Mal Washer (Moore, Liberal Party) Share this | Hansard source

I rise to discuss the National Health Amendment (Pharmaceutical and Other Benefits—Cost Recovery) Bill 2008 and the National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2008. The previous government undertook an extensive period of consultation to introduce the most far-reaching reforms of the Pharmaceutical Benefits Scheme in its 60-year history. All members will know that this is the 60th anniversary of the Pharmaceutical Benefits Scheme, a very important year.

The consultations involving the reforms were far-reaching and sought to deliver a five-year transition towards a more transparent process for the pricing of all medicines, particularly those coming off patent. There are a considerable number of medicines coming off patent in the next few years, and globally we are experiencing a significant drop in the price of patent medicines. Not only do we have one of the lowest cost medicine systems in the world; we certainly have one of the best systems of pharmaceutical delivery. There is no doubt that Australians have access to the very best available medicines that are safe and of high quality. The previous government delivered far-reaching reforms in consultation with all sectors of the pharmaceutical industry. These reforms delivered an estimated $580 million over four years and $3 billion over 10 years of savings to the taxpayer.

This amendment will result in a significant charge being levied for each and every application to the Pharmaceutical Benefits Advisory Committee, or PBAC. These charges will be levied the research based pharmaceutical companies, the exact same companies consulted by the former government when it introduced PBS reforms—reforms that the now Minister for Health and Ageing disagreed with in opposition and now embraces in government.

The fees proposed will be charged to pharmaceutical companies who make an application to the PBAC to have their drugs listed on the PBS. The PBAC advises the minister of drugs that should be listed on the PBS. The companies already pay fees to the Therapeutic Goods Administration, or TGA, to test the efficacy and safety of new drugs made available to the Australian market. Medicines listed on the PBS ultimately benefit the consumer in the community.

Full cost recovery was considered by the coalition government in 2005 and again last year. It was never introduced for very good reason, as problems with this fee based proposal were identified by consultants summoned by the Department of Health and Ageing. A number of problems were identified, such as sponsors of generic medicines having a potentially easy ride compared to the heavy costs carried by companies seeking to list a medicine for the first time or change a listing. This would inhibit new products and innovations—a tragedy for the Australian consumer.

In May 2007 the Minister for Health and Ageing opposed any proposed scheme of PBAC cost recovery, stating:

The PBAC needs to be independent of government and of industry, and we cannot see the justification for this move to the cost-recovery model. I have asked the government to reconsider this approach given the risk to the independence of the PBAC ...

I agree with the minister’s position of May 2007 when she stated there was no doubt that a conflict of interest, real or perceived, would exist if the cost recovery measure was enacted.

The user-pays system will make a public body, the PBAC, financially dependent on industry, which it is supposed to regulate. The influence on the PBAC by industry will undoubtedly grow as industry pays for the running costs of this previously independent body. Industry itself has had six weeks warning of this decision, as it was announced in the 13 May budget with a proposed start date of 1 July this year. As the member for North Sydney emphasised, industry has had no way of budgeting for the cost of presentation to the PBAC, which will possibly be as high as almost $150,000 for a submission. There is no doubt that this will affect drugs with a small patient population. For many industry groups, this may result in possible delays in presentation of pharmaceuticals to the PBAC. Companies are already facing major price cuts, which will be introduced from 1 August 2008, as a result of PBS reforms from the coalition last year. This will, again, add to cash flow problems.

The pharmaceutical industry in Australia suffered three manufacturing plant closures in the last year alone, costing approximately 500 Australian jobs. We must now encourage investment in Australia from those industries with a global head office and not discourage it by these measures. Too many uncertainties exist and there has not been sufficient consultation or appropriate time frames undertaken with industry, nor have concerns about the independence of the PBAC been addressed. This bill should be referred to a Senate committee to ensure consultations with industry and others occur.

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