What is a private prescription and why does it matter for insurers?
Understanding non-PBS medications and their cost implications for your claims.
Published: 3 April 2026 | Updated: 3 April 2026
What Is a Private Prescription
A private prescription is a medication that the patient pays for out-of-pocket rather than receiving a subsidy from the Pharmaceutical Benefits Scheme (PBS). In Australia, most prescription medications are PBS-listed; the PBS subsidizes their cost, and the patient pays a copayment (currently around 30 dollars). But some medications aren't on the PBS. When prescribed, the patient pays the full cost, not a copayment.
A private prescription doesn't necessarily mean the medication is more expensive or of lower quality. It means the medication didn't meet the PBS criteria for subsidy. PBS listing is based on evidence of efficacy, cost-effectiveness, and therapeutic value. Medications not listed on the PBS exist for various reasons: they're newer and not yet reviewed for listing, they're expensive and weren't deemed cost-effective enough, they have limited indications that don't justify subsidy, or they're complementary therapies outside the PBS scope.
For your insurance claims, private prescriptions matter because you may be paying the full cost without PBS subsidy. Your cost responsibility can be significantly higher. You need to understand why a medication is being prescribed privately rather than using a PBS-listed alternative, if one exists.
Why Medications Are Prescribed Privately
Medication Not PBS-Listed
Some medications simply aren't on the PBS. They might be new, not yet submitted for PBS listing, or unlikely to be approved. A specialist might prescribe them because they believe it's the best option for their patient, regardless of PBS status. Your claimant receives the medication, but at full cost.
PBS Criteria Not Met
A medication is proven effective for a condition, but the patient doesn't meet the PBS criteria for subsidy. For example, a specific pain medication might be PBS-listed only for cancer pain but your claimant has non-cancer pain. The medication might be appropriate for their pain, but PBS won't subsidize it outside its approved indication. The prescriber prescribes it privately.
Authority Criteria Not Met
Some medications require authority approval (meeting specific clinical criteria) to access PBS subsidy. If your claimant doesn't meet the authority criteria, the medication is available but only at full private cost. Sometimes prescribers prescribe privately rather than going through the authority process.
Brand vs. Generic Preference
Multiple formulations of the same medication might exist. The PBS-listed version is generic; a brand-name version exists at higher cost. Some prescribers or patients prefer the brand, so they prescribe it privately at full cost.
Complementary and Alternative Medicines
Some prescriptions are for herbal, nutritional, or complementary medicines. These aren't PBS-listed. They're prescribed privately. The evidence for these medicines varies widely. Some have reasonable support; others lack strong evidence. For your claims, paying for complementary medicines with weak evidence represents potential wastage.
PBS vs. Private Prescription Differences
| Aspect | PBS Prescription | Private Prescription |
|---|---|---|
| Patient Cost | Copayment (copay around 30 dollars) | Full cost to patient or insurer |
| Medication Type | Listed by PBS as having sufficient evidence and cost-effectiveness | Not listed, or listed but criteria not met |
| Prescriber Approval | Generally available; some require authority | Prescriber discretion; no formal approval needed |
| Evidence Requirements | Reviewed and approved by PBS advisory groups | Variable; prescriber makes judgment |
| Typical Cost Range | 20-40 dollars per month (patient copay) | 50-300+ dollars per month |
| Monitoring | Some PBS items have restrictions/monitoring | Minimal monitoring; entirely prescriber discretion |
Types of Private Prescriptions
Expensive Newer Medications
A new biologic medication for a condition is approved for use but not yet PBS-listed or considered not cost-effective enough for subsidy. A specialist prescribes it because they believe it's superior to older options. The cost is very high, possibly thousands per month. Your claim covers it, but the cost is substantial.
Off-Indication Use
A medication is PBS-listed for one indication but prescribed off-label for another. The PBS won't subsidize off-label use. Your claimant receives the medication privately at full cost. The prescriber believes it's appropriate for their patient's condition, but formal PBS approval doesn't exist for that indication.
Complementary Medicines
Vitamins, minerals, herbal medicines, and other complementary products are prescribed for health optimization. Some have reasonable evidence; others don't. They're not PBS-listed. Your claimant or their prescriber believes them beneficial, so they're obtained privately. Depending on your coverage terms, you may or may not cover these costs.
Specialist Formulations
A medication exists in a specialist formulation (extended-release, novel delivery method, specific strength) that isn't PBS-listed. The standard PBS formulation is available, but the specialist prefers the specialist version. Your claimant receives the specialist version privately at higher cost.
Private Prescriptions and Insurance Coverage
Your coverage of private prescriptions depends on your policy and your approach to claims management. Some insurers cover all prescribed medications, regardless of PBS status. Others cover only PBS-listed medications. Still others have middle-ground policies: they cover private medications if a PBS alternative doesn't exist or if the prescriber documents specific reasons why the PBS alternative isn't suitable.
For your claims, you need clarity about your private prescription coverage. If you cover all private prescriptions without question, you may be paying for unnecessary or expensive medications when cheaper alternatives are available. If you refuse to cover private prescriptions, you may be denying your claimant access to beneficial medications.
When to Question a Private Prescription
PBS Alternative Exists
Your claimant is on a private pain medication costing 150 dollars per month. A PBS-listed pain medication exists that costs 30 dollars and has similar efficacy. Question why the prescriber chose the private, expensive option. Is there a specific reason the PBS alternative wouldn't work? If not, the private prescription may represent unnecessary cost.
Weak Evidence for Complementary Medicine
Your claimant is prescribed a herbal supplement for pain. The evidence for this supplement in pain conditions is weak. The cost is 80 dollars per month. The supplement likely won't help, but it's costing your claim substantially. This is a situation where you might decline coverage or ask the prescriber to justify the expense with evidence.
Off-Label Use Without Clear Rationale
Your claimant is prescribed an expensive medication off-label. The prescriber hasn't documented why the PBS-listed alternatives (approved for your claimant's indication) aren't suitable. The private, expensive medication is replacing a PBS alternative. Unless there's clear documentation that the PBS alternative failed or isn't appropriate, this is questionable.
New Medication Without Clear Advantage
Your claimant is prescribed a brand-new medication costing 250 dollars per month. Older, well-established PBS-listed medications exist for the same indication. The prescriber hasn't documented what advantage the new medication has. This might be a situation where you request documentation of why the expensive new option is preferable.
Managing Private Prescriptions
Request Documentation
When a private prescription is being used, request documentation from the prescriber explaining why. Why wasn't a PBS alternative used? If a PBS alternative is available, what's the specific reason it's unsuitable? This documentation creates accountability and flags potentially unnecessary private prescriptions.
Pharmacist Review
A medication review identifies private prescriptions and assesses them. Are they necessary? Is there a PBS alternative that would work equally well? The pharmacist consults guidelines and evidence to advise on appropriateness and cost-effectiveness.
Cost-Effectiveness Analysis
For expensive private prescriptions, consider whether the benefit justifies the cost. A private medication costing 2,000 dollars per month that produces transformative improvement might be justified. The same medication producing marginal benefit is questionable.
Policy Clarity
Establish clear policies on private prescriptions. Will you cover all private medications? Only those without PBS alternatives? Only those with documented clinical justification? Clear policies prevent disputes and ensure consistent decision-making.
Private Prescription Review Process
When a private prescription is identified in a medication review, the pharmacist assesses: Is a PBS-listed alternative available? If yes, why wasn't it used? What evidence supports the private medication? Is the cost justified by the expected benefit? Based on this assessment, recommendations are provided about whether the private prescription should continue, be replaced with a PBS alternative, or be ceased.
Real-World Scenarios
Scenario One: Justified Private Prescription
Your claimant has severe neuropathic pain despite multiple PBS-listed medication trials. A specialist prescribes a newer biologic medication not yet PBS-listed. The evidence for this medication in difficult-to-treat neuropathic pain is strong. The cost is 200 dollars per month. This is a justified private prescription; no suitable PBS alternative exists after multiple trials.
Scenario Two: Questionable Private Prescription
Your claimant is prescribed an expensive complementary medicine for pain. The evidence for this supplement is weak. A PBS-listed pain medication is available that would cost 30 dollars per month. Prescriber documentation about why the PBS alternative wasn't used is lacking. This is a questionable private prescription; you might ask the prescriber to justify its use or switch to the PBS alternative.
Scenario Three: Private Due to Authority Criteria
Your claimant is prescribed a pain medication that's PBS-listed but restricted (requires authority). They don't meet the authority criteria, so the medication is available only as a private prescription at 120 dollars per month. A PBS-listed alternative that doesn't require authority is available at 30 dollars. The private prescription might be unnecessary if the PBS alternative is appropriate.
The Bottom Line
Private prescriptions are medications not subsidized by the PBS. They're prescribed for various reasons: they're not PBS-listed, criteria for PBS subsidy aren't met, or prescribers prefer them despite higher cost. Private prescriptions can represent excellent value (when evidence is strong and no PBS alternative exists) or wasteful spending (when evidence is weak or when PBS alternatives exist). Your claims benefit from clarity about when you'll cover private prescriptions and pharmacist review to assess appropriateness and cost-effectiveness. A medication review identifies private prescriptions and recommends whether they should continue or whether PBS alternatives are more appropriate.
Assess the value of private medications in your claims.
If your claimants are receiving private prescriptions, you need to understand whether they're justified and cost-effective. IMM's medication reviews identify private medications, assess their appropriateness, and recommend cost-effective alternatives where available.
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