Fact check: How much is subsidising cheap paracetamol costing the government?

One area of spending the Federal Government has earmarked for savings in the 2015 budget is pharmaceutical subsidies.

With the contentious GP co-payment off the table, the Federal Government has set its sights on reining in the cost of subsidising medicines instead.

Health Minister Sussan Ley says the Pharmaceutical Benefits Scheme (PBS) needs to be sustainable to pay for new generation cancer drugs and “expensive medications that absolutely need to be given to patients via a prescription with close involvement of their pharmacist and their doctor”.

“I don’t put Panadol into that category,” Ms Ley told ABC’s RN Breakfast.

“It costs the government $73 million a year and it’s being distributed by pharmacists at additional cost and those medications are available, as we know, from the supermarket and corner stores for around $2.”

Does the government spend $73 million a year funding a drug that costs $2 at the supermarket? ABC Fact Check investigates.

Paracetamol ‘over the counter’

‘Over-the-counter’ medicines can be bought without a prescription. They can be sold by retailers such as supermarkets, and also by pharmacies.

The Therapeutic Goods Administration (TGA) decides which medicines can be sold in pharmacies and other retailers by scheduling.

Paracetamol is a pain relief medicine that can be bought in pharmacies, and in small pack sizes from other retailers.

In 2013, the TGA reduced the maximum pack size of 500 milligram paracetamol that could be sold by non-pharmacy retailers from 25 to 20 tablets, capsules or caplets.

The regulator said it made the move because of the risk of liver damage from high doses.

The cost of some of the formulations and pack sizes of 500 milligram paracetamol sold by Coles and Woolworths is shown in the table:

Woolworths told Fact Check the maximum number of packs of paracetamol one person can buy is four, restricted at the cash register.

Coles said it reserves the right to limit sales quantities.

Pharmacies can sell higher doses and larger pack sizes of paracetamol, either as pharmacy medicines which don’t need a prescription (schedule 2 and 3), or which do (schedule 4).

Examples of paracetamol sold over the counter as pharmacy medicines include 500 milligram tablets in bottles of 100 and a bottle of 96 Panadol Osteo 665 milligram tablets in a slow release formulation.

The Pharmaceutical Benefits Scheme

If you have a prescription for paracetamol it can be subsidised by the PBS.

The PBS is a government-funded program to subsidise prescription medicines so they are affordable for all Australians who need them.

The independent Pharmaceutical Benefits Advisory Committee (PBAC) decides which medicines are necessary for health and whether they are cost effective.

Once the PBAC recommends funding a medicine, the government negotiates a price with the supplier and sets the PBS price.

Funded medicines are listed on the PBS schedule, prescribed by doctors and usually dispensed by pharmacists.

The PBS price is the amount paid to the pharmacist and includes the pharmacist dispensing fees, currently $6.76.

Patients pay a portion of the PBS price as a co-payment and the government makes up the rest.

The co-payment for general patients is up to a maximum of $37.70 per prescription, but patients who have a health concession card pay a maximum of $6.10, regardless of the cost of the medicine.

Concessions are available to people with pensioner concession cards, Commonwealth seniors health cards, health care cards or Department of Veterans Affairs cards.

The PBS safety net scheme protects patients who need lots of prescriptions from excessive medicine costs.

When general patients and/or their family pay $1453.90 for scripts in a calendar year, they move to paying the concessional co-payment of $6.10 for the rest of that calendar year.

For concession patients, once they have paid $366 in a calendar year, equivalent to 60 scripts, they get all scripts free for the rest of the calendar year.

Paracetamol on the PBS

Thirteen different paracetamol preparations are funded by the PBS.

Four are indicated for palliative care patients and a spokeswoman for the Department of Health told Fact Check these preparations were not included in the minister’s calculations that 6.7 million paracetamol scripts cost $73 million in 2013-14.

These four formulations are “not necessarily suitable for delisting,” the spokeswoman said.

A breakdown of the data used by the Department of Health is not publicly available. However, the data is available from the Department of Human Services but with a time lag due to extra processing by that department.

The public data published by the Department of Human Services, shows that the government spent $70 million on the other nine paracetamol prescriptions in 2013-14, equating to six million prescriptions.

It appears that the difference between the two figures is explained by some of the Health Department figures not being processed by the Department of Human Services until the new financial year.

The table below shows brand name examples, dose, units and indications for the different paracetamol prescriptions which account for most of the government’s $70 million spending in 2013-14.

All of these formulations can be bought without a prescription, but the 665 milligram dose, and the large unit sizes, can only be bought in pharmacies.

The retail cost shows what patients pay if they buy the medicine over the counter with no prescription and no concessions.

The PBS prices are the amount received by the pharmacist from the patient and the government if the medicines are dispensed on the PBS and the table shows they are all higher than the retail cost.

Concession card holders targeted

The government data on PBS paracetamol prescriptions shows that at least 98 per cent of them are dispensed to patients with concession cards.

Around 70 per cent are dispensed to patients paying their $6.10 and the remainder are supplied to concessions patients for free because they have reached their safety net limit.

The data shows that free paracetamol for concession patients who have reached their safety net is costing the government $28.3 million a year.

High dose, slow release paracetamol

According to the data 85 per cent of the government cost, $60.3 million, is for prescriptions for 192 tablets of a high dose (665 milligram), slow release paracetamol that can only be prescribed on the PBS to people who have persistent pain associated with osteoarthritis.

Stephen Parnis, vice president of the Australian Medical Association, told Fact Check that the 665 milligram paracetamol tablet is prescribed for people in chronic pain.

“They will use six tablets a day, pretty much every day … that’s the maximum safe amount you can have,” Dr Parnis said.

The 665 milligram dose, dispensed as two boxes of 96 tablets, can only be bought in a pharmacy, either with or without a PBS prescription.

If a concession patient gets this prescription filled online from Your Discount Chemist, it costs $6.10, or about three cents per tablet and the government pays the remaining $9.24 to make up the full PBS cost.

The patient could buy two boxes of 96 Paracetamol Osteo over the counter in the pharmacy without a prescription for $7.90.

That would cost the patient about four cents per tablet, or an extra $21.90 a year for the maximum dose of 6 tablets a day, but with no cost to the government, assuming the patient does not reach the safety net during the year.

Paracetamol for chronic joint pain

The second highest cost of paracetamol to the government is the 500 milligram tablets sold as 300 tablets, costing around $7.3 million a year.

Doctors can prescribe this dose and volume only to patients who have chronic joint pain.

The concession patient pays $6.10 for this prescription (about two cents a tablet).

But the patient could get the same medicine in the supermarket by buying 15 supermarket packets of 20 tablets for $0.70 each (about four cents a tablet) with no cost to the government.

Some retailers limit the number of packs that can be sold at one time.

Woolworths, for example, doesn’t sell more than four packs at a time, a 10-day supply for someone with chronic pain.

Alternatively, the patient could buy three boxes of 100 tablets over the counter from a pharmacy for $5.97 (My Discount Chemist) costing about two cents a tablet.

The data shows that, for this formulation, patients are paying more when paracetamol is prescribed by a doctor than if they paid for it over the counter.

Why pay more?

The remaining three categories of paracetamol prescriptions are for general pain and cost the government $2.3 million.

All of these formulations can be bought by concession patients over the counter, either in the pharmacy or the supermarket, for less than they cost on prescription.

In some cases the $6.10 a concession patient pays on prescription is more than three times the retail price.

One explanation for why patients get paracetamol on prescription when they could buy it much cheaper is that the prescriptions count towards their safety net limit of 60 scripts.

Ms Ley says patients on concession cards are able to use the PBS safety net to access over-the-counter medicines for free and the Abbott Government wants to put a stop to this.

“There’s a perverse incentive to reach that 60 scripts as soon as possible and then get the medicine free,” Ms Ley said in the same RN Breakfast interview.

What the experts say

Dr Parnis said the AMA does not want concession card holders to be disadvantaged, or have their access undermined, which could be a potential outcome of the minister’s proposed changes.

“But we understand what the minister is trying to do and if there’s efficiencies to be had, that’s laudable,” he said.

But he said it was important for doctors to know what medicines patients were taking and if patients bought their medications over the counter, there was a potential for confusion about doses, especially with older patients.

The Pharmacy Guild of Australia, the peak body representing community pharmacies, declined to comment on Ms Ley’s claim.

However, Lance Emerson, the CEO of the Pharmaceutical Society of Australia, the peak body representing Australia’s pharmacists, says most people getting prescriptions for paracetamol are older and less mobile patients who buy their paracetamol from a pharmacy with their other medications.

“Not everyone has access to a cut price pharmacy, especially in rural and remote areas, or feels comfortable with online purchases,” Dr Emerson said.

“But the biggest issue, beyond the cost for many consumers, is that osteoarthritis is a very serious health issue. This approach [buying from a supermarket] completely bypasses the therapeutic relationship between the patient, their GP and their pharmacist, who can help the patient manage their condition.”

Dr Emerson says supermarket paracetamol is not intended for patients with chronic conditions.

“Paracetamol is only exempt from scheduling and available in the grocery sector in packs of 20 when packed, labelled and marketed for short-term use of acute conditions,” he said.

Sarah Spagnardi, manager of the National Prescribing Service’s Medicine Line and a former pharmacist, says it’s a sensible move to review whether paracetamol deserves a place in the limited funds of the PBS.

“But to counter that comment, from a consumer perspective, if they are not having their paracetamol prescribed, then potentially that is a condition management issue that falls off the radar when they are back with their GP,” she said.

The verdict

Paracetamol prescriptions cost the government around $73 million a year on the PBS, but 85 per cent of that cost comes from prescriptions for people in chronic pain from osteoarthritis.

The high dose, slow release paracetamol formulation they are prescribed can’t be bought from a supermarket for $2.

Only around $2.3 million is for paracetamol formulations that could be bought from the supermarket for less than the patient pays for a prescription, and at no cost to the government.

Ms Ley is incorrect.

Sources

• Sussan Ley, RN Breakfast, April 27, 2015
• Department of Health, TGA, scheduling basics
• Department of Health, TGA media release, paracetamol: changes to pack sizes, August 26, 2013
• Coles online, pain relief
• NPS Medicinewise, panadol tablets
• NPS Medicinewise, APO-osteo paracetamol 665 modified release tablets
• Department of Health, PBS, About the PBS
• Department of Human Services, Pricing of pharmaceutical benefits scheme medicine
• Department of Health, PBS, The safety net scheme
• Department of Human Services, Pharmaceutical benefits schedule item reports
• Department of Health, PBS, paracetamol