THE IMPACT OF DEMOGRAPHIC AND OTHER CHANGES ON EXPENDITURE ON PHARMACEUTICAL BENEFITS IN 2020 IN AUSTRALIA

Abstract

In Australia, as in most other developed countries, there has been growing concern about sharply rising health expenditures. One of the areas of strongest growth in Australia has been the Pharmaceutical Benefits Scheme (PBS). NATSEM is currently finalising a new PBS microsimulation model, which simulates the impact of changes in policy settings and provides a much broader range of outcomes information, at a much greater level of detail, than has previously been available. The paper briefly describes the modelling process and illustrates the model’s capabilities through simulating likely PBS characteristics to 2020 under three different scenarios. The scenarios concern the impact of the ageing of Australia’s population, the continuation of the upward trend in PBS medicine costs and the possibility that a general improvement in Australians’ health would lead to lower usage of prescribed medicines. In the simulations it is assumed that the current policy settings of the Pharmaceutical Benefits Scheme remain unchanged. The findings from the illustrative examples are that increases in drug prices are likely to have the greatest impact on the cost to the government of the Pharmaceutical Benefits Scheme, and population ageing the least impact. The findings also suggest that improvements in Australians’ health have the potential to significantly limit PBS cost increases.