Crossing the threshold: The impact of Australia’s pharmaceutical safety net on medication utilisation

Thomas Plunkett, Karinna Saxby () and Yuting Zhang ()
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Thomas Plunkett: Centre for Health Economics, Monash Business School, Monash University, Caulfield, Australia
Karinna Saxby: Melbourne Institute of Applied Economic an Social Research, The University of Melbourne, Australia, https://findanexpert.unimelb.edu.au/profile/1027826-karinna-saxby
Yuting Zhang: Melbourne Institute of Applied Economic an Social Research, The University of Melbourne, Australia

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: Cost-related medication non-adherence is prevalent across many healthcare systems and is associated with poorer health outcomes. Pharmaceutical expenditure ceiling policies that reduce patient copayments once cumulative spending reaches a defined limit offer financial protection against high out-of-pocket medication costs. Using whole-of-population administrative prescription claims data, we provide the first population-level quasi-experimental evidence on the effects of reaching Australia's Pharmaceutical Benefits Scheme Safety Net on medication utilisation (n=1,537,885). We apply a dynamic difference-in-differences framework, comparing prescription use before and after individuals reach the safety net, using future threshold-crossers as controls. Reaching the safety net increased average monthly prescriptions dispensed by 0.715 (a 15% increase). Effects were driven primarily by pre-existing medications, particularly those used to treat chronic conditions. Responses were largest among lower-income individuals, especially those not eligible for government concession pricing, people with chronic health conditions, and individuals aged 40-69 years. These findings suggest that reducing out-of-pocket medicine costs increases medication utilisation, with the strongest effects observed among populations at elevated risk of cost-related non-adherence. The results provide new evidence on the distributional effects of pharmaceutical expenditure ceiling policies and have implications for the design of policies intended to improve equitable access to medicines.

Keywords: cost-sharing; copayments; prescription medicines; medication adherence (search for similar items in EconPapers)
JEL-codes: D12 I11 I13 I14 I18 (search for similar items in EconPapers)
Pages: 48pp
Date: 2026-09
New Economics Papers: this item is included in nep-hea
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