Damian Hale (Solomon, Australian Labor Party) Share this | Hansard source

I thank the honourable member for Dickson for his contribution to the debate and note that, if he would like to have some copies of my press releases in regard to the $85 million worth of health programs that were in the budget last night for the good people of Solomon, I will happily provide those to him. I have a copy of them here.

It is with a great deal of pleasure that I rise today to make my contribution to this debate on the National Health Amendment (Pharmaceutical and Other Benefits—Cost Recovery) Bill 2008 [No. 2]. This important bill proposes to amend the National Health Act 1953 to provide the legislative basis for the Commonwealth to recover costs for services provided. The services provided by the Commonwealth are in relation to submissions for the listing, or changes to current listings, of medicines and vaccines on the Pharmaceutical Benefits Scheme, the PBS, and the National Immunisation Program, the NIP. The arrangements are required to provide the framework that will establish charges on a fee-for-service basis.

The bill is not a taxing bill and expressly provides that fees must not amount to taxation. The arrangements are aimed at recovering costs from applicants, usually pharmaceutical companies, who apply for products to be listed on the PBS or the NIP. Having a medicine listed on the PBS or a vaccine designated on the NIP generally provides a high level of commercial certainty to the sales of that product in Australia. In order to establish that a product is worthy of the public trust that accompanies any listing, the assessment process of products requires rigorous tests to ensure the accuracy of the clinical claims made. Those tests and those assessments cost money. Therefore, it is not unreasonable for the government to recoup the costs associated with assessing a product’s suitability for subsidy.

It is envisaged the fees prescribed in the regulations will be derived from an activity based costing model. The more complex and time consuming the evaluation, the higher the fee. Let’s be realistic about this: pharmaceutical companies, many of them subsidiaries of large multinational pharmaceutical companies, have the financial capacity to meet the cost of these assessments. Why should the taxpayer of Australia foot the bill? In 2007-08 the top 20 pharmaceutical companies each received, on average, $241 million from the Commonwealth via the PBS or NIP subsidy.

Cost recovery is not a new concept for the pharmaceutical industry. The pre-market evaluation of products through the Therapeutic Goods Administration, or the TGA, is funded through cost recovery arrangements and has been since 1991. This bill is a logical extension of the TGA’s cost recovery process. In fact, the Productivity Commission has noted that cost recovery can provide an important means of improving economic efficiencies and equity by ensuring those who use regulated services bear the costs.

Medicines supplied under the PBS are provided directly to the people of Australia by chemists, doctors and hospitals on a government subsidised basis. Co-payments and other amounts charged will not be affected under the cost recovery arrangements. The PBS was established to set the public co-payment amount. It is very important to note that Australians accessing the PBS will not be required to pay any extra for PBS listed medicines or NIP vaccines as a result of this measure.

Importantly, this bill also ensures the independence of the Pharmaceutical Benefits Advisory Committee, or the PBAC. This group provides expert advice on medicines, independent of government and industry. Members of the PBAC are selected from consumers, health economists, practising community pharmacists, general practitioners and other specialists. They make recommendations to the Minister for Health and Ageing as to which medicines and vaccines should be made available for government subsidised supply. The arrangements for funding the PBAC directly through the budget will continue, and the PBAC will have no role in setting fees and will take no part in discussions with companies over fees. This bill will ensure there will be ongoing monitoring mechanisms to ensure fees continue to reflect costs. It is expected that fees will be indexed annually, and in accordance with the government’s cost recovery guidelines there will be a full review conducted within five years. The bill will see ongoing consultation with key stakeholders, including peak industry, consumer and healthcare provider bodies.

It is not the first time this bill has been before the House. The bill has been scrutinised by two Senate committees looking at various aspects of the bill and the regulations in detail. Both committee inquiries recommended that the bill be passed. Delay in the passage of this bill has already resulted in the loss of millions of dollars in revenue—in fact, around $9.4 million in 2008-09. The bill provides for a commencement date of 1 July this year. Previous operational data suggests fees would be expected to total approximately $14 million in the first full financial year of operation.

It is very interesting that those opposite announced in the 2005-06 budget that costs associated with listing products on the PBS and the NIP would be recovered from the pharmaceutical industry. So I think it is worth repeating what our fantastic Minister for Health and Ageing asked yesterday at the end of her second reading speech for this bill:

Given that this was a measure of the previous Liberal government in the first place, it is reasonable for us to ask why they continue to oppose it. It is just another example of opposition for opposition’s sake, or is it just the opposition choosing to once again support big business over the interests of the Australian people?

I commend this bill to the House.

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