CPI rise in pharmaceuticals due to PBS safety net

The apparent surge in pharmaceutical prices included in today’s Consumer Price Index for the March quarter is easily explained by the mechanics of the Pharmaceutical Benefits Scheme safety net, Medicines Australia chief executive Dr Brendan Shaw confirmed today.

“Today’s CPI pharmaceutical price should be considered in the context of the December 2011 CPI, when pharmaceutical prices fell 6% per cent,” Dr Shaw said.

“The fall of the pharmaceutical price index throughout the year to December 2011 quarter was largely due to patients reaching the PBS safety net threshold and paying either a reduced co-payment in the case of general patients, or no co-payment at all in the case of concession card holders.

“As each calendar year progresses, more people reach the PBS safety net threshold.

“On 1 January each year, the safety net is reset and consumers resume paying the normal PBS co-payments until they again reach the safety net threshold.

“That is why the pharmaceutical component of the index ALWAYS rises again in the first quarter of each calendar year.

“The apparent annual surge in pharmaceutical prices each March quarter is a product of Government policy rather than any change in pharmaceutical company pricing policy.

“In previous years this March quarter price surge has been incorrectly interpreted by some observers as a result of undue price rises by pharmaceutical companies.

“However, the apparent increase in consumer medicine prices in the first quarter of each year is due to the impact of Government policy related to PBS safety nets.

“What it shows is that the safety net is working.

“It’s also worth remembering that the March quarter figures don’t include the consumer impact of the major 1 April PBS price reductions resulting from the Memorandum of Understanding between Medicines Australia and the Federal Government.”

This explanation is provided by the Australian Bureau of Statistics itself in its own statistical release.

“Pharmaceutical prices mainly rose as a result of the cyclical reduction in the proportion of consumers who qualify for subsidised medications under the Pharmaceutical Benefits Scheme at the start of each calendar year,” the ABS analysis said.


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