Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Hansard source

The National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2008 makes a number of minor changes to the Pharmaceutical Benefits Scheme, which I will talk about in a moment, but there is something else I want to address. I note that the debate on the previous bill was also about the Pharmaceutical Benefits Scheme, and I want to take this opportunity to talk a little bit about the history of the PBS, because there are some arguments about whether it is 60 years old—and it certainly is 60 years old this year if it was introduced in 1948, as the member for Isaacs talked all about a little bit earlier—or if, in fact, it is a little bit older than that.

I thank the Parliamentary Library for this research, although I might ask them if they would be good enough to update their overview of the PBS. It appears that the PBS has a very rich history. It goes back to 1919, when the Repatriation Pharmaceutical Benefits Scheme was established to provide free pharmaceuticals to ex-service men and women after World War I. That is when the PBS, arguably, had its very first activities and its genesis. There were agreements made between various Australian pharmaceutical societies to provide necessary medications for veterans of both the Boer War and the First World War.

In 1944, the then Curtin government attempted to introduce free pharmaceuticals through the Pharmaceutical Benefits Act. Benefits were to be restricted to medicines listed in the Commonwealth Pharmaceutical Formulary and were only to be granted on the presentation of a prescription written by a doctor on a government form. However, it is interesting to note that the Australian branch of the British Medical Association—I assume that the AMA did not exist at that time—challenged the act and that the High Court subsequently declared that the act was unconstitutional because the Commonwealth did not have the power to spend money on the provision of medicines. Then, in 1947, a new Pharmaceutical Benefits Act was passed, to the credit of the then Chifley government. However, there was ongoing resistance from the medical profession. I have not got the information on why they were so opposed, but I can only speculate that they were concerned about government regulation of an industry that had previously been unregulated. Again the BMA challenged the act, and again the High Court found the 1947 act unconstitutional. There were various challenges around at that time.

However, during 1948 remote health establishments such as bush nursing centres were approved as hospitals under the Pharmaceutical Benefits Act for the purpose of applying pharmaceutical benefits to geographically isolated communities. Basically, over the years there were further pieces of legislation: in 1951 the National Health (Medicines for Pensioners) Regulations under the National Health Service Act 1948-49; and the establishment of the Pharmaceutical Benefits Advisory Committee, the PBAC, which exists today, in 1953 under the Menzies government. Then, really, the Pharmaceutical Benefits Scheme as we know it today was introduced on 1 March 1960. We can all argue about it, but it appears as though at the end of the day there was bipartisan support for the creation of the PBS, and I think that is a good thing given that it is such an integral part of the health system overall. But, of course, it was the Menzies government, on 1 March 1960, that introduced a copayment of five shillings. The irony is that, when they introduced a copayment of five shillings in 1960, the number of prescriptions increased from 24.6 million to 60 million within eight years. So it defies a lot of the common sense of this place that if you apply a fee, you actually have a reduction in usage. The Menzies government applied a fee in relation to the PBS, and usage almost tripled within eight years.

Over the years the PBS has grown significantly in expenditure. In the 1991-92 financial year the expenditure on the PBS was $1.11 billion, by 2001-02 it was $4.18 billion. So in a period of 10 years it has increased fourfold. What is really important is that the Pharmaceutical Benefits Scheme as a whole is recognised, at times grudgingly, by international analysts as one of the best—if not the best—pharmaceutical support schemes in the world. In part that is because it is bipartisan—and there is a lot of merit in that—but it is also because we, as a collective in this place, believe that you have to be prepared to provide support to people that need it. This goes to the heart of why we are members of this chamber and what we believe in as Australians, which is the provision of an appropriate safety net for the whole population but specifically for those people who are most in need of support.

The PBS continues to serve the Australian people very well. Drugs are accessible; drugs are properly tested; and, for Australians, the drugs are affordable. There will always be debates about whether a drug should be listed. Pharmaceutical companies and various interest groups will always mount an argument for a new drug. One of the hardest decisions that the cabinet and the government have to make is whether you do list a drug.

When I was in the cabinet, the most difficult decisions were often about whether you would allocate an extra half a billion dollars to a specific drug that alleviates pain for people suffering chronic illness maybe for two or three years. It gives them an extra 12 months or two years of life expectancy in less pain than they might otherwise have endured. But do you spend that half a billion dollars on research to find a long-term cure or do you spend it on a drug that alleviates pain? Ultimately, that is one of the reasons that big decisions have to be made by the cabinet.

I have great sympathy for members of cabinet, be they Liberal or Labor, who have to make those decisions. I always found them the most difficult ones. The Australian common-sense test says that you do everything you can to help a fellow Australian—or any human being for that matter—who is suffering pain. Knowing that there is a drug there that can alleviate pain and potentially save someone’s life and it is only a question of money makes the decision very difficult to make. However, I respect the fact that cabinets do have to make those sorts of decisions. They are cabinet decisions. One reason why these decisions are made ultimately by the cabinet is that they do deal with often life-and-death situations or, certainly, as a minimum the massive alleviation of pain. However, overall you must say that over the time of Liberal, National and Labor governments the right decisions have been made.

Today appears to be the 60th birthday of the Pharmaceutical Benefits Scheme. I am sure historians can find some way of arguing it over a long period of time. Historians are like economists: they have lots of different views—the difference is economists often project what is going to happen and historians reflect on what is happening. But one thing is for sure, they never agree with each other—thankfully. Having said that, the PBS is a very good scheme. It is one that we can be proud of as a nation. The fact that there are continuing changes to the PBS only enhances it generally, in my view. In relation to this bill, which deals with a number of minor changes, there is no opposition from the coalition. From 1 July 2008 you will pay up to $31.30 for most PBS medicines or $5 if you have a concession card and the Australian government will pay the remaining costs. In some cases that is hundreds of thousands of dollars. I know one of the great challenges that the previous government had was trying to have cost transparency on the bottle or the drug packet. I do not think we quite got there in toto, but I hope that the new government continues with that initiative.

One of the initiatives the previous coalition government introduced that I am very proud of was the Pharmaceutical Benefits Scheme safety net, which allows families to pool the out-of-pocket costs for medicines. Once an individual or family reaches a safety net threshold, they can apply for a PBS safety net card and this means all future PBS medicines will be less expensive or free for the rest of the calendar year. In 2008 the general patient contribution is $31.30 and the general patient safety net threshold is $1,141.80, or about 37 standard prescription items. I recognise that this bill does not in any way undermine the PBS.

I will make one interesting observation. One of the moments when there was a significant expansion of the PBS was after Cyclone Tracy in Darwin. I was only nine years of age at the time that happened. I am almost embarrassed to say that to you, Mr Deputy Speaker Adams, but I was a young’un in 1974. However, I do remember Cyclone Tracy—it was a catastrophe of sorts—on Christmas Day in 1974. One of the things I never realised was that, after Cyclone Tracy hit Darwin, a vast amount of pharmaceuticals had to get up to Darwin to address the potential outbreak of disease. The PBS kicked in in a very substantial way at that moment and it illustrated one of the significant benefits of having a very successful Pharmaceutical Benefits Scheme that is able to continue the involvement of international pharmaceutical companies directly in Australia.

The fact that a number of the international pharmaceutical companies have a very significant Australian presence is important for our country because it ensures that they are party to the ongoing challenges of increasing demand for pharmaceuticals in Australia and also that they have a ready domestic supply of pharmaceuticals rather than requiring massive and rapid importation of pharmaceuticals during national emergencies. Also, there is a very significant research element associated with international pharmaceutical organisations in Australia.

Australia might not be the most profitable pharmaceutical market in an international comparison, but it is a constant and growing market place for worldwide pharmaceutical companies. It might not have the growth of India or China, but it does have a constant stream of income and the stability to ensure that those companies can be active players. That is one of the reasons we are concerned about the other legislation which just came through this place about charging pharmaceutical companies for regulation of the industry. We do not want to do anything to cause international pharmaceutical companies to exit the Australian marketplace, but at the same time we must recognise that the size and stability of the pharmaceutical market in Australia and the stability of the PBS are all reasons the scheme works well and international companies continue to participate in the Australian pharmaceutical market. Ultimately, that will mean better quality, more affordable pharmaceuticals for the Australian community and that is what we on both sides of the House agree on.

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