare rebate for their own professional service. All medical practitioners with Australian medical registration can obtain a provider number, which enables them to prescribe pharmaceuticals.

REVIEW QUESTIONS AND ACTIVITIES

Endnotes

1 Australian Institute of Health and Welfare (AIHW). Health expenditure Australia 2006–7. Canberra: AIHW; September 2008.

2 Biggs A. The Pharmaceutical Benefits Scheme — an overview. 2 January 2003. Online. Available: www.aph.gov.au/library/INTGUIDE/SP/pbs.htm [accessed 21 November 2008]

3 Department of Health and Ageing. For Industry. Role of the pharmaceutical Benefits Advisory Committe. 2008. Online. Available: www.pbs.gov.au/html/industry/static/how_to_list_on_the_pbs/elements_of_the_listing_process/pbac_guidelines/a_part_1/section_1 [accessed 13 October 2008]

4 Department of Health and Ageing. Preparations which may be prescribed for patients receiving palliative care. 2008. Online. Available: www.pbs.gov.au/html/healthpro/browseby/palliative-care [accessed 25 October 2008]

5 The PBS Safety Net scheme was launched in 1986 to help individuals and families with high prescription medicine costs. Each year the government sets two Safety Net thresholds, namely one for general patients and one for people who have a concession card. When the patient or family reaches their relevant threshold, they are eligible to apply for a Safety Net card to receive PBS medicine either cheaper or free for the rest of the calendar year. Individuals and families hence need to keep a Prescription Record Form (PRF), listing all the PBS medicines supplied, to be used to determine when the Safety Net would apply

6 Therapeutic Goods Administration. Australian regulatory guidelines for prescription medicines (ARGPM). 2004. Online. Available: www.tga.gov.au/pmeds/argpm.htm [accessed 16 June 2008]

7 De Vries J., Gleave D., Best J., et al. Generic medicines: dealing with multiple brands. National Prescribing Service News. December 2007;55:1-4.

8 Pearce G.A., McLachlan A., Ramzan I. Bioequivalence: How, why, and what does it really mean? Journal of Pharmacy Practice and Research. 2004;34(3):195-200.

9 Therapeutic Goods Administration. Australian code of good manufacturing practice for medicinal products. 2002. Online. Available: www.tga.gov.au/docs/html/gmpeodau.htm [accessed 16 June 2008]

10 Lockney A. Generic medicines. inPHARMation. June 2003:6-10.

11 See the Hon. Tony Abbott MfHaA. ‘PBS Reform’ media release. In: Department of Health and Ageing C, ed. 16 November 2006

12 Department of Health and Ageing. Fact sheet: Pharmaceutical Benefits Scheme (PBS) reform. 2007. Online. Available: www.health.gov.au/internet/main/publishing.nsf/Content/24693658DD49E286CA2572750081DB74/$File/PBS%20Reform%202Feb07.pdf [accessed 18 June 2008]

13 Roberts A, Benrimoj S, Chen T, Williams K, Aslani P. Qualification of facilitators to accelerate uptake of cognitive pharmaceutical services (CPS) in community pharmacy. August 2004. Online. Available: www.guild.org.au/research/project_display.asp?id=263 [accessed 9 March 2006]

14 Coppock J. Careful collaboration reduces patient risks. Australian Journal of Pharmacy. July 2005;86:498.

15 Health Management Advisors. Review of the existing supply arrangements of PBS medicines in residential aged care facilities and private hospitals. Discussion paper: Part A — The review context and process. An invitation to make submissions by Wednesday 21 January 2009.

16 On behalf of the Department of Health and Ageing, Department of Veteran Affairs, Department of Families and Community Services and Indigenous Affairs and the Department of Health Western Australia.