Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I would like to ask a few general questions first and then either move my amendments or withdraw them, depending on the answers that I get—if that is okay with the Senate.

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

You are in order.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

Thank you. The Greens are concerned about the issue of price disclosure when it becomes operational. At the moment, the first cycle is 16 months. Since I foreshadowed these amendments, we have had some discussion with government about time frames and data collection. I would like some confirmation about time frames for the initial round of the price disclosure cycle and subsequent cycles. I would like the Parliamentary Secretary for Disabilities and Carers, representing the minister, to take us through those time lines. Then I would like to understand what the cycle will be subsequent to that, once you have the processes in place for the initial price disclosure cycle under this legislation.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | Link to this | Hansard source

The duration of the first price disclosure cycle, commencing on 1 December 2010, is 16 months, including a data collection period of 10 months and a six-month processing period. As price disclosure is based on sales data for a drug, a reasonable period is required on which to base the price changes. A reasonable data collection period is required to ensure that seasonal fluctuations and short-term changes in the market are balanced by figures on standard month-to-month sales, so giving a complete picture of market activity and not just a one-off sample. As you would understand, Senator, pharmaceutical use changes according to the season, so a decent length of time is needed to pick up winter and other times when there are different levels of use for various medications. The six-month processing period provides for data submission, new price calculations, price adjustment notifications and opportunities for industry to ask questions or appeal the new prices they are being asked to accept. Any truncating of those time lines would put at risk the accuracy of the pricing and calculations and deny affected companies the due process.

I understand that the motivation of your amendment is to bring this on earlier, and we too would like to do that as quickly as we possibly can. But we truly think that the time frame as described in the legislation is the most sensible period we could have to collect the data required to make a sensible decision and to deal with the process questions that will follow. Your second question goes to what will happen after the first data collection period. I am advised that subsequent cycles will be 18 months in duration. The next cycle will start on 1 October 2011 and include 12 months—a full year—for data collection and that data collection will be followed by six months for data processing, the review rights et cetera.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

Thank you for your answer, Senator McLucas. Six months for data processing and calculations seems a lengthy period, especially for subsequent cycles, as the department will already have done the calculations. Is there not a learning exercise here for the initial phase, which I note it is shorter than the secondary phase? The department will have already done the six months data entry and calculation during the first cycle, so could a shortening of the process for subsequent cycles be accommodated?

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | Link to this | Hansard source

Thank you for the question, Senator. The six-month period is broken down as follows. There will be six weeks for companies to submit their data. This allows for end-of-month receipt of data by companies and time for them to collate and validate their data before submission. The accuracy of this data is very important as it forms the basis of the weighted average percentage calculations. Four weeks is then required for the weighted average percentage calculations to be performed and then independently verified. Companies are then advised of any resulting price reductions determined by a legislative instrument. An eight week period is then set aside for any dispute resolution that is required and a final eight-week period is required for the production of the schedule of pharmaceutical benefits so that new prices can be published on the schedule price reduction day—that is, 1 April 2012. So that six-month period is broken down into required time frames. I think that, when you look at the process that is going to be pursued, we do need six months.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I can sort of understand—and can acknowledge—that the first time you do this there is going to be a longer time frame for data collection. However, 18 months is a long time from the beginning to the end of the cycle. Have you considered that you may not need to do the 12 months data collection process each time?

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | Link to this | Hansard source

I hope I am not confusing you, Senator Siewert. The first data collection cycle is 10 months. That is followed by a six-month period of data processing et cetera. From then on, from 1 October 2011, we will go into 12-month data collection cycles with a six-month data verification process. I hope that helps.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

As I understand it, after the initial cycle, the 12-month data collection process will be the standard that is used for data collection. That is correct, isn’t it?

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | Link to this | Hansard source

I understand so, and that is designed to capture a full 12-month period so that we get all the health cycles that occur in a normal year—so you get winter, basically.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

Thank you. It is my understanding that the subsequent cycles, the first of which comes into effect on 1 April 2012, are done by regulation rather than being contained in the body of the act. That is correct, isn’t it?

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | Link to this | Hansard source

I can confirm they are.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

Thank you. So that means that if it was established that a cycle could be completed in a shorter process or it could deliver better outcomes more quickly through changing the cycle, it could be done through regulations. That is a correct understanding, isn’t it?

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | Link to this | Hansard source

I understand so, but the principle of capturing data across a 12-month period is pretty fundamental to getting quality data. We need to get a full annual cycle of pharmaceutical consumption so that we are capturing the full 12 months of usage. I do not think it is fair to capture just a portion of the year and then try and extrapolate what consumption might be for other parts of the year.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I can understand that argument for some seasonal illnesses. There are some drugs that I do not think would be used in a 12-month cycle, for example. Has there been any consideration of looking at that process differently?

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | Link to this | Hansard source

I think the principle is that, if you are capturing the whole 12 months, we are not trying to predict certain behaviours that the players in this market may exhibit if we were reducing that data collection period. I think the first principle is that you require a full 12 months of data in order to make an informed decision about what the price should be.

I take your point that there are many medications used by people that are not relevant to fluctuations in burden of sickness—the normal winter event, for example—but I think to ensure validity of the data 12 months is required. Your fundamental question is if it is being done through regulation then that could change in the future, and I think the answer to that is yes.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

Thank you, and that is the point I was moving to, which is: has the government thought about doing a review of the process to look at what the time frames are and whether into the future it would be possible to shorten the time frames once a review has been done of the first cycle or two?

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | Link to this | Hansard source

I think, like any new legislation, it will be constantly being observed to make sure that its intent is being delivered. In terms of any formal review that has been flagged by the government, I think we just moved an amendment to the second reading, which talks about a six-monthly discussion between the Pharmacy Guild of Australia, the National Pharmaceutical Services Association, the Generic Medicines Industry Association and Medicines Australia that will happen every six months ‘on the impact of the reforms in this bill and any unintended consequences or relevant issues and to table a report on this discussion every six months’. In terms of a formal process, that has been inserted into the bill as a second reading amendment.

I can assure you, Senator Siewert, that the government will be watching very closely the implementation of these measures. Should changes be required, I am sure we will make them; however, we think we have got it right in terms of the period of data collection that is required and also the period of time required in order to validate the process and allow time for appeal before drawing up the schedule again.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I am going to push the envelope a bit here in terms of the review that was contained in Senator Xenophon and Senator Fielding’s amendment and just ask for confirmation that this process could be and will be included in the review process to ensure that it is on the agenda from the start that this process will be under scrutiny.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | Link to this | Hansard source

I can confirm that the government will follow the intent of Senators Xenophon and Fielding’s amendment and that there will be a six-monthly discussion. That discussion can canvass whatever issues the participants want it to cover, and a formal report of that will be tabled every six months. I think that is quite a robust form of review that includes all the participants in the delivery of pharmaceuticals in the country.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

The reason I am trying to nail this down a little bit under (c) is that there is no consumer representative as part of that process of review as far as I understand it. These issues are specifically relevant to consumers, so my concern is to ensure that it is on the agenda to convene a discussion. I note that at the moment, as I understand it, it is the Pharmacy Guild, the National Pharmaceutical Services Association, GMIA and Medicines Australia. They are industry bodies rather than consumer bodies, and I am keen to ensure that an issue can be raised if a consumer is not there to flag it.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | Link to this | Hansard source

Senator, you would be aware that we did not draft this amendment and I think you have identified a group that, had we drafted the amendment, might have been included. Our government has a strong record of ensuring that consumers are consulted not only in the pharmaceutical area but across the health portfolio. Whilst I cannot amend this amendment—it has been carried—I think you can take it as read that consumers will be consulted as part of the broader discussion around the implementation of this legislation. I cannot commit that they will be part of this discussion, but I can say that we will be consulting consumers around the implementation of the bill.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I can understand why Senator Fielding and Senator Xenophon put together this group, so I was not reflecting on that issue. The point for me was that that group was raised as the group that would be reviewing this every six months. Seeing that that group does not have a consumer representative on it, I wanted to make sure that this issue is on that agenda, because a consumer will not be there to put it on the agenda. I just wanted to be clear; I was not necessarily reflecting on that. I do accept that consumers are generally consulted, but under these arrangements they are not. I note that it will arise—I will make sure it arises—under the Greens amendment that was successfully passed, which involved conducting a study of affordability of prescription medication and access to medicines. That is obviously an issue around affordability, from our perspective.

If the government could give an undertaking to ensure that the issue we are discussing is on the agenda for this consultation, I would appreciate that. I also indicate that the Greens will not move our foreshadowed amendments; obviously they will not pass. I do understand the time frames. It does not change the fact that the Greens think that the time frame is too long. We will continue to pursue this through the channels that have been established to ensure that, if the time lines can be shortened, they are shortened, because that would mean an outcome where Australians get access to cheaper medicines.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | Link to this | Hansard source

I think, Senator, you would agree that the motivation for drafting this legislation is better outcomes for consumers in access to medicines and also the price of medicines they are using, but I can give you a commitment that we will ensure that consumer issues are placed on the agenda of the six-monthly meetings that are going to be held.

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Senator Siewert has made it clear that she is not proceeding with her amendments.

Russell Trood (Queensland, Liberal Party) Share this | Link to this | Hansard source

We on this side of the chamber did not support the amendments and they do seem to me to be deficient in certain key respects. Senator Siewert has pointed to some areas where they are deficient. It seems to me that they are further deficient in that they do not require any action to be taken beyond the report. I wonder whether the minister would care to give an undertaking to the Senate that, were there found to be unintended consequences and there was a view that reform was required, the government would act on that decision.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | Link to this | Hansard source

I think by the very fact that the report will be tabled in the parliament that will occur. If it were absolutely evident that there was a major failing or unintended consequences, any government would act on that advice. However, I think that an undertaking that a recommendation of a group of people would be implemented by our government, or any government, could not be given. This is an industry group, by and large, and it will have a view of the world, and I do not think it would be sensible to give an undertaking that any recommendation from that group would be introduced holus-bolus. But, if it were a sensible recommendation, any government would take the opportunity to fix an error should it exist. Our view is that it will not exist, because we think we have this one right, but to give you undertaking to enter into a series of amendments on the basis of a report to parliament where there may be different views about how correct that recommendation might be is something that no government would do.

Russell Trood (Queensland, Liberal Party) Share this | Link to this | Hansard source

The reason we oppose this legislation, even though that was not supported by the Senate, was that it seems on our side that there are some serious deficiencies with the legislation, including, in my view, some matters of timing. But I am grateful for the assurance that you have given the Senate.

Bill agreed to.

Bill reported without amendment; report adopted.