The failure of the pharmaceutical benefits scheme takes us to the heart of the obstacles which frustrated the Chifley government's health reforms. Most accounts of this have (rightly) been overshadowed by the clash between the Chifley government and organized medicine. In the course of a five-year struggle, the BMA successfully fought the federal government through the courts, by organized boycotts and in a fierce press campaign. The bitterness of the conflict destroyed any hope of a national health service based on cooperation between the Commonwealth and the medical profession, leaving a legacy of hostility and suspicion which persists to this day.

The scheme presented in the 1944 Pharmaceutical Benefits Act was relatively simple. Retail pharmacists and dispensaries were to be reimbursed for supplying pharmaceuticals prescribed by medical practitioners. The scheme would be universal with no means test or other restrictive conditions on access. However, not all drugs would be on the free list. An extensive formulary, compiled and regularly revised by a joint committee of medical practitioners and departmental officials, would list the drugs available under the scheme. Doctors were to prescribe drugs on official prescription forms, an administrative practice borrowed from the British scheme which had been in operation since 1911.

While the scheme did not include every drug listed in the British Pharmacopoeia, the formulary would be extensive enough to cover all the pharmaceuticals used regularly in general practice.