Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

I move:

That—

(a)

Parts 8, 9 and 10 of Schedule 1 of the National Health (Pharmaceutical Benefits – Therapeutic Groups) Determination 2010 (Instrument Number PB 1 of 2010), made under subsection 84AG(1) of the National Health Act 1953, be disallowed; and

(b)

Amendment determination – Drugs on F1 and drugs in Part A of F2 (Instrument number PB 2 of 2010), made under subsections 85AB(1) and 85AC(1) of the National Health Act 1953, be disallowed.

I speak on behalf of the coalition on this disallowance motion. Australia’s Pharmaceutical Benefits Scheme ensures that effective medicines are within the reach of all Australians by subsidising access to more than 600 medicines available in 1,800 forms and marketed as 2,600 differently branded items. The PBS provides Australians with timely, reliable and affordable access to necessary and cost-effective medicines. The Pharmaceutical Benefits Scheme is an excellent system for funding access to medicines and has served the Australian people well for many years—in fact, for more than 60 years. The scheme has proven itself to be one of the best drug subsidy systems in the world and around 80 per cent of prescriptions dispensed in Australia are subsidised under the PBS. The PBS covered around 181 million prescriptions in the year to June 2009, and this represents about eight prescriptions per person in Australia for the year. Patients normally pay a standard co-payment to excess medicines which often would otherwise be unaffordable and a safety net is in place for high users of medicines. Medicines that are listed on the PBS are assessed by experts to be clinically effective and cost effective. Importantly, doctors and patients can often choose between a variety of medicines and brands to treat a particular condition.

The Howard government increased expenditure on pharmaceutical benefits from $2.2 billion in 1996-97 when it came to government to $6.4 billion in 2006-07. The Leader of the Opposition, Tony Abbott, as Minister for Health and Ageing, from August 2006 listed on the PBS new drugs worth more than $1.5 billion over the four years to 2010-11. This included drugs like Herceptin, for early breast cancer, Lantus and Levemir, for the management of diabetes, and Lucentis, for the treatment of age related macular degeneration. In 2007, the Howard government added essential vaccines to the PBS to treat rotavirus in babies and the world-first HPV vaccine, Gardasil, to help protect girls and young females from cervical cancer at a cost of $704 million over the following five years from 2006-07 to 2010-11.

The coalition government has an excellent record on ensuring that the PBS delivered to Australians and the scheme was in very good hands during this time. In government it was our responsibility to continue to scrutinise schemes like the PBS to ensure that we were getting good value for taxpayers. The structures we have in place must be able to continue to provide access to new and expensive medicines for future generations. The integrated package of reforms to the PBS announced by the coalition on 16 November 2006 delivered this dual aim. It put in place structural changes to the pricing of medicines to achieve good value for listed medicines while delivering long-term savings to support the continued listing of cost-effective medicines into the future. The reform package included a new structure to the PBS schedule, with new pricing arrangements for listed medicines, including statutory price reductions and greater transparency through price disclosure requirements; a pharmacy support package to help community pharmacists to adjust to the new arrangements; streamlined authority approvals for a large number of medicines, giving doctors more time to spend with their patients; the establishment of a working group to consider issues of continued access to innovative medicines through the PBS; and a public awareness campaign to increase knowledge and usage of generic medicines.

Key industry stakeholders, particularly Medicines Australia, the Pharmacy Guild and the Australian Medical Association, indicated their general support for these reforms. In 2007, this parliament, with the support of the then opposition health spokesperson and now Minister for Health and Ageing, Nicola Roxon, passed major reforms to the Pharmaceutical Benefits Scheme designed to deliver significant savings to Australian taxpayers and ensure the ongoing sustainability of the scheme. One of the reforms was to create separate formularies on the PBS: F1 for patent protected innovative medicines and F2 for off-patent and generic medicines. The principle behind these reforms was to create more competition in the F2 formulary, which would provide significant price cuts when generic companies entered the Australian market. This increased competition between originator brands and generic brands was assisted by mandatory price cuts when the first generic product entered the market. With the full disclosure of the prices paid by wholesalers and pharmacies for medicines, this has resulted in substantial savings coming back to the government and it is able to adjust the amount it subsidises based on the actual market prices being paid. These reforms are still rolling out and are delivering substantial savings to government.

When these reforms were passed it was estimated that the savings generated would be in the order of $3 billion over 10 years. What we now know, from a report by PricewaterhouseCoopers commissioned by the health minister, is that the savings to the Commonwealth will significantly exceed the former target and are now in the order of up to $5.8 billion over 10 years. The most important aspect of the reforms undertaken by the Howard government, and supported by the then Labor opposition, is that they were done in full consultation with all the relevant stakeholders. The major reform ensured that the Australian community would continue to have access to new life-enhancing therapies, the government would get better value for existing medicines and the capacity to list new medicines would be strengthened. The new pricing arrangements would support this by enabling cheaper prices to be paid when a competitive market is operating. Of critical importance was that the PBS would be sustainable into the future.

I emphasise that these reforms were supported by the Labor Party when they were in opposition. It is understood that, in her first few months as health minister, Nicola Roxon told anyone who would listen that she had no plans to go delving into the PBS for more savings and acknowledged that the key health stakeholders were, understandably, suffering from reform fatigue. However, that all changed on budget night 2009, when Labor announced a new therapeutic group would be created for the two statins on the PBS. The PBS had become a source of savings.

A therapeutic good is a mechanism used by the government to link products together for the purposes of pricing. Essentially what happens is that the Pharmaceutical Benefits Advisory Committee provides a recommendation to the minister that two or more medicines provide the same outcome and are therefore interchangeable at the patient level. When this determination of interchangeability is made, the government works out which of the medicines in the group is cheapest based on the level of use and the varying doses. It then effectively adjusts the price paid for all of the other medicines in the group to match the cheapest medicine. The policy of paying the cheapest amount for medicines which do the same thing is a reasonable one. However, it is essential to determine that the two or more products really do exactly the same thing and are therefore interchangeable at the patient level. Who determines what is interchangeable? What evidence is used? What opportunities do stakeholders have to provide information and evidence to the decision-makers? And what exactly does ‘interchangeable’ mean?

The opposition’s concerns about the PBS being raided were further heightened when the government announced a further three PBS therapeutic groups were to be created when it released the mid-year economic forecast in November 2009. These new groups relate to medicines to treat depression, osteoporosis and Paget’s disease and are scheduled to be implemented on 1 April 2010. It is claimed the new therapeutic groups will result in a saving of $48.2 million over the next four years. There have been clinical concerns raised regarding the interchangeability of the drugs to be included in the new therapeutic groups and to possible impacts on patients. The opposition has received numerous communications from expert clinicians, particularly those who treat osteoporosis, about these new therapeutic groups. They are deeply alarmed at the lack of consultation on the interchangeability of osteoporosis drugs, especially with those experts involved in daily use of these drugs in treating often elderly and vulnerable patients. These experts have questioned whether these medicines are actually interchangeable and have raised concerns about differences between the medicines that impact patients and mean that they may not be the same.

The consultation with the industry has been minimal at the very least. In addition to the possible clinical issues raised by experts, this measure may also have a financial consequence for patients and increase red tape for GPs. When a therapeutic group is formed, one medicine will be determined to be the benchmark price and all other medicines will have their prices cut to match the new price. However, if the manufacturer refuses to accept a price cut, which is certainly possible if it believes its medicine is not interchangeable, the government will impose an additional price to be paid by the patients. To avoid this extra charge, a patient will have to accept a cheaper medicine or their doctor will have to seek authority from Medicare and Medicare will have to deal with the authority requests. If this is widespread then there will be absolutely no savings whatsoever from these measures and, at worst, there will be additional costs. Once again the process of delivering and implementing its savings measure appear not to be well thought through. This government has form in this area. This appears to be an ill thought through savings measure with a lack of consultation with the industry and, importantly, GPs who may have to explain this change to patients. There are many patients who rely on the PBS for access to the medicines affected by the proposed therapeutic goods. The PBS is too important to all Australians to let this go through unscrutinised and, as we know, policy on the run is policy overdone.

The Rudd government is playing with people’s lives, and our ability to continue to enjoy access to cost-effective medicines now and in the future is being jeopardised by hasty savings decisions. The coalition left the PBS in very good shape, but Labor, after supporting reforms to secure the long-term future of the scheme when in opposition, now in government appears intent on destroying it just to pay for its spending spree on failed stimulus programs.

It was with these concerns about the impact on patients in addition to the clear lack of process and consultation in mind that in November 2009 this Senate agreed to a motion to refer the policy on creation of therapeutic groups on the PBS to the Community Affairs References Committee for inquiry.

Now I come to the primary motivation for the opposition moving this motion of disallowance. On 25 November 2009 the Senate referred the following matter to the Community Affairs References Committee for inquiry and report by 30 June 2010:

Consumer access to pharmaceutical benefits and the creation of new therapeutic groups through the Pharmaceutical Benefits Scheme (PBS), including:

(a)

the impact of new therapeutic groups on consumer access to existing PBS drugs, vaccines and future drugs, particularly high cost drugs;

(b)

the criteria and clinical evidence used to qualify drugs as interchangeable at a patient level;

(c)

the effect of new therapeutic groups on the number and size of patient contributions;

(d)

consultation undertaken in the development of new therapeutic groups;

(e)

the impact of new therapeutic groups on the classification of medicines in F1 and F2 formularies;

(f)

the delay to price reductions associated with the price disclosure provisions due to take effect on 1 August 2009 and the reasons for the delay;

(g)

the process and timing of consideration by Cabinet of high cost drugs and vaccines; and

(h)

any other related matters.

When the Senate referred this matter to the Community Affairs References Committee for inquiry we could have been forgiven for thinking the Labor government may have taken notice of the Senate’s concerns about therapeutic groups and the PBS. Clearly the prudent thing to do is to delay the introduction of the measure from 1 April—next month—until the Senate completes its inquiry in June this year. After all, while the three new therapeutic groups are forecast to save $48 million over four years, only $1 million of those savings is in the 2009-10 financial year.

Based on the figures provided in the MYEFO, a six-month delay on implementing this measure would barely cost $5 million. The government, however, clearly saw the issue differently and on 21 January 2010 the minister’s delegate signed the determination with an implementation date of 1 April 2010, nearly three months prior to when the Community Affairs References Committee is due to report. The government knew of the Senate inquiry when it signed the determination but does not appear at all interested in the outcomes of the Senate inquiry and the future of the PBS. It may well be the case that when all the evidence is considered by the Community Affairs References Committee it will unanimously recommend these measures be reintroduced, but it should have the opportunity to consider all the evidence—even if the government will not.

As I have pointed out, were they to be reintroduced in six months time the cost would be around $5 million. In the interests of patient safety, I would have thought this is a relatively small price to pay. The policy of therapeutic groups has been around for a long time and the coalition in government created a number of them; however, we consulted prior to implementing the policy. We talked to doctors, we talked to companies, and we talked to patients before we sought advice from the Pharmaceutical Benefits Advisory Committee. The Senate referred this matter to the Community Affairs References Committee for a reason. It wanted to know more about how this policy came about, the implementation and delivery and, most importantly, the impact it may have on patients.

It is unbelievable that, with the knowledge that a committee inquiry is underway, the government decided to proceed with this measure on 21 January 2010. The Senate must be given the opportunity to hear from the committee before further consideration is given to these measures. The inquiry must be given the opportunity to investigate the policy and examine the concerns raised by medical experts prior to its implementation. Given the government’s arrogance in moving to implement this measure before the inquiry reports, there is only one option available and that is this Senate must now disallow these determinations. I commend the motion to the Senate.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

The motion from the opposition would disallow a sensible policy that would save taxpayers $48 million over four years. If this disallowance motion passes, it will be a loss to taxpayers and will provide no benefits to doctors or patients at all. It will only benefit big pharmaceutical companies. It is yet another example of the fiscal irresponsibility of this opposition, which is determined to obstruct the Rudd government no matter the cost to the community.

The government’s measure is designed to ensure that taxpayers get value for money for medicines listed in the Pharmaceutical Benefits Scheme. It introduces three new therapeutic groups. These therapeutic groups ensure that the government and taxpayers pay the same low price for medicines that achieve the same health outcomes. The therapeutic group policy, as identified by the opposition, was introduced by the Howard government in 1997, highlighting once again the clear opportunism and irresponsibility of the opposition in opposing this measure.

The government has decided to form three additional groups on the basis of advice from the independent expert Pharmaceutical Benefits Advisory Committee. The committee advised the government that it was appropriate to create therapeutic groups for certain medicines to treat osteoporosis and Paget’s disease and antidepressants. Pharmaceutical companies were provided with the opportunity to comment on the matter, and this was carefully considered by the clinical experts on the committee. On the basis of the committee’s advice, the government has made the legislative instruments which would create these three new therapeutic groups. The therapeutic groups mean that, for these medicines which produce the same health benefits, the government only pays for medicines at the price of the lowest drug in a therapeutic group.

Turning to the impact on patients, the government’s measure does not affect patient access to medicines. Doctors can still prescribe any medicine they consider appropriate for their patient. Patients will continue to pay only the standard PBS copayments for their medicines.

Turning to taxpayers, the government’s measure would create, as I indicated, savings of $48 million over four years. This will help to maintain the sustainability of the PBS so that all Australians can have access to essential, affordable medicines. The PBS cost in the vicinity of $7.7 billion in 2008-09 and is expected to grow by 10.6 per cent in 2009-10. If we are to be able to continue to afford the PBS in the future, we have to ensure that our scarce health dollars are used as effectively as possible.

If these therapeutic groups are disallowed, then the government and taxpayers will end up paying pharmaceutical companies more for these medicines than they should. It will be $48 million going straight into the pockets of big pharmaceutical companies without providing a single benefit to patients or doctors. It shows, yet again, the irresponsibility and recklessness of the opposition in not supporting the continuation of this measure.

Question put:

That the motion (Senator Fierravanti-Wells’s) be agreed to.