Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Minister for Health) Share this | Hansard source

I should not have said that, Wilson, should I? These amendments relate most particularly to the arrangements affecting overseas visitors such as tourists, 457 visa holders or overseas students.

To recap, the reforms enacted earlier this year—the Private Health Insurance Bill 2006 and six related bills—introduced a range of reforms to the private health insurance arrangements that included allowing for private health insurers to offer a wider range of products, standardised information about health insurance products, changes to Lifetime Health Cover, changes to prudential arrangements and changes to the role of the regulator—the Private Health Insurance Administration Council. Under the new arrangements, emphasis shifted from the regulation of health funds to the regulation of health insurance products. In addition, various transitional arrangements were introduced.

The reforms included changes that meant that from 1 July 2008 overseas visitors’ health cover would become a general insurance product that could be offered by general insurers and private health funds. Under the new arrangements, overseas visitors’ health cover would not be subjected to the complying health insurance product arrangements established by PHIAC and would not be subject to the community rating arrangements which require insurers to offer products without discrimination on the basis of age, profile, medical history or other risk factors.

This created an inequity between general insurers and private health insurers. While general insurers are not subject to the requirement of the community-rating arrangements and can therefore operate in a risk-rating environment where they can charge higher premiums or refuse cover altogether based on a person’s risk profile, private health insurers who are offering complying health insurance products were bound under PHIAC to community-rating requirements. This potentially placed an unfair burden on the private health funds because private health funds were required to accept risks that their competitors in this particular market—the general insurers—could refuse.

Correcting this potential inequity appears to be the reasoning behind most of the schedule 1 amendments. According to the health minister’s second reading speech:

The act currently provides that all the operational rules of a private health insurer are subject to improper discrimination requirements. However, it was only intended that these requirements apply to the core business of private health insurers—that is, complying health insurance products. The bill will provide that the improper discrimination requirements only apply to complying health insurance products.

A second set of amendments concerns the regulatory environment for overseas visitors’ health cover. The government’s intention under the original reform package was to make the Australian Prudential Regulation Authority, or APRA, the regulator for all overseas visitors’ health cover from 1 July 2008 as a general insurance product. According to the health minister’s second reading speech, however, the government has now decided that from July 2008 overseas visitors’ cover offered by private health insurers will be regulated as a health related business by PHIAC, while cover provided by the general insurers will be regulated as a general insurance business by APRA. The explanatory memorandum provides no information about this regulatory change. The only explanation offered by the minister in his second reading speech is that the decision was made after consultation with APRA and PHIAC and that:

This parallel approach will remove the potential for regulatory overlap and minimise the compliance burdens on health insurers who now offer the service, while not preventing potential new providers from entering the market.

The amendments will remove the requirement that health funds who offer overseas visitors’ health cover during the transition period from 1 April 2007 to 30 June 2008 must offer it as a complying health insurance product. In essence, this means that insurers can offer products to travellers that do not provide the full or same cover as that offered to residents. It also means that health insurers and general insurers will be treated consistently in providing these products to travellers. Penalties for not offering this as a complying health insurance product will also be removed, retrospective to 1 April 2007. We understand from the Australian Health Insurance Association that the private health insurance industry is generally in favour of these amendments and in fact has been trying to have a number of the minor issues fixed in this fashion. So, as I indicated at the beginning, we will support these amendments.

Turning to schedule 2, these amendments concern the Pharmaceutical Benefits Scheme reforms which came into effect on 1 August 2007. To recap for the House, in May 2007 a bill amending the pharmaceutical provisions of the National Health Act was introduced into the House of Representatives. Subsequently, the bill was passed by the Senate and came into effect on 1 August 2007. The legislation introduced significant structural changes to the pricing of medicines subsidised under the PBS and was the subject of a Senate committee inquiry.

The amendments in this bill propose to clarify and correct provisions in the recent reform package that affect the pharmaceutical benefits around pharmacists: firstly, supplying substituted brands of prescribed medicines; secondly, supplying repeats of medicines; and, thirdly, supplying medicines early. Prior to the implementation of the new legislation in August 2007, pharmacists could substitute an equivalent brand under the early supply arrangements. However, the reforms introduced in August inadvertently narrowed the definition under the early supply provision so that pharmacists could no longer substitute different brands. This bill proposes allowing the substitution of different brands under the early supply arrangements, provided the brands are described as equivalent in the schedule. In essence, the changes here ensure that pharmacists can continue to substitute in the way they did prior to the changes, as well as in the new ways that will be encouraged by the major reforms of earlier this year.

Let me deal briefly with those three different categories. In relation to substitution arrangements, under brand substitution arrangements pharmacists are allowed to substitute to the lowest priced approved bioequivalent generic product with the permission of the patient and provided the prescriber has not directed otherwise on the prescription. The government subsidises only to the lowest priced drug in the defined subgroup and consumers pay any difference in price in addition to the usual copayment. This bill clarifies that a prescriber does not need to specify the exact brand of medicine when writing the prescription. A prescription will be valid even if the brand is not specified, although a listed drug and its dosage or form must be specified. The bill further proposes restricting substitution arrangements to only those medicines specified in the schedule so that pharmacy prepared medicines do not qualify as substitutes.

In respect of repeats, the bill proposes applying permissible repeat prescription arrangements to schedule equivalent medicines. Under PBS arrangements, a prescription can specify a number of repeats so that the patient does not need to return to their doctor to obtain a new prescription every time they complete a course of medicine. The maximum number of repeats for a subsidised medicine is specified in the schedule. The proposed amendments prevent the number of permissible repeats being exceeded by prescribing more than one schedule equivalent medicine in a prescription.

Finally, on the early supply provisions, under the PBS arrangements, when a patient has a repeat prescription for a PBS medicine they normally cannot obtain repeat scripts until 20 days after the supply of the original prescription. This is designed to prevent stockpiling of medicines. However, in special circumstances, the patient can obtain a script early or immediately under the immediate supply provisions of the PBS—for example, if the original medication is lost or damaged. These early supply prescriptions do not count towards the PBS safety net.

We understand that industry groups have been consulted on these amendments concerning the PBS reform, and, while the Generic Medicines Industry Association have expressed their support for the amendments, we understand that Medicines Australia has questioned the need for these reforms. We also understand that Medicines Australia has flagged some additional recommendations regarding the need for the minister to seek Therapeutic Goods Administration advice before something is declared bioequivalent. I would welcome clarification from the minister or departmental officials about where this stands.

I fear that this issue flags that we might be back before the parliament again for yet another set of changes on these issues. The minister may not have been here for the start of my speech, where I indicated our support for these changes and our understanding that we are dealing with complex reforms. But to be so quickly back before the parliament on two major reform packages that the government has been very proud of and to be having to fix up work that the minister did not pay sufficient attention to the first time around indicates that the minister has taken his eye off the ball in terms of his ordinary duties as health minister and become far too focused just on electioneering. Minister, the community expects you to continue to do your duty as the health minister. Perhaps take a little more care in passing legislation through this House in the first place and allow sufficient time for it to go through Senate committees and for adequate consultation with industry and consumer groups so that major changes like this are passed in the best possible format and we are not repeatedly here before the House month after month making minor changes that could have been dealt with earlier. We would ask that the minister and his office continue to keep us properly briefed if another set of changes is about to be proposed. I flag my concerns that the additional amendments on top of these two that have brought us back to the House today were flagged to us just last night. I know we will be addressing them separately, but we are certainly not in a position to be able to indicate any enthusiastic support or strident opposition for yet another change that was just dropped on our table minutes before we had to debate it.

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