CPI figures show PBS safety net is working: Medicines Australia

A cyclical spike in the pharmaceutical component on the Consumer Price Index (CPI) is proof that the PBS safety net is working, according to Medicines Australia CEO, Dr Brendan Shaw.

ABS statistics released today appear to show that pharmaceutical product prices grew 14.1% during the March quarter – the most significant CPI price rise for the period.

But Shaw said the spike was misleading, and not due to “any change in pharmaceutical company pricing policies.”

The pharmaceutical component of the CPI always rises in the first calendar quarter, Shaw said, because of the way the Pharmaceutical Benefits Scheme (PBS) safety net threshold is applied.

“As each calendar year progresses, more people reach the PBS safety net threshold,” Shaw said. This results in more people either paying a reduced PBS co-payment or no co-payment at all.

At the end of each calendar year the threshold resets and a number of people revert to normal PBS co-payments, leading to the annual spike during the first quarter.

He said the figures should be read in conjunction with a 6% decline in the pharmaceutical component of the CPI during the December quarter.

“What [these figures] show is that the PBS safety net is working,” Shaw said.

Medicines Australia is a representative body for the Australian pharmaceutical industry. Its members supply 86% of the medicines available to Australians under the PBS.

At the start of the month, the body's members cut the price of 74 commonly used off-patent medicines on the PBS by between 10% and 82%, as part of a memorandum of understanding (MoU) reached with the government.

Under the MoU, Medicines Australia member companies have also agreed to a system of mandatory disclosure of the actual price products are being sold for on the market. Its purpose is to allow the government to make more informed purchasing decisions.