Media Release

Catholic Health Australia


PBS Cuts Unnecessary


'The PBS cuts are a blunt instrument which overestimate savings, worsen health outcomes and increase other health and welfare costs', said CHA's CEO, Francis Sullivan on the release of CHA's Budget Analysis 2002.


'The budget measures are likely to have a negative affect on health outcomes since the new drug prices will decrease demand for pharmaceuticals and place extra pressure on GPs and hospitals.


'These measures fly in the face of international research, which clearly shows the economic benefit of public expenditure on pharmaceuticals.


'Increasing drug prices for poor and sick people is regressive. The new charges will hit families the hardest. Economic modelling shows the poorest families already spend a much higher proportion of their income on medicines than higher income earners. In 2000-2001, the poorest were spending 7 percent of their income on pharmaceuticals. Those at the top end of town were only paying 2 per cent.


'CHA suggests the 13.5 percent growth of the PBS during the 1990s was sustainable. This growth was from a low base, and by international standards, Australia is not a high spender on pharmaceuticals. Australia has successfully negotiated prices for imported drugs below the world prices, applied co-payments to drugs that are often free elsewhere, delayed new drug listing and set the HIC on GPs who have unusual prescriber patterns.


'The main reason for cutting the PBS this budget in Australia was that the Government's share of the payments had increased. However, over the past decade the share has ranged between 80 and 85 per cent, which begs the question - so what is the right share? Will the share be reduced to 75 percent next Budget? Does the real reason have more to do with acclimatising the electorate to less and less Government provision of health insurance (which is what the subsidy scheme really is - a risk-sharing device for pharmaceuticals)?


'CHA has always contended that the only justifiable increase on drug charges should be paid by the well off and prosperous, without tampering with the safety nets and imposing extra burdens on families and chronically ill people.'


CHA's analysis also explores the neglected budget issues. Discussion focuses on:



         Private health insurance

         Medical indemnity insurance

         Mental health

         Transitional care

         General practice

         Indigenous health


         Dental health

         Head injuries


For CHA's full analysis of the budget, including aged care issues, visit CHA's website at