Improved Tobacco Control Will Save On PBS Costs
Further investment in tobacco control interventions could curb the increasing cost of the Pharmaceutical Benefits Scheme (PBS) and contribute to government efforts to ensure the viability of Australia's healthcare financing program, according to results of a study published in the current issue of The Medical Journal of Australia.
Co author of the study, Associate Professor Susan Hurley, Health Economist at the University of Melbourne's School of Population Health and Director of Bainbridge Consultants, said the study aimed to estimate PBS subsidies for drugs to treat smoking-related cardiovascular disease (CVD) in 2001-02, and over the period of the government's Intergenerational Report (IGR) to 2041-42, assuming current smoking prevalence rates and a 5 per cent reduction in smoking rates.
"The PBS costs of smoking-related CVD in 2001-02 were $126 million, almost 10 per cent of the cost of drugs for CVD and around 3 per cent of total PBS subsidies," Associate Professor Hurley said.
"The cumulative difference in these costs over the forty year period with a 5 per cent drop in smoking prevalence was predicted to be $4.5 billion, a 17 per cent reduction.
"The saving would be $1.4 billion discounting future costs at 5 per cent per year.
"The obvious question is how can this 5 per cent reduction in smoking prevalence be achieved, and at what cost?
"The evidence shows that money spent on tobacco control programs, especially anti-smoking advertising, reduces smoking rates.
"In turn, reductions in tobacco use have been clearly shown to reduce healthcare costs," Associate Professor Hurley said.
Applied Economics estimates that, since 1975, for every dollar spent on tobacco control, $2 has been saved in Australian healthcare expenditure.
Based on the outcomes of the National Tobacco Campaign (NTC), Associate Professor Hurley and her colleagues estimate that an investment in enhanced tobacco control of $45 million over three years would see a reduction in smoking rates of 5 per cent.
"If $5 million per year was required to sustain this reduction in smoking prevalence, such a campaign would have a net present value (NPV) of around $1 billion, and an internal rate of return of 33 per cent, at a 5 per cent per anum discount rate. The payback period would be less than eight years.
"Such a campaign would be an excellent investment," Associate Professor Hurley said.
The Medical Journal of Australia is a publication of the Australian Medical Association.
CONTACT Associate Professor Susan HURLEY 0412038388
Judith TOKLEY, AMA Public Affairs 0408 824 306 / 02 6270 5471