Measuring the Progressivity of the Pharmaceutical Benefits Scheme

© 2015 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research. Through the Pharmaceutical Benefits Scheme, the Australian Government subsidises the cost of a large range of medicines. This study assesses the income-related distribution of Pharmaceutical Benefits Scheme resources using patient-level data from Medicare Australia and concentration indices. We find that use of, and government expenditure for, Pharmaceutical Benefits Scheme-subsidised drugs is progressive in that more resources flow to lower income groups, even after adjusting for differences in medical need, as measured by age, sex, self-assessed health and clinically assessed comorbidities. Of the major drug classes, cardiovascular drugs contributed substantially to the overall progressivity of Pharmaceutical Benefits Scheme subsidies, accounting for almost 50 per cent.