More gain for less pain: how to cut health spending and not hurt the vulnerable

by Stephen Duckett


The Federal Government’s plan to make most patients pay $5 more for each drug prescription will hurt the poor and sick while saving far less money than could be saved if the Government simply paid fair prices for pharmaceuticals, according to the Grattan Institute.

In evidence to a Senate inquiry today, Health Program Director Stephen Duckett said the new pharmaceuticals co-payment would only raise $450 million in 2017-18.

Yet the Government could save $580 million a year immediately if it matched the prices that the British Government pays pharmaceutical companies for just 20 drugs.

This change would also save Australian patients an average of $13 for each box of pills.

“A proper drug pricing policy would save money for both government and consumers. Joe Hockey can have his health cake and eat it too,” says Dr Duckett.

These figures update Grattan Institute’s 2013 report, Australia’s bad drug deal, which shows that the Pharmaceutical Benefits Scheme pays drug companies more than $1 billion a year too much for prescription drugs, compared to the sums paid by the most efficient schemes overseas.

Grattan research also shows that out-of-pocket health costs are straining the budgets of low-income Australians even before the Government introduces co-payments for GP visits and prescriptions.

In one in 10 of the poorest households that pay out-of-pocket costs, these costs eat up more than 20 cents in every dollar of the household budget.

“The result is that poor people who are sick are likely to avoid doctors and get sicker,” says Dr Duckett.

Many people already miss out on health care because of cost: 5 per cent skip GP visits, 8 per cent don’t go to a specialist, 8 per cent don’t fill their prescription and 18 per cent don’t go to the dentist.

“These proposed changes will put people’s health at risk yet do little to balance the budget. There are much fairer and safer ways to cut health spending,” Dr Duckett says.

For further enquiries: Stephen Duckett, Health Program Director
T. +61 (0)3 8344 3637 E. media@grattan.edu.au