Background Around the world government agencies responsible for the selection and reimbursement of prescribed medicines and other health technologies are considering how best to bring community preferences into their decision making. In particular, community views about the distribution or equity of funding across the population. These official committees and agencies often have access to the best available and latest evidence on clinical effectiveness, safety and cost from large clinical trials and population-based studies. All too often they do not have access to high quality evidence about community views. We therefore, conducted a large and representative population-based survey in Australia to determine what community members think about the factors that do and should influence government spending on prescribed medicines. Methods A choice-based survey was designed to elicit the importance of individual criteria when considering the equity of government spending on prescribed medicines. A representative sample of 3080 adult Australians completed the survey by allocating a hypothetical budget to different combinations of money spent on two patient populations. Societal preferences were inferred from absolute majority responses i.e. populations with more than 50% of respondents' allocation for a particular allocation criterion. Results This study shows that, all else being equal, severity of disease, diseases for which there is no alternative treatment available on the government formulary, diseases that affect patients who are not financially well off, and life-style unrelated diseases are supported by the public as resource allocation criteria. Where 'all else is not equal', participants allocated more resources to the patient population that gained considerable improvement in health and fewer resources to those that gained little improvement in health. This result held under all scenarios except for 'end-of-life treatments'. Responses to cost (and corresponding number of patients treated) trade-off scenarios indicated a significant reduction in the proportion of respondents choosing to divide resources equally and a shift in preference towards devoting resources to the population that were more costly to treat for all criteria with the exception of severity of disease. Conclusions The general public have clear views on what's fair in terms of government spending on prescribed medicines. In addition to supporting the application of the 'rule of rescue', important considerations for government spending included the severity of disease being treated, diseases for which there is no alternative treatment available on the government formulary, diseases that affect patients who are not financially well off and life-style unrelated diseases. This study shows that the general public are willing to share their views on what constitutes an equitable allocation of the government's drug budget. The challenge remains to how best to consider those views alongside clinical and economic considerations.