PROBLEM INVESTIGATED: Methodological issues and policy implications arising from the application of interrupted time series (ITS) analyses to assess the impact of Pharmaceutical Benefit Scheme (PBS) subsidisation policies on drug utilisation in Australia. PROCEDURES FOLLOWED: A critical review of methodological issues relating to the application and analysis of ITS designs was undertaken. This included an examination of drug utilisation data sources in Australia. The PBS policies examined were: (i) the introduction of copayments in 1990; (ii) the introduction of re-supply limits in 1994 and (iii) the introduction of a form of reference pricing in 1998. Monthly aggregate drug utilisation data was obtained from the Australian Department of Health and Ageing. Segmented regression analyses incorporating autocorrelated errors were implemented and statistical diagnostics applied to ensure correct ITS model specification. Alternative seasonal modelling approaches were compared. RESULTS OBTAINED: The copayment ITS evaluation found that while these copayments produced a reduction in the utilisation of essential and discretionary medications, this effect was stronger for discretionary drugs. An unintended policy effect was a large anticipatory increase in drug utilisation during the month prior to the copayments. Repatriation PBS data was also utilised due to the limited number of pre-intervention data points in the Community series. The re-supply limit ITS evaluation found that the 20-day rule markedly reduced the size of the seasonal increase during the month of December. However, logistic regression analyses showed that the size of this reduction attenuated over time, highlighting the need to consider alternative analysis strategies when applying a ITS approach. The reference pricing ITS evaluation found that this policy had achieved its drug utilisation objectives for H2RAs and ACE Inhibitors. However with regard to CCBs, no increase in the utilisation of benchmark priced drug was apparent, which probably reflected clinical concerns at the time about the safety of these drugs. MAJOR CONCLUSIONS: Well implemented ITS analyses provide a valuable tool for evaluating the impact of PBS subsidisation policy change on drug utilisation in Australia. As with any methodology, however, different design and data integrity issues will affect the quality of information provided.