Crossing the threshold: The impact of Australia’s pharmaceutical safety net on medication utilisation
Melbourne Institute Working Paper No. 15/26
Date: September 2026
Author(s):
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.