House debates

Wednesday, 7 February 2018


National Health Amendment (Pharmaceutical Benefits — Budget and Other Measures) Bill 2017; Second Reading

5:03 pm

Photo of Ms Catherine KingMs Catherine King (Ballarat, Australian Labor Party, Shadow Minister for Health and Medicare) Share this | | Hansard source

I rise to speak on the National Health Amendment (Pharmaceutical Benefits—Budget and Other Measures) Bill 2017. This bill has been a little while coming before the parliament, but it's good that it's finally here. This legislation puts in place a number of measures announced in last year's May budget, including measures around further price disclosure reform.

Let me start by saying that making medicines more affordable for Australians is always good news. The Pharmaceutical Benefits Scheme is one of the hallmarks of Australia's universal healthcare system, a system that is the envy of many countries across the world. Labor is incredibly proud of the PBS. It was first established in 1948 by the Chifley government and has been in place in various iterations ever since. Labor fought to create the PBS, has always fought to strengthen the PBS and will always fight to protect the PBS. It's only through the Pharmaceutical Benefits Scheme that most Australians can afford to access the medicines that they need.

I will say from the outset that we will be supporting this bill. The price reductions enabled by this bill will deliver savings to the budget and price reductions to consumers. But we note serious concerns that the government have not been up-front with Australians about whether they have already spent the savings that were negotiated as part of this bill. This bill represents about $1.8 billion in savings, but, with new listings in last year's budget and throughout the year, it is possible that these funds have in fact already been spent. The government need to be clear about that.

This bill builds on the work of the previous Labor government around pricing of medicines and which applicable medicines are reduced on the PBS. This bill continues that work by making a number of changes to pricing of medicines and drugs. The existing five per cent reduction that applies for single-brand drugs on the F1 formulary on their fifth anniversary of listing will be extended for another two years, now applying until April 2020.

There is the introduction of two new anniversary price reductions for drugs on F1: a 10 per cent reduction after 10 years of listing on the PBS and a further five per cent reduction after 15 years of listing. On 1 June 2018, medicines that have already reached the 10-year or 15-year anniversary by that date will be subject to catch-up reductions, and subsequent anniversary reduction days will occur on 1 April each year.

The bill increases the price reduction that applies on listing the first additional new brand of a medicine. When a first new competing brand is listed alongside an existing brand of an F1 drug, both immediately have their prices reduced. This bill will increase the reduction from 15 per cent to 25 per cent.

The bill adds new provisions around ministerial direction for price reductions, with previous price reductions able to be taken into account before a statutory price reduction is applied.

The bill also adds a new measure around price disclosure arrangements. These arrangements mean that drug companies must report data on sales, with the sale price information used to adjust the price for all brands of a medicine. The new measure provides that, after a medicine has had seven full cycles of price disclosure data collection and reduction days, the threshold for price disclosure price reductions will increase from the current 10 per cent to 30 per cent.

Finally, the bill allows a company to list another version of its own originator brand without being subject to a new brand price reduction.

Of course, we are very pleased that the reforms we introduced in government are continuing to help Australians access more-affordable medicines. But there are questions about whether the government are being honest about whether they have already spent money from our previous savings and from these savings. As PharmaDispatch noted after MYEFO:

Confirmation of the aggregate spend on new medicines confirms the $1.8 billion in savings negotiated by the sector—

and represented in this bill—

and supposedly set aside to fund new listings, is gone.

It actually remains unclear whether the $1.8 billion really existed in the first place given the Budget papers released in May shows it was used as a savings to improve the government's bottom line.

Labor has repeatedly questioned the government on the existence of these savings, but they have failed to provide adequate information.

Of course, these changes are built on previous reforms made by Labor to improve the budget bottom line and make medicines more affordable for Australians. In 2007, Labor introduced price disclosure arrangements, making further changes in 2013 to speed up the time in which applicable medicines are reduced on the PBS, saving money for both consumers and the government. The 2007 and 2010 PBS reforms, coupled with the introduction of simplified price disclosure in 2013, have achieved savings in excess of $20 billion to 2017-18 and put the PBS on a sustainable pathway.

Of course, we are pleased that the reforms we introduced in government are continuing to help Australians access more-affordable medicine. But Australians have every right to ask the government what they have done with these PBS savings. They have only listed a fraction of the $20 billion handed to them under Labor's reforms, so they need to explain where the missing $14 billion has gone. The minister likes to praise the work that he has done in listing new medicines—and I also want to acknowledge in particular his predecessor, the previous health minister, for the work that she did in listing medicines. It is the business of government to do so. But lauding that the government are doing so within the budget context does beg the question: if you're doing that, where has the $20 billion, all up, gone?

Labor is very proud of its record in fighting for affordable medicines for all Australians. The Labor government approved the listing of over $6 billion worth of new medicines and vaccines, adding more than 780 new medicines to the PBS Life Saving Drugs Program and vaccines to the National Immunisation Program. This included funding 36 new or amended listings on the PBS to treat more than 17 types of cancer, at a cost of $2 billion. We've been fighting against the government's attempts to make medicines more expensive from the moment they were introduced—changes that would have made medicines more expensive for every Australian across the country.

While much of this bill focuses on enabling price changes for medicines and drugs—which, as I said, is something we support—it also makes a notable change to the pharmacy location rules. Since 1990, rules have existed to limit how close a new pharmacy can be to an existing pharmacy. These rules have a sunset clause in the Sixth Community Pharmacy Agreement. This bill will remove the sunset clause, meaning existing arrangements will continue post 2020. Labor will not stand in the way of this change. In the context of this legislation, I'd like to note the important role of pharmacists as custodians of the PBS and in the National Medicines Policy.

This legislation needs to be considered in the context of the government's overall approach to health—because, while we welcome cheaper medicines, this is a government which consistently puts the health of Australians last. When it comes to prevention, to out-of-pocket costs, to primary health and to public hospitals, this government continues to drag our health system backwards.

While there are several elements of this year's budget Labor remains critical of, we welcome the resolution of a number of outstanding issues which were hanging over the sector, including dropping the proposal to increase the PBS co-payment by $5 for general patients and 80c for concessional patients. As we have said, more affordable medicines are good for the budget and for consumers, and we acknowledge the work of industry in agreeing to the savings contained in this bill. While we will support this bill, we will continue to note our concerns that the government is not being up-front about whether the savings have already been spent. The government's language around reinvesting the $1.8 billion in savings is way too soft. Any additional savings realised through the agreement with Medicines Australia or negotiated in the future should be reinvested in new medicines. Labor is incredibly proud of the PBS, and we will always fight for it. The government must guarantee that every dollar of savings generated by the passage of this bill will be reinvested in new medicines. Of course, affordability of medicines is only one aspect of overall health costs. The fact is that, under this government, Australians are paying more for their health and their budgets are increasingly stretched. I commend the bill to the House.

Debate adjourned.