Chris Hayes (Fowler, Australian Labor Party) Share this | Hansard source

I too rise to support the National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2012. The bill will amend the National Health Act 1953 in order to improve the pricing of medicines on our Pharmaceutical Benefits Scheme and the way they are delivered. The Australian government's Pharmaceutical Benefits Scheme, the PBS, provides reliable, timely and affordable access to a wide range of medicines for all Australians. Under the current system, prices for PBS items are determined on the price-to-pharmacy basis, which is a combination of the ex-manufacturer price and a wholesale margin. This bill ensures that the common base point for price calculation of medicines listed on the Pharmaceutical Benefits Scheme will be the ex-manufacturer price alone. This will bring the PBS calculations into line with the calculation approach which has been used by the pharmaceutical industry, as I understand it, for many years. Importantly, prices for different brands and quantities of the same medicine will be determined from the same base ex-manufacturer price. This will create uniformity in determining the price of same-brand medication.

The new price for items and brands on the Pharmaceutical Benefits Scheme will be determined by subtracting the wholesale margin and arriving at the ex-manufacturer price. That alone will be the price determinant. This will ensure uniform pricing of all brands of medicines across the different PBS programs and mechanisms of supply. Under the new system, only one ex-manufacturer price will need to be agreed on for a brand of any pharmaceutical item. These changes are in line with the recently proposed price discount system, which aims to ensure that Australian taxpayers benefit from discounts and incentives provided by manufacturers of medicines where there is more than one brand on the PBS.

In the past, manufacturers commonly sold pharmacies new brands of older medicines, the patents for which had expired, at lower prices. The government unfortunately missed out on those discounts and continued to pay the full PBS amount to pharmacies. In other words, there was a disproportionate subsidy from taxpayers. Price disclosure will require manufacturers to notify the government of the prices at which medicine is being sold to pharmacies. The government has been aware for a while now that pharmaceutical companies tend to provide undisclosed discounts to pharmacies for stocking their products, but the pharmacies still receive the same amount of reimbursement from the government under the PBS. Price disclosure will therefore provide a vital $1.9 billion in savings. That can be used to make further investments in our healthcare system generally.

Price disclosure brings the government price into line with the market price, benefiting taxpayers and consumers. This will ensure a more efficient Pharmaceutical Benefits Scheme—a scheme which has been assisting Australians for years—and will ensure that those discounts are passed on to patients. Under price disclosure, on 1 April this year some 75 medicines became cheaper for the government and the price of over 60 medicines dropped for patients. In August this year, patients will have additional savings on 126 brands through the premium paid by patients being reduced. For instance, a cholesterol-lowering drug will be between $5 and $14 a month cheaper than it was previously. On average, patients will be making a saving of $3 per packet of medicine.

Price disclosure means that the price the government pays is in line with the market price, ensuring the cheapest possible prescriptions for people who are in need. Concessional patients will continue to receive their prescriptions at the concessional rate, making only a $5.80 co-payment. The most a general patient can pay for a PBS prescription is a co-payment of $35.40. The PBS helps to make medicines more affordable for Australians by limiting the amount we pay towards the cost of medicine items, as well as the selected brands under the Pharmaceutical Benefits Scheme. A number of vital, and often life-saving, medications cost a heck of a lot through research and development, but under the PBS they are provided to Australian citizens at an affordable rate. From 1 January this year, Australians have been paying no more than $35.40 for the vast majority of the items listed on the PBS, or $5.80 if they have a concession card. Under the PBS system the Australian government pays the remaining cost. This bill is another example of the Australian government's commitment to creating and maintaining a strong, sustainable and viable world-class healthcare system. Like the shadow minister, I have pride in commending the bill to the House.

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