Prescription co-payments: Time to stop the silent killer
Jul 26, 2023
Prescription co-payments are imposed by the Federal Government for subsidised drugs. Australians pay $1.6 billion a year in co-payments. Why do we continue to have financial barriers to accessing these drugs?
Co-payments are $7.30 or $30 per prescription for Pensioners and Health Care Card Holders, or the remainder respectively. Scotland, Wales, and Northern Ireland abolished prescription co-payments in 2011. New Zealand has just abolished co-payments in July 2023.
Purpose of co-payments
Co-payments in general are designed to reduce inappropriate use and to generate income. Some also believe that without co-payments the consumer will not value the product appropriately. In terms of medical care that sad view of human nature would appear to contradict my reality of many gifts and thanks from my bulk billed patients. Humans value good service. They value prescriptions which help.
Determining appropriate use of prescription drugs is the task of the prescriber, not the patient. Arguments for co-payments to reduce inappropriate use are nonsense.
Co-payments are taxes, levied on those unfortunate enough to need prescription drugs. People do not choose illnesses. One must ask if the purpose of co-payments is therefore also to punish the sick?
Health and social impacts of co-payments
Prescription drugs are approved for listing on the PBS because they have been shown to save lives and/or reduce severity of illnesses. However, multiple studies show a reduction in use of medication with introduction or increase in co-payments. Repeated surveys over decades have reported that patients delay or do not fill prescriptions because of costs. Half a million people delayed or did not fill a prescription in 2021 according the Australian Bureau of Statistics Patient Experience Survey. The largest effects are in those living in areas of low socio-economic status, the elderly, those with long term health conditions, and females. There are widespread reports from doctors that their patients are reducing the dose or taking the drug every second day to save money.
It is well established that mortality and morbidity correlate with income, socio-economic status, and postcode. Access to health care probably accounts for 20% of the differences in life expectancy in first world countries. Socio-economic status accounts for most of the rest. Cost barriers are either met by decreased usage of life saving drugs or forcing the most vulnerable to pay co-payments and forgo spending on other basics in their lives which contribute to improved socio-economic status.
Studies of the direct effect of prescription co-payments on health show for example, improved compliance with taking heart medication if drugs are free, increased adverse events after the introduction of co-payments, and most recently a study in New Zealand showed decreased hospitalisation rates across a variety of medical conditions following the removal of co-payments for a selected group.
Economic impact of co-payments
An inflation adjusted figure from the Australian Institute of Health and Welfare 2012 data indicates that the day cost of a public hospital admission in 2013 is $1300. The Grattan Institute estimates there are 750,000 potentially preventable hospital admissions adding up to three million unnecessary days in hospital per year. Most of these are due to inadequate primary health care which includes financial barriers to access as well as adverse socio-economic factors. The government would only have to see a reduction of 185,0000 admissions across Australia to have easily saved the estimated $1.2 billion cost of abolishing all co-payments. Whilst the causes of these preventable admissions are multiple, medication compliance is likely to be a significant part of the problem. Improving compliance by abolishing co-payments will save money and reduce the net cost. It might even be budget neutral.
Thus, we have both an ethical and an economic argument for abolishing co-payments.
Current policy initiatives
The current Federal Government has done well with respect to reducing cost barriers to accessing prescription drugs. It implemented a reduction in the general co-payment from $42 to $30 in January.
It has since taken on one of the most powerful lobby groups in Australia, the Pharmacy Guild by extending prescription lengths from the usual month to two months. This halves the cost to patients for many drugs.
It has supported the concept of increased prescribing by pharmacists for some specific limited conditions, thus saving patients the challenge of finding and paying for an appointment to get a prescription. These changes combined will lead to a decrease in revenue from patients from $1.6 billion to about $1.2 billion.
It has maintained safety nets so that over a year there is a limit to how much one pays per prescription. But just because a safety net kicks in after a patient had spent $262 or $1563 (different depending on Health Care Card) on drugs for the year, this might not happen until May or October. It doesn’t help the budget in March or January.
What now?
More should be done. The Federal Government updated its National Medicines Policy in February this year. The stated aims of the policy include that:
All Australians have fair, timely, reliable, and affordable access to high-quality medicines and medicines services.
It’s time to align actual policy with the above. Co-payments continue to be a financial barrier to accessing lifesaving medication. Co-payments kill, lead to more hospitalisations, and waste money. It’s time to axe killer co-payments.
Tim Woodruff is a specialist physician working in private practice. He is President of the Doctors Reform Society and Chair of the Australian Health Care Reform Alliance.
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