Budget 2017: PBS Shake-Up To Cut Cost of Drugs

Price reforms in the Pharmaceutical Benefits Scheme will deliver $1.8 billion in savings over five years, which the Turnbull government will reinvest in drug subsidies and pharmacy initiatives.

Under an agreement with Medicines Australia, the government will mandate bigger price cuts, and for longer — drugs listed on the PBS for more than 10 years will be especially targeted — and embrace cheaper alternatives. This will enable new drugs to be listed on the PBS, including Sacubitril with Valsartan (product name Entresto), for patients with chronic heart failure, at a cost of $514.6 million.

Health Minister Greg Hunt has struck similar agreements with the Pharmacy Guild — community pharmacies will benefit from ­funded medication management reviews and other initiatives — and the Generic and Biosimilar Medicines Association.

The budget has allocated $210m for community pharmacies, recognising a lower than ­anticipated increase in scripts filled by pharmacists under a ­previously signed agreement. Scott Morrison last night described the agreements as “cornerstone partnerships” and said there should be no doubts over the ­Coalition’s commitment to health.

While the reforms are primarily aimed at reducing the cost to government, there will be flow-on savings to patients and Mr Hunt has sought to assure all stakeholders of the government’s commitment to subsidise new drugs.

The government will also ­include PBS funding in its new Medicare Guarantee Fund, promising greater certainty over its health expenditure.

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