Luke Hartsuyker (Cowper, National Party) Share this | Hansard source

I welcome the opportunity to speak on the National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2007. I welcome the broad support for the aims of this bill as expressed by the member for Gellibrand, but I reject her notion that the government is mismanaging the PBS. This government has a strong record on economic management. This government has kept interest rates low, it has kept the economy growing and it has kept unemployment falling. We have done a great deal in economic management—and economic management is also important in the area of health. It is very easy to throw more and more money at the health system—anyone can do that—but the issue is to allocate those funds as efficiently as possible and to get the maximum benefit for the community out of a limited health budget. We would all like to spend more in virtually any portfolio area you care to name, but the challenge is to spend that money efficiently and effectively. The reforms contained in this bill aim to do precisely that.

In her contribution, the member for Gellibrand conveniently neglected to include the fact that the Pharmacy Guild has indicated that, for those non-concessional patients who are paying for drugs that cost in excess of $30.70, there will be a projected reduction in price of $2.73 for some 400 brands that are included under these reforms. The real purpose of these reforms is to provide a more economical framework for generics and, in doing so, leave that headroom and allow us to invest more heavily in the more expensive innovator drugs, those wonder drugs that provide cures for a whole range of complaints. So I certainly reject the notion put forward by the member for Gellibrand.

I would also like to reflect for a moment on another issue she has raised, which is that these reforms may somehow cause an increase in the price of F1 drugs. She is walking both sides of the street on this. She praises the actions of the PBAC, yet she says that the PBAC is going to be ineffective in allowing the price of F1 drugs to rise. The PBAC is a gatekeeper. It has a role in ensuring that new drugs coming onto the market are effective and efficient in terms of cost and from a clinical point of view. The member for Gellibrand clearly does not take that into account. Perhaps she will come to her senses later in the day.

The bill is another vital step in ensuring that our Pharmaceutical Benefits Scheme remains sustainable into the future. Sustainability is the key in this. As our population continues to age and as more expensive medications become available, it is essential that the government continues to implement measures which will work towards the sustainability of our PBS. The bill before us today is a further endorsement of this government’s key values when it comes to health service delivery. This has been evident across a range of key areas in the health portfolio. For example, the coalition government is strongly committed to Medicare as the most important pillar of Australia’s health system. We are proud of the fact that, on any objective criterion, the coalition government is, as the health minister constantly reminds us, the best friend that Medicare has ever had.

We are proud of the fact that the coalition government is committed to a balanced public and private system and strongly encourages those who want to take out private health insurance and, in doing so, take pressure off the public system. That is a very important fact. We often hear from the members opposite that the private health insurance rebate is the epitome of evil, a draconian measure that is wrecking our health system. But what we are really doing is encouraging people to take control of their own health issues, invest in their own health insurance and, in doing so, most importantly, take pressure off the public health system.

We are proud of the fact that the coalition government is delivering access to more-affordable medicines under the PBS. The legislation before us today is an extension of the coalition government’s commitment to a sustainable, accessible and world-class Pharmaceutical Benefits Scheme. It is a timely reminder of this government’s commitment to further improve our health system and ensure that it is sustainable in the years to come.

The government has a fine record when it comes to health service delivery. Since the coalition came to office, spending on health has more than doubled—from $20 billion in 1995-96, which was some 15 per cent of Australian government spending, to $48 billion in 2006-07, which is some 22 per cent of Australian government spending. Coalition government spending on public hospitals has increased to record levels under the new $42 billion Australian health care agreements. This is more than $10 billion of additional funding for public hospitals over and above Labor’s last agreement. As I noted before, the coalition government is the best friend that Medicare has ever had—and it is the best friend that the health system has ever had.

In 1995-96, Medicare expenditure was $6 billion. In 2005-06, it was $10.4 billion, an increase of 73 per cent—or 36 per cent in real terms. We have also seen bulk-billing percentages increase significantly as a result of government policy. Since 1 January 2005, Medicare patients have received a higher rebate from Medicare for all GP consultations. The rebate for all GP consultations has increased from 85 per cent of the Medicare schedule fee to 100 per cent of the fee. Additional incentives for GPs to bulk-bill concession card holders and children under 16 have had a very positive impact on bulk-billing figures around the nation, particularly in regional and rural Australia.

In my own electorate of Cowper, we have seen the percentage of bulk-billed GP consultations rise from 52 per cent in 2003 to 72 per cent in 2006—a dramatic increase indeed. We have also seen the introduction of the Medicare safety net in March 2004, under the Strengthening Medicare package. The safety net assists people to cope with the cost of out-of-hospital procedures such as MRI, CT scans, ultrasounds and visits to specialists. Medicare now meets 80 per cent of the out-of-pocket cost of Medicare services provided outside hospital, once an annual threshold has been reached. Approximately 1.5 per cent of Australians are today benefiting from the safety net.

All these initiatives have been complemented by an unprecedented commitment to the Pharmaceutical Benefits Scheme by this government. Since the government was elected in 1996, subsidies for prescription medicines via the PBS have increased from some $2.5 billion in 1995-96 to $6.17 billion in 2005-06, an increase of 148 per cent. The PBS is a crucial part of the Medicare system. More than 80 per cent of prescribed medicines in Australia are subsidised by the government. The PBS provides all Australian residents with affordable, reliable and timely access to approximately 2,600 brands of prescription medicines. The amount consumers pay towards their medicines is only around a fifth of the entire cost to the PBS.

The full cost of PBS medicines is now provided on the label, so consumers can see the real cost. When that measure was introduced, countless people in my electorate came up to me and commented on the fact that they did not realise how much the government was subsidising the medicines that they were using. They did not realise the incredible cost of many medicines to the taxpayer. As a result of that very small measure, many people in my area became much more aware of the importance of spending money on health wisely and much more aware of the fact that it is very important that patients use medicines wisely, because there is a very real and very great cost to government. They realised that there is not just a copayment that they pay but that the taxpayer is subsidising their health care to a huge extent. They were very mindful of that, and that was a very welcome measure.

Also, more than 300 additional medicines have been added to the PBS since 2005, which has added $1 billion to the cost of the PBS between 2005 and the 2007-08 financial year. To ensure the PBS remains sustainable and affordable, the government has previously introduced reforms. For example, in August 2005 new generic versions of existing PBS medicines have been subject to an automatic reduction of at least 12½ per cent in the government benchmark price. This is delivering around $800 million in savings over four years.

A key part of the coalition government’s commitment to the PBS is supporting community pharmacies. We are very much focused on the importance of community pharmacies. The coalition strongly supports the role that community pharmacies play in the Australian healthcare system. That is reflected in the fourth community pharmacy agreement, which sets out how pharmacies are paid for dispensing PBS medicines. The agreement is ensuring that Australians can continue to get the medicines they need at prices they can afford regardless of where they live. Under the fourth community pharmacy agreement, some $11.1 billion is being provided for the distribution and supply of PBS medicines over the period from 1 December 2005 to 30 June 2010. Total payments under the fourth agreement will be 28 per cent higher in real terms than those made under the third agreement. This equates to an average payment of $11.38 per PBS prescription dispensed, up from $9.93 under the third agreement, or a 6.2 per cent increase in real terms. Importantly, the current prohibition of pharmacies locating within supermarkets continues.

The legislation before us today builds on many of the initiatives which I have previously outlined and seeks to strengthen the sustainability of the PBS. We know that patents for over 100 medicines are due to expire over the next 10 years, providing a unique opportunity to make some changes to the PBS. Changes will be made to the pricing arrangements for medicines to make sure that the government pays reasonable prices for multiple-brand medicines without increasing the costs for patients and taxpayers. The fundamentals of the PBS will not change, however. Patients will continue to meet only the standard co-payments and in some cases they will pay less. The main changes will be in the way that the government prices those PBS medicines that are operating in a competitive market. These medicines will take a series of price drops and eventually will move to a system where the price that the government pays more closely reflects the actual price at which a medicine has been supplied to the pharmacy.

This bill is a very important piece of legislation because it will position the PBS for the future. It specifically seeks to change the way in which certain drugs are priced after they are listed on the PBS. The new pricing arrangements contained in the bill enable the government to realise the benefits of competition where drugs have multiple brands. This is an essential step in providing a sustainable PBS. The bill seeks to distinguish the price of single-brand drugs and those with multiple brands. To date it has been difficult for the government to pay competitive prices for multiple-brand drugs as these prices could flow on to other essential drugs, resulting perhaps in their withdrawal, which would not be welcomed by medical consumers.

The bill effectively divides the PBS schedule into two parts—one part for single-brand drugs and the other part for those which have multiple brands or which are interchangeable at the patient level with drugs with multiple brands. As a result, this bill will provide a minimum 12½ per cent price reduction in the price of any new bioequivalent brand of drug that lists, provided that the drug has not been previously subject to a 12½ per cent reduction. This 12½ per cent reduction will flow on to existing brands of that drug and other drugs in the same therapeutic group which share the same manner of administration as the new brand. This reflects government policy that has existed since 2005. Importantly, any drugs that have already taken a 12½ per cent reduction under the existing administrative arrangements will not be required to take a further 12½ per cent reduction, as I said earlier. The bill also provides for a price reduction of some two per cent per year for three years, commencing on 1 August 2008, for drugs where price competition between brands is low, or the F2A drugs. A one-off price reduction of 25 per cent on 1 August 2008 will apply for drugs where price competition between brands is high, or the F2T drugs.

To summarise these key changes, this bill will ensure single-brand medicines will retain their higher prices until such time as they become subject to competition, providing companies with greater certainty about the prices of these medicines. Meanwhile, the government will be able to pay a price that more truly reflects the market price for medicines operating in what is essentially a commodity market.

Price disclosure provisions for drugs are an important measure which will ensure the price that the government pays for a multiple-brand drug more closely reflects the actual price at which that drug is being supplied to pharmacies. This will be achieved by requiring that all new brands that list on what is known as the F2 classification are subject to new price disclosure requirements. Related brands of that drug provided by the same supplier will also be subject to price disclosure requirements along with any brands for which other suppliers volunteer to price disclose.

This bill also ensures there is a guarantee of supply of drugs. From 1 August 2007, suppliers listing a new bioequivalent brand of a drug on the PBS and suppliers of existing brands of what are known as F2 drugs will be required to guarantee the supply of these brands. The guarantee of supply period will be 24 months, or until another new brand of the drug is listed or until a further price reduction is offered in relation to the drug.

Suppliers will be required to notify the minister if they form the belief that they will fail to supply or will be unable to supply, or if they actually fail to supply. The guarantee of supply provisions will deter suppliers from supplying without a viable business model able to support their long-term participation in the market. Interruptions to supply are disruptive for patients and other suppliers. The provisions in the bill also ensure that the government is given as much notice as possible of possible supply failures so that it can take action on their impact on patients, prescribers and pharmacists.

It is always important that, when there are proposed changes to the Pharmaceutical Benefits Scheme, we carefully consider the impact on patients. Importantly, these changes do not impact on the fundamentals of the PBS. Patients will continue to have access to a choice of medicines. On the advice of the PBAC, medicines will continue to be listed to ensure their clinical effectiveness and their cost-effectiveness. There will be no reduction in the range or number of medicines.

Patients will continue to pay only the standard copayment contribution, currently $4.90 for concessional patients and $30.70 for general patients. There are also future benefits. Under the new arrangements, it is less likely that additional patient charges will be added.

Pharmacies will be helped to adjust to the new arrangements through a structural readjustment package. The package compensates pharmacies for the loss in remuneration that will result from mandatory price reductions for medicines in the F2 class and reflects the commitments made by the government to pharmacists in the fourth community pharmacy agreement. As a result of other amendments detailed in this bill, from 1 July 2007 40c will be paid to pharmacists for each prescription processed using PBS Online. This will encourage more pharmacists to join up to PBS Online, creating efficiencies in the administration of the PBS. From 1 August 2008, the fees that pharmacists receive for supplying a PBS medicine will increase. As well, there will be an incentive payment of $1.50 each time a substitute medicine is dispensed which 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. This should lead to a greater use of medicines where there is no additional patient charge and more efficient eligibility checking and processing of prescriptions by pharmacists.

In conclusion, the previously mentioned measures are key components of a package of measures that comprise reforms to the PBS. They are a necessary step to ensure that the PBS remains sustainable in the future—the very sustainability of what this government is about: effective economic management at an economic level and effective economic management of the health system. I commend the bill to the House.

See this speech in context