Both major parties have committed to cutting the maximum patient contribution for PBS medicines to $25, potentially putting a squeeze on discounters.
The maximum copayment for medicines dispensed under PBS scripts is set to go down by about $5, but the rules around discounting are not straightforward.
On Wednesday evening, both the Labor and Liberal parties committed to lowering the PBS copayment from $31.60 to $25 for non-concession cardholders.
Prime Minister Anthony Albanese estimated that four out of five PBS medicines would become cheaper as a result of the $689 million investment, which will be cemented in next week’s budget.
Concession cardholders will continue to pay $7.70 for PBS medicines until 2030.
The Pharmacy Guild of Australia has already welcomed the move as a win for patients, even though it had been advocating for the maximum copayment to drop to $19 instead of $25.
One of the quirks of the PBS subsidy system is that if a drug’s listed price is below the copayment threshold – in this case, $24.99 and less – then the subsidy does not kick in.
These medicines are subject to normal retail pricing, meaning the free market can do its free market thing.
In the case of pharmacies, this means that the big discounting chains which benefit from economies of scale can compete with community pharmacies on price – it’s why Chemist Warehouse can sell packets of 20mg pantoprazole for $7.70 when its’ PBS price is $22.66.
But the rules change when the PBS co-payment is equal to or more than a drug’s listed price; at this point, the lowest that pharmacies can discount is $0.10 below the co-payment price for most patients.
This has been reduced from $1 and will eventually be phased out completely.
Pharmacists are not permitted to reduce the charge for an over co‑payment prescription any further under any other PBS arrangement.
Related
This puts the discounting pharmacies in a pickle, theoretically; any medicines currently priced between $25 and $31.60 on the PBS which discounters could be selling for far less will only be able to be sold for a minimum of $25 from January next year.
The most-prescribed drug in Australia for 2024, according to Australian Prescriber, is rosuvastatin.
The general patient charge for a 30-pack of 10mg rosuvastatin is $25.89 on the PBS, falling beneath the current copayment; discount pharmacy chain Chemist Warehouse sells it for $7.99.
Once the lower copayment threshold of $25 kicked in, the lowest Chemist Warehouse could discount would be $24.90.
There is, however, a relatively new policy that allows pharmacies to discount medicines with a PBS cost between $31.60 and $49.50 by any amount that they would like, which could potentially allow discounters to keep discounting relatively cheap medicines like rosuvastatin.
This policy tends not to be brought up in discussion about discounting pharmacy policy.
The announcement did not make it clear whether it would be changed to include medicines with a PBS cost between $25 and $31.60, but a spokesman for the Health Minister has since confirmed that it will be.
It’s worth noting that, out of the top 10 most-prescribed drugs, four are uniformly priced lower than $25 on the PBS, meaning that there will be no change to the cost of these scripts.
These are the generic formulations of esomeprazole, sertraline, amoxycillin and cefalexin.
Most generic formulations of the remaining top-10 drugs – perindopril, pantoprazole, atorvastatin, metformin and escitalopram – are also priced below $25.
This article was updated at 9pm on Thursday 20 March following confirmation from a ministerial spokesman that the additional discount will be extended to also cover drugs priced between $25 and $31.60.
