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What is the PBS?

The PBS, also known as the pharmaceutical benefits scheme helps towards the cost of a large number of prescription medications.

The Pharmaceutical Benefits Scheme (PBS) is a scheme in which the government subsidises the cost of many medications dispensed by pharmacists. It was first introduced in 1948, when it supplied free medicine to pensioners and others members of the community, and today it provides affordable access to necessary medication for all Australians.

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What pharmacy costs are covered by the PBS vs health insurance?

The PBS subsidises a large percentage of the prescription medicines purchased at pharmacies and the amount you must pay yourself will depend on the type of medicine up to a standard maximum limit.

  • PBS covered medicines. If you have a concession card or if you exceed the annual Safety Net threshold, the standard maximum limit will be reduced accordingly for the remainder of the calendar year.
  • Non-PBS covered medicines. The pharmaceuticals that are not subsidised by the PBS will cost you the full amount, unless you have health insurance that covers non-PBS medicines. If you do, your insurer will pay a certain percentage of the cost up to a benefit limit (varies with insurer and policy) and you will be required to pay the rest.

Who is eligible?

  • Australian residents. As long as they hold a valid Medicare card, all Australian residents are eligible to purchase any subsidised medication that appears on the PBS. Concession card and veteran card holders can also receive PBS medicines at greater concessional rates, along with those who exceed their annual Safety Net threshold.
  • Overseas visitors. People visiting from countries that have a Reciprocal Health Care Agreement (RHCA) with Australia are also eligible to receive some PBS medicines at a reduced rate. RHCA countries currently include The UK, Ireland, New Zealand, Malta, Italy, Sweden, The Netherlands, Finland, Norway, Belgium and Slovenia.

To obtain the discount, Australian residents must present their Medicare card to the pharmacist (can be kept on file at the pharmacy’s discretion), concession card holders must present their concession cards as well as their Medicare cards and eligible overseas visitors must present their passport or Reciprocal Health Care Agreement Card.

How does a medication end up on the PBS?

  • Therapeutic Goods Administration (TGA) assessment. To appear on the PBS, the medication must first be approved by the TGA. This is the Health Department division responsible for regulating therapeutic goods such as prescription medicines, vaccines, sunscreens, vitamins, medical devices and blood products. If the TGA decides that a medicine meets the required manufacturing quality, safety and effectiveness standards, it will be approved for sale in Australia.
  • Pharmaceutical Benefits Advisory Committee (PBAC) assessment. Once the medication has been approved by the TGA, it must then pass examination by the PBAC. This body determines whether a medicine works as well as or better than other medicines in the same category for treating a particular illness.
  • Potential outcomes. If the PBAC decides that it does not, then it remains a non-PBS medicine. If they decide it works at least as well as other medications like it, they may recommend that it be placed on the PBS at the same level of subsidy as those medicines. Only if a manufacturer can prove that a medicine works better than other similar offerings (e.g. if it’s more effective or causes less side-effects) will the PBAC recommend that it be placed on the PBS schedule at a higher price. The Government typically accepts most PBAC recommendations.

What is the PBS Safety Net?

The PBS Safety Net scheme is a way of ensuring that Australians don’t pay too much for their prescription medicines. If someone spends more than a certain amount in a year (the Safety Net threshold), they become entitled to cheaper or even free pharmaceuticals for the remainder of that calendar year.

  • To be eligible for the PBS Safety Net scheme, you must keep a record of how much you have spent on PBS medicines during the year. If you use more than one pharmacy for your prescriptions, you can ask each for a printout of your expenditures, which you can enter on a Prescription Record Form (available from any pharmacy). Or, if you use the same pharmacy every time, you can ask them to keep a record for you on their computer.
  • Once you reach the Safety Net threshold, your pharmacist will give you a Safety Net Card, which you can use to get free or cheaper pharmaceuticals for the rest of the year. If you have a family, all your prescriptions can be included on the one Safety Net Record Form.
  • Bear in mind that you must only fill your prescriptions as needed, otherwise the Safety Net concession will not apply. This is known as the Early Supply Rule and is designed to prevent people from ordering additional medicines on their Safety Net Cards prior to the end of the calendar year.

What costs do you have to pay?

There are several factors that affect how much you pay for PBS medications. These include:

  • The type of medicine. Some medicines are more expensive than others, meaning the co-payment may be higher (the proportion you pay after the PBS subsidy has been subtracted).
  • Indexation. Co-payment amounts are adjusted in line with indexation every year on 1 January.
  • The pharmacy you go to. Some pharmacies offer higher discounts than others (pharmacists have the option to discount the patient co-payment by up to $1.00 per prescription).
  • Brand premiums. If you opt to use a particular brand of PBS medicine that costs more than another brand of the same type of medicine, you will have to pay a higher co-payment.
  • Therapeutic group premiums. If you choose a more expensive brand amongst similar medicines within a group, you will have to pay the difference as the PBS subsidises all medicines within a group up to the level of the lowest priced medicine.
  • Special patient contributions. If you can only use a certain more expensive medicine within a group (eg, because of adverse reactions or side-effects), the government may pay the difference on your behalf.

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