Medicines funding in Australian hospitals—complex, fragmented, not patient-focused

Tuesday, December 19, 2017

‘Current funding arrangements for medicines in Australian hospitals are so complex and fragmented that they are difficult to navigate, and may result in unexpected costs or lack of timely and affordable access to optimal medicines’, says Alison Verhoeven, Chief Executive of the Australian Healthcare and Hospitals Association (AHHA).

The AHHA has released a Deeble Institute Issues Brief today, The impact of Australian hospital medicines funding on achieving the objectives of the National Medicines Policy, authored by Deeble Institute for Health Policy Research Summer Scholar, Brock Delfante.

‘The National Medicines Policy has laudable objectives such as timely access to high quality, safe and effective medicines at a cost individuals and the community can afford’, Ms Verhoeven said.

‘For medicines provided through primary care, such as GPs and community pharmacies, the funding arrangements through the Commonwealth’s Pharmaceutical Benefits Scheme (PBS) are quite clear.

‘But in hospitals, the arrangements are anything but clear—it depends on who you are and where you are treated, even down to individual public hospitals within the one state or territory.

‘Unfortunately this mish-mash is largely the by-product of a history of well-intentioned reforms that are now having unintended impacts that affect equity of access, efficiency and potentially patient care.

‘For example, if you are treated in a private hospital, either as an inpatient or outpatient, you have access to all drugs on the PBS, funded by the federal government, with the co-payment coming either out of your pocket, or paid by your health insurer, depending on the policy. Medicines not listed on the PBS may or may not be covered by your insurer, with availability and use in that hospital determined by the hospital’s Drugs and Therapeutics Committee.

‘If you are an admitted public patient in a public hospital, your medicines are funded by the relevant state or territory government. But they don’t have a separate budget for medicines, it is all rolled into funding based on typical activity at that hospital, and even then availability of the drug you might need depends on decisions of that individual hospital’s Drugs and Therapeutic Committee. And decisions for that hospital may not be optimal for you as a patient or the health system as a whole.

‘Different funding rules apply if you are a private patient in a public hospital, or a non-admitted patient in a public hospital—and before and during admission, on discharge, and after discharge. If you are being treated as a ‘Hospital in the Home’ patient, the funding complications escalate.

In addition, depending on where you are and your particular condition, you may or may not have access to several other specialised drug subsidy programs within the hospital setting and after discharge. There are also additional programs to fund medicines for Aboriginal and Torres Strait Islander people, but hospitals cannot participate in these schemes.

‘This funding complexity is symptomatic of an uncoordinated health system that is patching up “traditional” service models, often with good intentions, but ignoring a changing healthcare landscape where patients should be the primary focus’, Ms Verhoeven said.

‘Our Healthy people, healthy systems healthcare blueprint released yesterday set out clear steps towards a nationally unified and regionally controlled health system that puts patients at its centre and has long-term sustainability.’

The AHHA wishes to acknowledge the valued contribution of the Summer Scholarship major sponsor, HESTA. 

The Australian Healthcare and Hospitals Association is the national peak body for public and not-for-profit hospitals, and community and primary healthcare services.