Ken Ticehurst (Dobell, Liberal Party) Share this | Hansard source

The National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2007 proposes a number of amendments to the National Health Act 1953 to provide Australians with continued access to new and expensive medicines while ensuring the Pharmaceutical Benefits Scheme remains economically sustainable into the future. The Pharmaceutical Benefits Scheme provides Australians with access to a diverse range of medicines, allowing choice between different medicines for patients and doctors at an affordable price for individuals as well as for the community. Patients who use medicines listed in the PBS are only required to pay a standard co-contribution payment, with the Australian government subsidising the rest of the cost associated with supplying and purchasing the medicine. This is an important scheme as it greatly benefits many Australians who, without it, would be unable to afford many of the treatments which are offered, some at discounted prices, leading to a lower quality of life for patients. In 2005-06 the Australian government paid just over $6 billion to subsidise around 170 million prescriptions. That averages out at about eight scripts for every person in Australia.

The proposed amendments to the PBS have been brought about by an increasing incidence of the government paying too much for many medicines where there is a competitive market operating. In the next 10 years over 100 patents for medicines that are part of the PBS will expire, providing us with the opportunity to make some positive changes and allowing us to secure the future of the PBS. Restructuring the pricing arrangements will ensure the government pays reasonable prices for medicines without increasing the costs to patients and taxpayers.

One of the main changes proposed in this bill is the separation of PBS medicines into two formularies—F1 and F2—each with different pricing arrangements. Medicines where there is only a single brand listed will be referred to as F1. It will contain both on-patent and off-patent medicines that are not substitutable with other brands or medicines. With this formulary, there will be no mandatory price reductions, and existing price linkages will be retained within this group. This means that single-brand medicines will retain their higher prices until they become subject to competition, providing companies with a greater certainty about the prices of these medicines. This allows the Australian government to ensure these medicines remain subsidised by the PBS, hence continuing their availability at affordable prices. Medicines where there are brands listed and groups of medicines that are interchangeable between patients will be referred to as F2.

There is already the requirement for a 12½ per cent price reduction when the first new brand of a medicine is listed on the PBS. This amendment bill proposes to further reduce these prices as more brands of the same medication subsequently become available. These additional reductions will reduce the price that the government pays for medicines that are subject to competition between suppliers whilst ensuring that patients will not pay more for them. Under these new pricing structures, patients will remain largely unaffected, as they will only be required to continue paying the mandatory co-contribution payment. This is currently $4.90 for concessional patients or $29.50 for general patients. This is highly beneficial to patients, as the price restructuring has the potential to increase the savings for patients who use the F2 medicines and over time the cost of their medication may reduce to a price below the general copayment.

Another major benefit to patients as a result of these proposed amendments is that it is less likely that additional patient charges will be added or that medicines will be withdrawn from the PBS in the future. The proposed amendments also aim to address the pricing of combination medicines that are made up of multiple medicinal components. Currently, the PBS system pays no more for combination products than it does for medicinal component parts. However, sometimes a combination medicine may have some advantage over alternative therapies or may fulfil multiple medicinal purposes. In those cases, it may be more appropriate for the combination product to receive a higher price than that of its components, as it performs more functions than the one component on its own.

These proposed changes also allow for the Pharmaceutical Benefits Advisory Committee to advise whether a specific combination product has advantages over alternative therapies, which the minister may take into consideration when deciding on the price. The proposed amendment will allow for any price change of a component, due to price disclosure, to flow on to any combination product that contains that component. This is an improvement on the previous inconsistent pricing structure of combination medicines, where any price change of a component, due to price disclosure, would not flow on to any combination product which contained that component. The usual pricing rules for combination products will still apply. Also, a combination medicine will be priced according to the weighted price of its components. This amendment to the pricing of combination products will ensure that they are reasonably priced and reflective of their components, as well as their therapeutic advantages, providing added assurance to patients of value for money.

Concerns of industry groups regarding the ability of the minister to make decisions regarding therapeutic groups have also been addressed in this amendment bill. Therapeutic groups are medicines which are considered interchangeable because they provide a similar health outcome and, in the majority of instances, can be safely substituted for each other for most patients. One of the provisions in the PBS amendment bill is the requirement that the PBAC provide advice about the formation of new therapeutic groups. This advice, however, will not be binding, allowing the minister to retain a large amount of discretion.

The Department of Health and Ageing, in conjunction with Medicines Australia, have also formed a working group to discuss ways in which Australians can be assured of continued access to new medicines. This working group will consider issues relating to the evidentiary requirements for submissions to the PBAC, as well as ways in which to streamline the process of listing medicines on the PBS. In addition, the amendment bill aims to introduce a system of compulsory price disclosure for companies listing new brands of medicines in the F2 category on the PBS. They will be required to disclose the prices at which they actually supply their medicines to wholesalers or pharmacies, whilst other companies which have brands of that medicine already listed on the PBS may voluntarily participate in disclosure; but, once they elect to do so, they may not revoke their decision.

This is a big advantage as it will increase the ability of the minister to more accurately determine, in accordance with the regulations, the weighted average disclosed price of a medicine. If the difference between the current price and the weighted average disclosed price is 10 per cent or more, the price of the medicine will be reduced to that disclosed price. This is a huge benefit to patients, at it ensures that the price they are paying for medication is a true reflection of the actual cost of the medication, reducing the instances of high mark-up of products.

A company failing to comply with price disclosure requirements will be deemed as committing a criminal offence, with a penalty of $33,000 for corporations. In addition, the minister may also delist that company’s brand, or its other brands, from the PBS or may refuse to list new brands of that company. In deciding to take these actions, the minister may take into account a range of factors, such as the number of times the company did not comply with price disclosure requirements and the reasons for noncompliance. Furthermore, any new brand listing on F2, plus any brand of medicine on the F2 list that offers a price reduction, will be required to have a guarantee as to supply of that medicine.

This will guarantee the supply of all new brands listed on the PBS from 1 August 2007 and the already listed medicines for which price reductions are offered to all patients who require these medications. This will significantly help patients on these medications, as the guarantee of supply period will be 24 months, or until another new brand is listed, or a further price reduction is offered for another already listed medicine. Any company which believes that it will be unable to supply, or has failed to supply, will be required to notify the minister. A criminal penalty will apply for failure to notify the minister. There is also a $33,000 fine for a corporation.

Companies which fail to supply or which are unable to supply may have that brand or other brands on the PBS delisted or they may be refused the listing of new brands. These tough measures introduced with respect to noncompliance with the new price disclosure and supply guarantee measures are another advantage for patients, as they aim to ensure that companies adhere to their commitments. Patients have a right to know that the prices that they are paying for their medications are truly reflective of manufacturing costs. They also have a right to have a continual, guaranteed supply of medications available to them. Patients do not need the added stress of costs often incurred by having to change their medications because they are too expensive or unavailable. These reforms aim to further ensure patients’ quality of life by increasing the accountability and compliance of companies which supply the medication.

Pharmacists will also greatly benefit from the proposed reforms. From 1 July 2007, pharmacists will receive 40c for each prescription that they process using the PBS Online system. This will encourage more pharmacists to use PBS Online, which will increase efficiencies in the administration of the PBS, also benefiting customers through faster processing and delivery of their medications. Pharmacists will also receive an incentive of $1.50 each time they dispense a substitute medicine that costs the patient no more than the standard copayment. These initiatives will help to ensure that patients are aware of their right to pay no more than the copayment for their medicines. They should also increase the use of medicines where there is no patent charge, through more effective and efficient eligibility checking and processing of prescriptions by pharmacists.

Doctors too will benefit from the amendment bill. As from 1 July 2007, they will be able to authorise prescriptions for approximately 200 of the 450 PBS medications without having to gain pre-approval from Medicare Australia via a phone call. This will significantly benefit the 70 per cent of patients whose scripts currently require an authority approval from Medicare and will mean that doctors will be making about 30 per cent fewer calls to Medicare to obtain pre-approval. This will reduce the unnecessary administrative burden on doctors so that they can focus more on their patients’ health needs.

The proposed amendments aim to further protect patients from higher out-of-pocket costs by getting better value from market competition among brands of generic medicines. The fundamentals of the PBS will not change, with patients continuing to meet only the standard copayment and in most cases paying less. The main changes will be in the way the government prices medicines when operating in a competitive market, reducing red tape for pharmacists and doctors to benefit all Australians. I commend the bill to the House.

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