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How medicines are approved for sale and PBS subsidy How are medicines approved?
Read about a medicine’s journey from the lab to the public, including approval by the Therapeutic Goods Administration and assessment for a subsidy under the Pharmaceutical Benefits Scheme (PBS).
In Australia, all medicines must be approved for sale by the Therapeutic Goods Administration (TGA), a division of the Australian Government Department of Health and Ageing. Manufacturers of prescription medicines will usually also apply for the medicine to be subsidised under the Pharmaceutical Benefits Scheme (PBS). If a medicine is subsidised under the PBS, the Government pays a portion of the cost.
These are two separate processes:
- TGA approval — If the TGA is satisfied that the medicine meets its standards for manufacturing quality, safety and effectiveness in treating a particular illness, it will approve it for sale in Australia.
- PBS listing — If the Pharmaceutical Benefits Advisory Committee (PBAC) decides the medicine works as well or better than other medicines for treating a particular illness, it will recommend that it be subsidised on the PBS. In most cases, the Government will accept this recommendation.
TGA approval
The TGA approval process involves reviewing the evidence to assess a medicine’s safety and efficacy as well as checking that the medicine meets manufacturing quality standards. When a medicine is approved by the TGA, a decision about how freely it will be available is also made (e.g prescription or non-prescription). Find out why some medicines are more freely available than others.
Prescription medicines
For prescription medicines, evidence about their benefits and risks must come from approved clinical trials.
The TGA must approve the clinical trial evidence of the medicine’s stated benefits and agree that all the recognised side effects are acceptable. The TGA also checks to see that the information about the benefits and side effects in the product information for those prescribing the drug is accurate and clear.
Typically, it takes a long time for a medicine to be developed and to accumulate enough evidence to be approved for sale — perhaps around a decade. Many medicines don’t make it through this long process because they don’t do well enough in the early trials.
A medicine’s journey from the lab to the public
Non-prescription medicines
The rules for TGA approval of non-prescription medicines vary according to safety of the ingredients. These medicines are categorised as lower or higher risk according to their side effects and the seriousness of the illnesses they treat.
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Listed medicines — These are lower risk products and show an ‘AUST L’ number on the label. The TGA assesses their quality and safety, but not efficacy. This means the TGA has not evaluated these medicines individually to see if they work. This category includes products with well-known established ingredients, such as vitamin and minerals, and many complementary medicines that have a long history of traditional use. (Most complementary medicines are listed products, but some are registered.)
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Registered medicines — These are higher risk products and show an ‘AUST R’ number on the label. The TGA does a comprehensive assessment of their quality, safety, and efficacy. This category of medicines includes mild pain relievers, cough and cold preparations, and antifungal creams.
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PBS listing
If a medicine is subsidised under the PBS, you pay a lower price for the medicine, and the Government pays the rest. Once a prescription medicine has been approved and registered by the TGA, the manufacturer can apply for the cost to be subsidised under the PBS. See below for information about who is eligible for PBS-subsidised medicines.
Applications are evaluated by the Pharmaceutical Benefits Advisory Committee (PBAC) to determine if the medicine will provide a health benefit that is better than, or at least as good as, that provided by an existing medicine or with fewer side effects.
The PBAC also makes recommendations about whether a new vaccine should be included in the National Immunisation Program or PBS, after advice from The Australian Technical Advisory Group for Immunisation (ATAGI) on the effectiveness of the vaccine in the Australian population.
The other key consideration is that the medicine’s price is acceptable to the Government. It is worth noting that there is no need for a new medicine to be better than existing medicines — it can be subsidised under the PBS if it is at least as effective as an existing medicine.
The PBS system is unique because the pharmaceutical company must prove their medicine is worth the price asked of the Government. If the pharmaceutical company cannot prove the new medicine is better than an existing treatment, the Government will only pay the same price as it does for the existing medicines. If the new medicine has uncertain benefit and a high cost, it is unlikely to be PBS listed.
PBS decisions are complex. For most new drugs, the Department of Health and Ageing publishes a public summary document to explain the decision making about that drug. See a list of all medicines subsidised under the PBS.
Who is eligible for PBS-subsidised medicines?
PBS-subsidised medicines are available to all Australian residents who hold a current Medicare card. Some overseas visitors are also eligible. See PBS — brief overview for details.
Why does the PBS subsidise a medicine for some illnesses and not others?
The PBAC decides whether evidence from clinical trials for a medicine shows a health benefit for people with a particular illness. The PBS listing will be limited to illnesses and situations where a benefit has been proven. The PBAC also considers whether the proven benefits of the new treatment justify the proposed cost.
For example, a medicine may have good evidence that it improves survival in lung cancer, but very little evidence in kidney cancer. In this case, the PBS listing might only be for people with lung cancer.
In some cases, the PBAC may also recommend that the medicine is subsidised under the PBS only for certain groups of people if they feel wider use could be unsafe.
What is an ‘authority’ prescription?
Some medicines are more closely monitored to make sure they are prescribed only for specific illnesses in particular groups of people. For these ‘authority’ prescription medicines, the prescriber has to either phone Medicare for approval or to enter a special code on the prescription.
Authority prescriptions are also sometimes used if a higher dose of a medicine is required than is usual. With the authority prescription, you will only pay the same amount as someone on the standard dose.
Once your doctor has given you an authority prescription, you can give it to the pharmacist as you would any other prescription.
For more about authority prescriptions, see Authority prescriptions explained.
What will a medicine on the PBS cost me?
If a medicine is subsidised on the PBS for someone with your medical condition, you will pay up to $34.20 per prescription, or $5.60 if you have a concession card.
If you or your family need a lot of medicines and the amount you spend in a year reaches the threshold for the PBS Safety Net, you will be eligible for prescriptions at a reduced cost.
The PBS Safety Net entitles people to free or cheaper medicines if they spend more than a certain amount on PBS (prescription) medicines in a calendar year. If you were paying the general rate, your payments will be reduced to the concessional rate once you reach the Safety Net threshold. If you were paying the concessional rate, PBS medicines will be free for the rest of the year.
In 2011, the Safety Net threshold is $336 if you have a concession card, and $1,370.20 if you do not. These thresholds apply to family units and are the same regardless of whether the unit consists of one person, a couple, or a family with dependent children.
The cost of subsidised medicines, and the Safety Net thresholds can change, but you can find the current amounts on the About the PBS page on the Australian Government Department of Health and Ageing website.
If a medicine is not on the PBS for your condition, you will have to pay the full price for it. This will usually be between $10 and $100 per prescription but, in some cases, it can cost hundreds of dollars. Part of the cost for medicines not on the PBS may be covered by some health funds.
If the cost of the medicine is a problem for you, ask your health professional if there are more affordable options. For tips on how to keep your medicine costs down, see Keeping a lid on the cost of medicines.
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Date published: 2011-01-24 00:00:00
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