Moving towards an Improved Microsimulation Model of the Australian Pharmaceutical Benefits Scheme

Finding ways of curbing government expenditure on the Pharmaceutical Benefits Scheme (PBS) while maintaining social equity and access to 'essential' medicines is at the centre of ongoing public debate. This article describes a microsimulation model of the PBS that simulates current and future use and costs of PBS medicines under existing and different PBS policy settings, and estimates the distributional effects of policy changes. The article outlines future developments that will extend the current model to include health outcomes. Adding health outcomes will enable the debate on PBS sustainability to be advanced beyond the prevailing cost-containment mentality to consider not only the costs of pharmaceutical use but also the benefits that result from the use of these medicines. Copyright 2004 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research.