In 2011, around 240 million prescriptions were dispensed on the Australian Pharmaceutical Benefits Scheme (PBS) at a cost of $8.3 billion to the government and a further $2 billion in patient copayments to the pharmacies. The copayment is the price paid by a patient for a prescription.1 It has evolved over the years and now seems to lack a purpose other than offsetting the cost to government.
In 2013, patient copayments are $36.10 for each prescription or $5.90 if the patient has a concession status. These charges are reduced once a family’s expenses in one year reach a safety net threshold. Currently, these thresholds are $1390.60 for general and $354 for concessional patients. The copayments and safety net thresholds are adjusted for inflation every January.
Most general practitioners and community pharmacists are well aware that some patients have difficulty paying for their prescriptions. While copayment increases may reduce what the government pays for medications, they also have unintended effects on patients and elsewhere, for example on the hospital system.
Increases in copayments primarily affect vulnerable populations such as those on low incomes and patients with chronic medical conditions taking multiple medications. To deal with increased costs, patients often reduce or stop taking their medicines and this can have potentially serious health consequences.2 This failure to take medicines can also lead to increased visits to the doctor and hospitalisations.3
There is a relationship between patient cost sharing, medication adherence and clinical and economic outcomes. Increasing the patient’s share of medication costs is associated with a decrease in adherence, which in turn is associated with poorer health outcomes.4 Tiered prescription copayments (similar to brand price premiums and therapeutic group premiums) shift use from ‘nonpreferred’ to the lower cost ‘preferred’ medications.5
Some have argued that greater cost sharing does not undermine overall patient health because patients facing rising costs will reduce their consumption of perceived non-essential medications more than their consumption of essential drugs.6 However, ‘preventive’ drugs are different, because not all patients understand the long-term benefits of taking medicines for conditions such as hypertension and hypercholesterolaemia. In this case, underutilisation may be the problem and ‘too much’ cost sharing could lead to a loss of clinical benefit.6 For example, in the USA when copayments were increased from $6 to $10 there was a 6% increase in non-adherence and a 9% reduction in full adherence in patients with type 2 diabetes.7
According to the Australian Bureau of Statistics, 9% of adults will delay or not collect their prescriptions.8 In addition, both non-adherence and poor persistence with long-term treatment are well documented in Australia.9 One of the major reasons (but not the only reason) for patients failing to collect their medicines is the relatively large out-of-pocket costs of the prescriptions. These costs can become prohibitive if patients are taking multiple drugs.
Evidence is emerging that more patients are failing to collect their prescriptions. Industry data on prescribing of a third-line ‘add-on’ antihypertensive drug showed that towards the end of 2011, the proportion of prescriptions dispensed on the PBS had declined relative to the number of prescriptions written by general practitioners.
Compared to 2010 the percentage change inconcessional prescriptions was consistent with a reduced rate of dispensing from about August 2011. The change in concessional dispensing was also apparent with other antihypertensives. This suggests that concessional copayments may have been too high and fewer patients reached the safety net threshold. (Patients had to pay an extra $12 to reach the concessional safety net in 2011).
Even though the PBS has reduced the price of many commonly prescribed medicines, the cost to concessional patients did not change, because their copayment remains the same. In contrast, general patients derived significant savings from the lower prices, but only if their drugs were priced under the general copayment.
The current fixed copayment system has been around for more than 25 years and with all the PBS reforms taking place, it may be time to take a closer look at patient copayments. The current approach to PBS savings is that the government takes most of the cost savings, but increases copayments and safety net thresholds each year in line with inflation. Increasing copayments reduces medication adherance and ultimately may compromise the care of some patients.
Dr Ortiz is an independent pricing and reimbursement consultant to several pharmaceutical companies.
- Tatchell M. Prescription pricing demystified. Aust Prescr 2009;32:6-8.
- Hynd A, Roughead EE, Preen DB, Glover J, Bulsara M, Semmens J. The impact of co-payment increases on dispensings of government-subsidised medicines in Australia. Pharmacoepidemiol Drug Saf 2008;17:1091-9.
- Hsu J, Price M, Huang J, Brand R, Fung V, Hui R, et al. Unintended consequences of caps on Medicare drug benefits. N Engl J Med 2006;354:2349-59.
- Eaddy MT, Cook CL, O’Day K, Burch SP, Cantrell CR. How patient cost-sharing trends affect adherence and outcomes: a literature review. P T 2012;37:45-55.
- Rector TS, Finch MD, Danzon PM, Pauly MV, Manda BS. Effect of tiered prescription copayments on the use of preferred brand medications. Med Care 2003;41:398-406.
- Lozada C. Effects of co-payment on prescription drug demand. National Bureau of Economic Research; 2005.www.nber.org/digest/apr05/w10738.html [cited 2013 Jan 7]
- Dor A, Encinosa W. Does cost sharing affect compliance? The case of prescription drugs. National Bureau of Economic Research Working Paper No. 10738. 2004.www.nber.org/papers/w10738 [cited 2013 Jan 7]
- Australian Bureau of Statistics. Year Book Australia 2012. Canberra: ABS; 2012.
- Simons LA, Ortiz M, Calcino G. Persistence with antihypertensive medication: Australia-wide experience, 2004-2006. Med J Aust 2008;188:224-7.