Pricing of PBS Medicine
Average rates payable for extemporaneous items
The table below lists the average 10g/ml rates payable for extemporaneous items supplied during January 2011 in all states.
These rates apply to extemporaneously-prepared benefits not included in the Standard Formulae List, where the approved supplier has not made an election to price such prescriptions.
The current prices shown in these rates include a dispensing fee of $8.46, the additional fee for agreed price items of $1.41 and the container rates as shown in the online Schedule of Pharmaceutical Benefits, available at the PBS
website.
| PB code | Preparation name | Average 10 g/ml rate (in cents) | Price payable for maximum quantity ($) | Maximum price to patients ($) |
|---|---|---|---|---|
| 13Q | Creams | 56.90 | 14.99 | 16.40 |
| 48M | Dusting powders | 107.95 | 20.15 | 21.56 |
| 15T | Ear drops | 49.10 | 10.04 | 11.45 |
| 19B | Eye drops with cocaine hydrochloride | 0.00 | 0.00 | 0.00 |
| 22E | Eye drops, other | 0.00 | 0.00 | 0.00 |
| 23F | Eye lotions | 0.00 | 0.00 | 0.00 |
| 29M | Inhalations | 98.56 | 13.90 | 15.31 |
| 64J | Linctuses containing codeine phosphate | 39.45 | 12.98 | 14.39 |
| 34T | Linctuses, other | 0.00 | 0.00 | 0.00 |
| 39C | Lotions | 12.71 | 11.83 | 13.24 |
| 65K | Mixtures containing codeine phosphate | 0.00 | 0.00 | 0.00 |
| 40D | Mixtures, other | 46.52 | 18.60 | 20.01 |
| 66L | Mixtures, children with codeine phosphate | 0.00 | 0.00 | 0.00 |
| 41E | Mixtures for children, other | 0.00 | 0.00 | 0.00 |
| 30N | Mouth washes | 30.77 | 15.44 | 16.85 |
| 42F | Nasal instillations | 0.00 | 0.00 | 0.00 |
| 43G | Ointments, waxes | 75.23 | 16.82 | 18.23 |
| 44H | Paints | 1344.85 | 42.60 | 34.20 |
| 63H | Pastes containing cocaine hydrochloride | 0.00 | 0.00 | 0.00 |
| 45J | Pastes, other | 153.40 | 24.64 | 26.05 |
| 49N | Powders for internal use | 228.24 | 32.17 | 33.58 |
| 52R | Solutions | 0.00 | 0.00 | 0.00 |
An asterisk (*) indicates that no prescriptions were submitted for this preparation type and the average rate has been calculated by averaging the available standard formulae maximum quantity prices.
A zero price denotes where an extemporaneous preparation type does not have any related standard formulae to calculate an average price. Prescriptions submitted for payment for these average rate codes must include a price.
Changes to pharmacy remuneration
Changes to remuneration for section 94 private hospitals
From 1 October 2010, the remuneration arrangements will change for section 94 private hospitals—private hospitals approved under section 94 of the National Health Act 1953 (NHA)to supply Pharmaceutical Benefits Scheme (PBS) medicines.
The new remuneration arrangements will better reflect the existing operational arrangements for section 94 private hospitals, and support the Australian Government’s commitment to ensuring the sustainability of the PBS.
Under this initiative, the current:
- wholesale mark-up will be replaced with a flat storage and handling mark-up of 11.1 per cent, and
- pharmacy mark-up will be replaced with a flat 1.4 per cent private hospital mark-up.
These mark-up changes will only apply to PBS medicines supplied under section 85 of the NHA, by a section 94 private hospital.
Medicare Australia will automatically include these mark-up adjustments in payments section 94 private hospitals receive for section 85 PBS medicines supplied from 1 October 2010.
All fees will remain unchanged and will be paid as per current arrangements. This includes the dispensing fee and when applicable, dangerous drug fee and container fee.
The Restructure of Remuneration for Section 94 Private Hospitals – Information for Hospital Pharmacists information sheet [PDF, 134Kb]
contains more information on this initiative.
Increase in dispensing payments
From 1 July 2010 pharmacies will receive the following fees for dispensing medicine under the Pharmaceutical Benefits Scheme and Repatriation Pharmaceutical Benefits Scheme.
| Type of payment | Basis of payment | 1 July 2010 |
|---|---|---|
| Dispensing fee (ready prepared) | PBS or RPBS medicine | $6.42 |
| Dispensing fee (extemporaneously prepared) | PBS or RPBS medicine | $8.46 |
| Special handling fee (no change) | Dangerous drug | $2.71 |
These adjustments are automatically included in the payments you receive from Medicare Australia.
Pharmacy mark-up
The pharmacy mark-up is a payment the Australian Government makes to pharmacists for supplying PBS listed medicine. These payments cover:
- the cost of the medicine
- a retail mark-up to cover the pharmacist’s costs in storing and handling medicines
- a fee for the pharmacist’s professional advice and services in dispensing the medicine.
From 1 August 2008, changes to the pharmacy mark-up price of PBS medicine will include additional 'Cost of medicine' categories.
| Pre August 2008 | 1 August 2008 | ||
|---|---|---|---|
| Cost of medicine | Value | Cost of medicine | Value |
| Up to and including $180.00 | 10% | Up to and including $30.00 | 15% |
| Between $30.01 and $45.00 | $4.50 | ||
| Between $45.01 and $180.00 | 10% | ||
| Between $180.01 and $450.00 | $18.00 | Between $180.01 and $450.00 | $18.00 |
| Between $450.01 and $1000 | 4% | Between $450.01 and $1750 | 4% |
| Over $1000 | $40.00 | Over $1750 | $70.00 |
Other pharmacy remuneration and PBS medicine mark-ups
When a pharmacist supplies a medicine that attracts an Australian Government benefit, they are entitled to be paid the Australian Government or PBS dispensed price of the medicine less, where applicable:
- patient contribution
- brand price premium
- therapeutic group premium
- special patient contribution.
The Australian Government dispensed price consists of:
- the manufacturer’s price (as negotiated by the government and supplier)
- the wholesale mark-up
- the pharmacy mark-up
- dispensing fees
- any other fees to which the pharmacist is entitled under the Commonwealth Price (Pharmaceutical Benefits Supplied by approved Pharmacists) Determination 2010.
Wholesale mark-up
The wholesale mark-up is as follows:
| Type of payment | Cost of medicine | Value |
|---|---|---|
| Wholesale markup | Up to and including $930.06 | 7.52% * (Government Price to Pharmacists) |
| Over $930.06 | $69.94 |
Highly specialised drugs mark-up
The Australian Government provides funding for certain specialised medicines under the Highly Specialised Drugs program. Where a community pharmacy provides pharmaceutical services to a private hospital which provides medicines under the Highly Specialised Drugs program to eligible outpatients, that pharmacy will be eligible for remuneration by the Australian Government. Highly Specialised Drugs are subject to different mark-ups. The rate of mark-up to be applied is determined based on the cost of the medicine for the maximum quantity. When the quantity of Highly Specialised Drug to be supplied is less than or more than the maximum quantity, the mark-up will be pro-rata, i.e. a fraction or a multiple of the mark-up applied to the maximum quantity.
Remuneration rates for Highly Specialised Drugs approved by PBS.
| Type of payment | Basis of payment | Value |
|---|---|---|
| Highly Specialised Drugs mark-up | Less than $40.00 | 10% |
| Between $40.00 and $100.00 | $4.00 | |
| Between $100.01 and $1000 | 4% | |
| Over $1000 | $40.00 |
PBS dispensing fees and patient charges for Highly Specialised Drugs are the same as for other drugs in the Schedule.
Generic brands
Wider use of generic brands of medicine can benefit the PBS. The Australian Government aims to improve the acceptance and understanding of generic medicine in the Australian community. Rigorous standards are applied to ensure the quality of these products, as regulated by the Therapeutic Goods Administration, and their active ingredients are chemically equivalent to the originator products. Many countries achieve savings by making wider use of generic brands medicine.
The government encourages doctors to give consideration to prescribing generic brands in the interests of affordability of medicine for patients and for the longer term affordability of the PBS. For example, prescribing Simvastatin in a way that allows brand substitution by the pharmacist will ensure patients get the cheapest available brand. Swapping of brands will not represent good health management for all patients and prescriber discretion is required for best health care.
When a manufacturer applies to list the first new generic brand of a medicine already listed on the PBS, they must offer at least a 12.5 per cent price reduction. This price reduction flows on to all medicines in the same reference pricing group.
The Australian Government subsidises, through the PBS, up to the price of the lowest medicine in the group. This means that when companies do not agree to lower their price to the new benchmark, patients have to pay more for more expensive options. Generally, there is always a medicine available at the benchmark price so patients do not pay more than the standard PBS co-payment amount.
From 1 July 2010, eligible pharmacies will receive a $1.53 generic dispensing incentive when they dispense a subsidised PBS prescription that costs the patient no more than the standard co-payment. More information can be found at PBS reforms.
Special patient contribution
A special patient contribution applies when the manufacturer and the government disagree on the price of subsidised medicine. Despite the disagreement on price, the medicine continues to be listed and subsidised, but the patient pays an additional amount on top of the normal PBS patient co-payment.
Medicines that attract a special patient contribution are listed as Special Pharmaceutical Benefits in section 2 of the Pharmaceutical Benefits Schedule.
Special Patient Contribution Exemption
Other than for Bleomycin Sulfate, exemptions on medical grounds are available. Prescribers can request an exemption from these special patient contributions from Medicare Australia. To qualify a patient must meet the criteria of the exemption restriction as described in the item.
To assist pharmacists, authority prescriptions approved by Medicare Australia for a contribution exempt medicine will be highlighted at the time of approval.
- Written approvals, original and duplicate copies, will be stamped 'SPX APPROVAL'; or
- Telephone approvals will have the existing approval number format with the prefix 'SPX'.
The Patient Charges factsheet [PDF, 78Kb] contains more information about the Special Patient Contribution, the Brand Price Premium and Therapeutic Price Premium.
Multiple Listed Medicines
Medicines that attract a special patient contribution have multiple item codes to identify prescriptions:
- that attract a special patient contribution
- that have been previously approved by Medicare Australia as exempt from the special patient contribution
- written prior to the PBS listing and which the Pharmaceutical Benefits Advisory Committee have exempted from a special patient contribution for a certain period.
PBS Safety Net
Special patient contributions do not count towards the PBS Safety Net.
Repatriation Pharmaceutical Benefits Scheme (RPBS)
RPBS patients are exempt from special patient contributions for any medicine.
More information
For doctors and pharmacists: 132 290*
For patients: 1800 020 613
For more information on PBS pricing and on medicines listed as Special Pharmaceutical Benefits, visit the Department of Health and Ageing website.
The Explanation of PBS Pricing June 2011 [PDF, 401Kb] contains more information on current PBS pricing.
*Call charges apply.
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Last updated: 26 July, 2011