Glenn Sterle (WA, Australian Labor Party) Share this | Hansard source

Before I begin I would like to acknowledge Senator Moore’s wonderfully informative and passionate contribution to this debate. I rise to speak on the National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2007.There are a number of matters in respect of this bill which deserve the attention of the Senate and the concern of members of the community. As senators will be aware by now, I take particular interest in the government’s actions when they concern the integrity of Australia’s universal health system, Medicare.

This government is full of rhetoric about its ongoing commitment to Medicare; however, when its actions over the past 11 years with regard to health are looked at closely there is a huge chasm between rhetoric and reality. For example, in its 11 years in office the Howard government has presided over the greatest stuff-up of medical practitioner training this country has ever experienced. No amount of self-serving spin will explain away the critical shortage of doctors created by the Howard government, particularly as it will take a decade or more to recover from it. As a result of the Howard government’s mismanagement, small country towns have now been forced down the path of incredible incentive payments to get a doctor into their town. Just last week the story made the news that one local shire is supporting a payment of up to half a million dollars—and that is on top of a salary of almost a quarter of a million dollars—to get a doctor. The Howard government has betrayed rural communities on a scale never witnessed before. The outcome is that rural Australia is now paying big time for the Howard government’s ‘she’ll be right because the market will deliver’ attitude. When is the Prime Minister going to wake up and work out that market forces alone are not going to deliver medical services to rural Australia?

What is more important than having access to life-saving medical care? There is no alternative. The Commonwealth government has a responsibility to do something about this sorry state of affairs. In my view, this bill is setting up Australia’s highly regarded universal health system for another hit courtesy of the Howard government. Already we are seeing patients having to meet an increasing share of the cost of PBS medicines as the gap between the cost of PBS medicines and PBS benefits widens.

There is now a real suspicion that the most significant changes to the PBS proposed in this bill have been driven by a need for the Australian government to appease US interests following Australia’s signing of the free trade agreement with America. We should be under no illusion: the pressure is on from the US drug manufacturers to bring about an increase in the price of PBS medicines in Australia. US drug companies and players in the US administration are very antagonistic to the fact that the prices of many medicines in Australia are significantly lower than they are in the US. For the US drug manufacturers, free trade with the US translates to Australians paying the same exorbitant prices for medicines as do US citizens.

Historically, the actions of our nation’s government have ensured that all Australians have affordable access to world’s best practice pharmaceutical treatments. This is something we cannot afford to have put at risk. Government involvement in the pricing and availability of PBS medicines extends to ensuring that Australians, regardless of where they live, are able to access required medical and pharmaceutical services. We know that the availability of medical practitioners, particularly GPs, often depends on where you live. We also know that, despite progressive improvements in average health status and longevity, there are far too many Australians whose health status and longevity remain well below those of the rest of the population.

Australians have a right to know how much of this difference can be attributed to sharp differences across the country in access to medical services. Available statistics indicate that people living in the mining and pastoral electorate of Kalgoorlie, which takes in all the Kimberley and the Pilbara, have half the access to Medicare GP services of people living in the leafy harbour side and North Shore electorates of Sydney. On a population basis, the Howard government spends in the order of $50 million to $60 million per annum less on Medicare GP services in the electorate of Kalgoorlie than what it is prepared to spend on Medicare GP services for people living in the well-heeled suburbs of Sydney. The statistics are not available but I suspect that the story with regard to access to PBS medicines would be similar.

The fact is that, the further from the centre of a capital city or the eastern seaboard you live, the more difficult it is to get timely access to comprehensive medical care when you need it. Take my home state of Western Australia as an example: the average per capita Medicare medical and PBS services are well below the national average. In other words, Western Australians on average have significantly less access to medical and PBS services than do other Australians. Lack of access to medical practitioner services inevitably results in lower levels of access to PBS medicines. It is difficult not to conclude that the lower health status and higher death rates of many people living in the Pilbara and Kimberley, particularly Indigenous Australians, are related in large part to poor access to Medicare medical practitioner services and PBS medicines. There is absolutely no point in the government claiming to be a supporter of Australia’s universal health system when it has allowed such uneven access to Medicare services to remain unaddressed after over a decade in government.

The truth is that the Howard government has no real commitment to protecting the rights of all Australians, no matter where they live in Australia, to access high-quality health care under the Medicare scheme. In 2005-06, average national per capita access to Medicare, medical and PBS services was, respectively, 14 per cent and 16 per cent higher than in Western Australia. Clearly, Western Australians are not receiving the same level of medical care as other Australians are. In 2005-06 the figures show Western Australians received three million fewer medical practitioner services and 2½ million fewer pharmaceutical services than the rest of the country. The provision of a lower level of Medicare, medical and PBS services to Western Australians saves the Howard government approximately $250 million annually. No wonder the Howard government has got hundreds of millions of taxpayer dollars to splash around on blatant, self-serving propaganda in the run-up to an election.

There are other examples that show how the Howard government is all talk and no substance when it comes to ensuring that all Australians have access to a fair and universal health system. The Howard government’s callous disregard to ensuring all Australians have universal and comparable access to needed medical and pharmaceutical services falls most heavily on, sadly, Indigenous Australians. Approximately 26 per cent of Indigenous Australians live in remote or very remote parts of Australia. I do not need to remind senators that Indigenous Australians continue to experience on average an appalling health status compared to other Australians who live in Australia’s capital cities and who have ready access to medical practitioners and required medicines. As the Australian Institute of Health and Welfare has reported, the death rate of Indigenous Australians is over 1.4 times that of non-Indigenous Australians. Even worse, the death rate of Indigenous infants is 3.1 times greater than that of non-Indigenous infants.

These are scandalous figures when put against the relatively lavish way the Howard government is prepared to fund Medicare medical services in the well-off electorates of Sydney. Take for example access to Medicare safety net payments. I draw your attention to the Medicare safety net payment figures for 2005-06. To cite an example, the New South Wales electorate of Wentworth received $7.8 million in safety net payments. This was 16 times more than the total Medicare safety net payments received by people living in the large rural federal seat of O’Connor in Western Australia, despite the electorates having similar populations. The median annual family income in the Wentworth electorate at the 2001 census was no less than $86,000; however, in 2001 the median annual family income in the electorate of O’Connor was $38,000. In the electorate of Wentworth, only 10.5 per cent of families had a weekly income of $500 or less, while in the electorate of O’Connor 32.3 per cent of families were living on a family income of $500 or less. Under the Howard government, the higher your income, the better access you have to medical and PBS services.

On top of that, if you live in a higher income area you get a Medicare safety net bonus. In 2005-06 the top 10 Medicare safety net electorates with a total resident population in excess of one million people, and who in 2001 had a median family income of approximately $80,000, received in total over $50 million in Medicare safety net payments. In comparison, the bottom 10 Medicare safety net electorates—located almost exclusively in Western Australia, South Australia, Tasmania and the Northern Territory, with an average median family income of approximately $40,000—received in total only $3.7 million. That is 13 times less than the top 10 Medicare safety net electorates. Where is the universal access in that? Where is the equity for all Australians? I will tell you where it is—out the window; unless you reside in the leafy Sydney harbour-side suburbs or on the North Shore, which includes the electorates of Wentworth, North Sydney, Bradfield, Warringah and Mackellar.

Australian patients, and patients throughout the world, deserve to have the best treatment options made available to them. One way to ensure this remains the case is for publicly employed Australian medical practitioners and researchers to continue to be actively supported by the Commonwealth—both on our shores and within the global pharmaceutical market. Australia’s public health system and its publicly funded medical researchers are, and continue to be, significant contributors in the advancement, development and use of therapeutic pharmaceuticals. Very recently, two Western Australian medical researchers who worked in Perth’s public teaching hospitals were awarded a Nobel Prize for their outstanding contribution to medical science. It is, therefore, well to remember that it is not unusual for advances in drug therapies to have come from research conducted in research laboratories attached to the country’s major public teaching hospitals, not just from laboratories of transnational pharmaceutical companies.

This bill has neatly packaged two important changes to the PBS arrangements. Firstly, it contains a measure that should have the effect of putting downward pressure on the prices of generic drugs. This is a good thing. Secondly, it contains a measure that may seriously weaken price competition between generic medicines and branded medicines. It would be a rather pointless exercise if this bill opened the door for drug companies to exploit the PBS to reduce price competition, rather than consumers getting the benefit from the lower cost generic medicines that the bill professes to support. In regard to generic drug pricing, I think it is true to say that the major pharmaceutical companies are not very supportive of the encroachments of generic medicines into the lucrative branded medicines market. I might also add that the medical profession have not been great advocates of prescribing generic medicines to their patients. It is typically pharmacists, rather than doctors, who are more likely to bring a patient’s attention to a lower priced equivalent generic medicine as a substitute for the brand name medicine on the doctor’s prescription.

This bill purports to strengthen the government’s stance on the pricing of generic medicines and, if all goes to plan, it could result in substantial savings to the government in respect to the cost of the PBS. That is good news. The bad news is that these savings will only be passed on in full measure to patients if doctors prescribe generic medicines where these are available for the required treatment. That is because the government subsidises a PBS listed medicine based on the competitive pricing of multi-brand medicines available in the market. When a medicine comes out of a patent and is able to be manufactured by multiple drug companies, this invariably has the effect of reducing the price of the drug due to competition. If doctors fail to prescribe the lower priced generic medicines and patients are not offered an alternative at the point of sale, patients will end up having to pay a larger gap for medications.

There is evidence that this may already be occurring. In the period from 2002-03 to 2005-06, the direct cost to patients of PBS listed drugs increased by 30.7 per cent, while the cost to the government increased by only 17.7 per cent. In other words, there has been a significant shift in PBS cost from the government to individuals in recent years. The question arises as to whether the legislative changes proposed in this bill will increase the incentive for the Liberal coalition government to shift an even greater share of the cost of PBS to individual patients. It will hardly be a great outcome for patients if the main result of the government’s proposed amendments to the PBS legislation is to shift more of the cost of medicines from the government to individual patients. Ultimately, the government’s attempt to reap the economic benefits of multibrand medicine price competition will only flow to patients if doctors are conscientious in their prescribing habits. The Australian Medical Association would do well to take this point to heart and aggressively encourage its members to help drive taxpayer health dollars further by prescribing generic medicines wherever possible as a valid substitute to a brand name medicine.

I would now like to move on to the measure contained in this bill that proposes two separate lists of PBS drugs: one for single brand medicines—medicines regarded as not interchangeable with any other; and one for multibrand, or generic, medicines. In Australia, as the government has stated, generic medicines account for approximately 18 per cent of medicines dispensed under the PBS. This is less than half the market share of generic medicines in the United States and the United Kingdom. The pharmaceutical industry knows full well that any substantial expansion in the number of generic drugs dispensed in Australia through the PBS will see a financial loss for them.

In the Weekend Australian of 9 June 2007, Professor David Henry, an expert in clinical pharmacology from the University of Newcastle, had this to say:

While accepting that a drug, on average, is no better than an older product, a doctor can often find a reason why a new product is not strictly interchangeable in every patient. As a consequence companies will likely argue for higher prices for drugs that do not offer better measurable performance, on the grounds that someone, somewhere, has a unique need for their products.

If the proportion of generic medicines used in Australia was in line with the US and the UK, this would reduce Australian taxpayer payments to pharmaceutical companies by several hundreds of millions of dollars annually. Hence, it is logical that the pharmaceutical industry is keen to see measures enacted which have the potential to lessen competition from generic drugs.

The Department of Health and Ageing has estimated that patents of over 100 medicines are due to expire over the next 10 years. With the enactment of this bill as it is, a new game will come to town: when is a generic medicine a generic medicine? I refer again to Professor David Henry in the Weekend Australia where, in referring to the amendments in this bill, he says:

On the one hand these aim (laudably) to cheapen generic drugs. On the other hand they appear to be designed to protect the patented products of the big drug manufacturers from having their newer products compared, for pricing purposes, with cheaper older products that work just as well.

He goes on to say:

The first formulary (Fl) will list drugs that are only available as a single brand and are not considered “interchangeable” at the patient level. The drugs listed in F1 will not be pricelinked to the drugs in the second formulary (F2), which will mainly be older drugs available in multiple brands. By requesting that drugs be proven “interchangeable” before they are priced down to the level of older equally effective products, the industry has made it harder for the Pharmaceutical Benefits Advisory Committee to base their decisions on the results of clinical trials. This is a move away from evidence-based medicine, which has become a major driving force in modern clinical care.

The idea of the two lists seems to have been adopted by the government following concerns from the pharmaceutical industry that, in certain low-volume situations, it is therapeutically useful for a relatively small number of patients to have access to a particular brand name medicine rather than to a very closely related generic substitute. In other words, the bill contains a device whereby medicine manufacturers may be able to significantly reduce competition from generic medicines.

As medical patents expire, drug manufacturers may be inclined to tinker with the formulation of particular brand name medicines on the pretext of unique therapeutic benefit for particular patients. Given the hundreds of millions of dollars of sales revenue at stake from the expansion of generic medicine use in Australia, it is inevitable that drug manufacturers will have a strong incentive to test the government’s capacity to manage this device. I think it is alarming that experts in the field of pharmacology, such as Professor Henry, have identified the real possibility for drug manufacturers to protect their products from competition, yet the government seems oblivious to the problem.

This has already been pointed out in the other place but it needs to be stated again: Labor’s approach to the PBS is based on three core principles. I encourage the government to adopt the same principles. I know that the member for Warringah pays attention to my speeches about health. I hope he is tuned in on the other side. I am sure he will be paying attention to this contribution. The question is: will he and the government act? Sadly, I doubt it.