A guide to the Pharmaceutical Benefits Scheme (PBS)

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on January 07, 2022 Fact Checked
A guide to the Pharmaceutical Benefits Scheme (PBS)

Modern medicine can do amazing things - from managing pain to pimples - but it’s often expensive. In Australia, the PBS can be a godsend.

Medicine - sometimes, we all need it. Whether it’s a nasty toe infection that won’t go away on its own or you’ve just had all four wisdom teeth out (unless you’re like me and you had six); there will be one time or another when you end up like Post Malone i.e. poppin' pillies.

Enter the Pharmaceutical Benefits Scheme (PBS). Originally introduced back in the 1940s to help pensioners and others in the community access free medicine, the PBS has evolved to help all Australians have access to government-subsidised medications. All you need is a Medicare card.

But what is actually covered by the PBS? And possibly more importantly, what isn’t covered? Let’s dive into the extremely fun and not-at-all complex topic of the PBS.

In this article, we’ll discuss:

What is the Pharmaceutical Benefits Scheme (PBS)?

The PBS was introduced in 1948, governed by the National Health Act 1953, in order to dispense medicines to eligible Australians at a subsidised price. This cheaper cost allows all Australians to have affordable access to potentially life saving medication when they need it. Basically, it saves Australians a bunch of money on prescription medication they need to live a normal life.

Managed by the Australian Government and administered by Services Australia, the PBS Schedule - which lists all medicine that falls under the scheme - is online and updated monthly. Using the online search tool, you can find information like which medicine falls under the scheme, information about the medicines, how much they will cost you, how much is covered by the government, and more.

What medicine is covered under the PBS Schedule?

As of 2016, there are nearly 800 medicines in more than 2,000 forms and dosages included under the PBS. Medication for “most” medical conditions are covered by the PBS, and there are also a number of special arrangements funded under the scheme including IVF medicines, drug treatment programs, and more.

Medication that is subsidised is considered necessary to maintain a healthy community in a way that is cost effective according to the PBS website. To decide which medication falls under this criteria, the PBS assesses the therapeutic benefits and costs of medicines and, if it’s deemed cost effective, the government negotiates the price with the supplier.

So, if you have a medical condition that requires medication in order to live a healthy and normal life, you can assume that said medication is likely covered by the PBS. The PBS Schedule is also reviewed regularly - both the medicines and their prices - to ensure it provides both affordable medicines for patients and is an affordable scheme for taxpayers.

To appear on the PBS Schedule, a medication must:

  • Treat or prevent significant medical conditions not already covered by a PBS-listed medication

  • Be more effective and/or less harmful than a currently listed drug, or

  • Be as effective and safe as an already listing drug

After this point, it must then:

  • Be approved by the Therapeutic Goods Administration (TGA)

  • Pass an examination by the Pharmaceutical Benefits Advisory Committee (PBAC)

How much does medicine cost under the PBS?

Medicine under the PBS may require you make a co-payment which is adjusted each year in line with the Consumer Price Index (CPI) also known as inflation. Many PBS medications cost “significantly more” than the co-payment required.

As of 1 January 2022, you will need to pay up to $42.50 for most PBS medicines (or $6.80 if you have a concession card). Some pharmacists may choose to discount you a further $1, but this isn’t mandatory and will vary from pharmacy to pharmacy. Whatever the actual cost of your medicine - whether it’s $100 or $1,000 - the Australian Government covers the rest.

While you pay the costs mentioned above, there may be other factors that can influence the real cost of your medication.

  • You may end up needing to pay more than the co-payment if you choose a particular brand over the cheaper generic option

  • Therapeutic Group Premiums can apply to drugs with similar safety and health outcomes; the difference between the subsidised price and price of the drug is paid by you (the patient)

  • Special patient contributions can apply if the government and supplier can’t agree on a negotiated price. This may mean you need to pay more than the typical co-payment

Veterans' medication falls under the Repatriation Pharmaceuticals Benefits Scheme. Dental and optometrical medication also fall under their own respective schedules.

What is the Safety Net?

The PBS Safety Net scheme is designed to ensure Australians don’t pay too much for their prescribed medication. It’s basically a threshold and if you pass said threshold you’re entitled to cheaper or even free medicine for the remainder of the calendar year.

As of 1 January 2022, the Safety Net is $326.40 for concession card holders and $1,542.10 for everyone else. The same threshold applies to a family unit regardless of whether the ‘family’ is an individual, couple, or family with children.

If you reach the Safety Net as a general patient, you would then pay for your medication at the concessional rate for the rest of the year. If you’re a concession hard holder, you will receive your prescriptions at no further cost for the rest of the year.

To access the Safety Net scheme, you must keep records of your PBS expenditure on a Prescription Record Form (PRF), in which you can get a copy from your local pharmacy. If you go to more than one pharmacy for your prescriptions, keep one PRF for each. That way, once you pass the threshold, you will receive a Safety Net Card which will allow you to get free or cheaper medication under the scheme.

What isn’t covered by the PBS?

Assuming vital medication is covered by the PBS, non-vital medication may not be covered. Since the list of medication that falls under the PBS Scheme is so long, determining which medication isn’t on the list would be quite a challenge. But it’s safe to say that annoying expenses like the contraceptive pill or painkillers such as paracetamol probably don’t fall under the PBS Schedule, depending on their use.

If your prescription isn’t listed under the PBS Schedule, you will have to pay full price. The PBS website recommends shopping around for private prescriptions to find the best price as pharmacies may charge differently.

Private health insurance

Your private health insurance may cover your non-PBS medications. However, pharmacy costs will need to be included in your policy to claim on your insurance. Your health fund will only cover non-PBS medication if:

  • It costs more than $38.30

  • It’s dispensed by a registered pharmacist

  • It’s only available when prescribed and is a registered drug

You would still need to cover a portion of your medicine costs until your private health insurance kicks in. You should check your insurance premium’s Product Disclosure Statement (PDS) to see how much you’re covered for, whether there’s a limit in place, and more.

Who can access the PBS?

As we mentioned, all you need is a Medicare card to have access to the PBS Scheme. Other than Australian residents, overseas visitors can also access the PBS Scheme if their country has a Reciprocal Health Care Agreement (RHCA). These countries currently include Ireland, New Zealand, Malta, Italy, Sweden, the Netherlands, Finland, Norway, Belgium, and Slovenia.

When at the pharmacy collecting your script, you’d need to provide proof of your eligibility. This will either be a copy of your Medicare card or your passport.

You may also find you’re eligible for a concession. To access concessional rates, you would need one of the following concession cards:

  • Pensioner Concession Card

  • Commonwealth Seniors Health Card

  • Health Care Card

  • DVA White, Gold or Orange Card

How to access the PBS

The PBS Scheme isn’t like the Chamber of Secrets - there’s nothing you need to do to be granted access to it. Though, your general practitioner (GP) will need to write you a script which you then take to a pharmacy in order to access your PBS-listed medication. Once you’ve passed your script onto your pharmacist - along with your Medicare card and any other documentation - your pharmacist will take it from there.

An estimated 20% of the Australian population has a chronic illness. Even with this statistic in mind, almost everyone will need to take prescription drugs at some point in their life. I know I’ve taken my fair share; the initial examples of wisdom teeth removal and toe infections were taken from personal experience. Thankfully, the PBS is there to cushion the blow to your wallet.

If you have any questions about the PBS or whether your medication falls under it, consider speaking to your GP or visit the PBS website. For questions about your private health insurance, consider seeking independent financial advice.


Image by Christine Sandu on Unsplash

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Rachel is a Finance Journalist, and joined Savings in 2021. Coming from a background in the FinTech space, her interests include the innovation of lending technology, property, investing, and more. With a passion for educating and informing people about their finances, she hopes to increase the financial literacy of everyday Australians.

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