Richard Marles (Corio, Australian Labor Party) Share this | Hansard source

I also rise to speak in support of the National Health Amendment (Pharmaceutical and Other Benefits—Cost Recovery) Bill 2008 [No. 2]. This is a bill which will allow the Australian government to recover costs associated with the assessment of applications for both new listings and changes in the listing of products on the Pharmaceutical Benefits Scheme or for the designation of vaccines under the National Immunisation Program. These assessments are undertaken by the Pharmaceutical Benefits Advisory Committee.

The Pharmaceutical Benefits Scheme is fundamental to the architecture of the way the Australian government administers health in this country. In the financial year 2007-08, $7 billion was paid out in subsidies under the PBS. There were 171 million prescriptions made in that year, the equivalent of eight prescriptions for every Australian. This is a scheme fundamental to ensuring that drugs and medications can be provided to Australians at an affordable price, thus making our system one which we would want to see representing a developed economy and country. The Pharmaceutical Benefits Scheme has been providing affordable medications to Australians for 60 years and it is essential to the administration of health in this country.

While the Pharmaceutical Benefits Scheme provides an enormous benefit to those persons buying drugs and medications, there is also, very evidently, a significant benefit which goes to the pharmaceutical companies who have their products listed under the PBS or their vaccines designated under the National Immunisation Program. Indeed, in the financial year 2007-08, the top 20 pharmaceutical companies who had products under the umbrella of these two schemes received, on average, $241 million each through subsidies under the PBS or the NIP. It is clear that it is essential to the business plan of these pharmaceutical companies that they receive the subsidies that are paid under the PBS or through the NIP.

So the proposition which forms the heart of this legislation is very simple: if these companies are to receive the considerable benefit associated with having their products listed on the PBS or designated under the NIP, then the assessment which is undertaken by the government of their products in order for those products to come under the umbrella of those programs ought be paid for by the companies receiving the benefits. And these costs are not insubstantial. The assessment process is significant. It involves a very exhaustive assessment and testing of the particular products involved so that the clinical claims being made by the pharmaceutical companies can be verified by the government. That is very important in ensuring that there is public trust in the products which find themselves listed on the PBS or the National Immunisation Program. There is also a function undertaken by the Pharmaceutical Benefits Advisory Committee of entering into negotiations around the ultimate price which a consumer is required to pay for these products on chemists’ shelves.

Seeking cost recovery in circumstances such as this is consistent with the Australian government’s cost recovery guidelines. Indeed, the Productivity Commission has commented on the importance in circumstances such as these of having cost recovery programs, and for three reasons. Firstly, there is an argument of equity. If companies which are in a position to pay are receiving a significant benefit from a service provided by government, then it is appropriate that they, rather than the taxpayer in general, pay for that service. Secondly, there is an economic argument that goes to economic efficiency on the part of those who are providing the service through government. They will provide that service in a more efficient and productive way if they know that they are subject to the discipline of needing to provide a bill to those applicants seeking listing of their products on the PBS. Thirdly, there is an economic efficiency argument from the point of view of the applicants themselves, and that is that there is an incentive not to put in place a substandard application if they risk the prospect of that application being knocked back and of then having to pay a price without getting an outcome.

This bill provides for the cost recovery scheme by allowing for regulations to be made under the National Health Act for such a cost recovery regime. It is important to understand that we are not here tonight legislating for a tax; this is a fee for service. The regulations that would come under this legislation may include but certainly would not be limited to provisions which deal with the administrative process for putting in place the cost recovery scheme through the making of the submissions and the prescribing of fees. They would deal with provisions relating to the payment of those fees and whether there are any categories of applicants or products which ought to be exempt from those fees, and whether there ought to be perhaps a provision which deals with the waiver of fees in certain circumstances. The provisions can deal with refusal to provide services in circumstances where no fees are paid—in a sense, a ‘down tools’ provision that if the company is not paying the fee then the service being provided, the assessment of their product, would stop. The regulations will provide for the recovery of unpaid fees, for the provision of penalties where there are late fees and, importantly, for a review mechanism for the administrative decisions which are made in the process of putting this scheme in place.

These regulations will be subject to parliamentary scrutiny. They will provide for a very simple method, a very simple proposition, which is that the more complex the assessment of a product, the more complex the price negotiations involved in a product, the greater the fee that will be charged. Indeed, if there were an application that was substandard and was knocked back, as I said, then every new application would be subject to a new fee, as there would be a new service provided. It is expected that these fees would be indexed annually, that there would be a full review of all the fees within five years and that the department would put in place a mechanism for monitoring the fees. As the member for Solomon said, it is anticipated that the revenue raised through this cost recovery scheme would be in the vicinity of $14 million annually.

The independence of the Pharmaceutical Benefits Advisory Committee will be assured, as the Commonwealth will continue to directly fund the committee and the revenue raised as a result of this regime would be paid into consolidated revenue. Very importantly, Australians accessing PBS products—accessing the medications or the drugs which are subsidised through the PBS—would not be paying a cent more as a result of the implementation of the scheme, and that is really a function of the process of negotiating the price, which is part of the assessment of the product in the first place.

There has been significant consultation with stakeholders in the pharmaceutical industry over the last two years about the implementation of this scheme. And, indeed, this is not new. There are cost recovery schemes, for example, in relation to the Therapeutic Goods Administration, where there is a system of providing for the registration of products or goods for their sale and for their marketing, and, as part of the assessment process required for registration, there is a fee paid by the applicant. So this is not a new concept to the industry; it is something that the industry is very familiar with.

This bill has a recent legislative history. It was first passed by this House of Representatives on 5 June last year. From here it went to the Senate Standing Committee on Community Affairs and from there to the full Senate, where the motion for the second reading was rejected, on 28 August last year. It went back to the Senate community affairs committee, where a second inquiry into the bill was held. It is worth mentioning to the House that both the committee inquiries recommended that this bill be passed.

The Pharmaceutical Benefits Scheme is a very important part of the architecture of this country’s administration of health. This bill will absolutely improve that architecture. The pharmaceutical companies are certainly receiving a reasonable benefit, but the service that is provided by government in assessing their products to form part of the PBS or the NIP is a service for which they ought to pay, and so I commend this bill to the House.

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