Purpose Patient co-payments for medicines subsidised under the Australian Pharmaceutical Benefits Scheme (PBS) increased by 24% in January 2005. We investigated whether this increase and two related co-payrnent changes were associated with changes in dispensings of selected subsidised medicines in Australia.Method We analysed national aggregate monthly prescription dispensings for 17 medicine categories, selected to represent a range of treatments (e.g. for diabetes, cardiovascular diseases, gout). Trends in medication dispensings from January 2000 to December 2004 were compared with those from January 2005 to September 2007 using segmented regression analysis.Results Following the January 2005 increase in PBS co-payments, significant decrease in dispensing volumes were observed in 12 of the 17 rnedicine categories (range: 3.2-10.9%), namely anti-epileptics, anti-Parkinson's treatments, combination asthma medicines, eye-drops, glaucoma treatments, HmgCoA reductase inhibitors, insulin, muscle relaxants, non-aspirin antiplatelets, osteoporosis treatments, proton-pump inhibitors (PPIs) and thyroxine. The largest decrease was observed for medicines used in treating asymptomatic conditions or those with over-the-counter (OTC) substitutes. Decrease in dispensings to social security beneficiaries was consistently greater than for general beneficiaries following the co-payment changes (range: 1.8-9.4% greater, p = 0.028).Conclusions The study findings suggest that recent increase in Australian PBS co-payments have had a significant effect on dispensings of prescription medicines. The results suggest large increase in co-payments impact on patients' ability to afford essential medicines. Of major concern is that, despite special subsidies for social security beneficiaries in the Australian system, the recent co-payrnent increase has particularly impacted on utilisation for this group. Copyright (c) 2008 John Wiley & Sons, Ltd.