David Gillespie (Lyne, National Party) Share this | Hansard source

I rise to speak on the National Health Amendment (Pharmaceutical Benefits) Bill 2015 because it is one of the more important bills that will pass through the House in this parliament because it affects so many people. In the food industry, they talk about how the industry takes raw product from the paddock to the plate. Well, this bill encompasses, in the pharmaceutical space, from the factory through to end organ physiology. It encompasses so many different areas of the health sector, and that is why it is so important.

Overall, I think it is a good deal for the Australian taxpayer, and it is an okay deal for the pharmaceutical industry and the local community pharmacist. Everyone wanted more. The government wanted to save more. The pharmacies wanted more security for their high-employing, high-quality, service driven industry. And the pharmaceutical industry need to be on a sound footing when they are selling the products that they have spent billions and billions and billions of dollars investigating and bringing to market.

As I mentioned, there are many elements to this. I will get to the Sixth Community Pharmacy Agreement at the end. First of all, there are some significant changes which will deliver reasonable cost efficiencies for the taxpayer, and they have been negotiated with the pharmaceutical industry, both the originator drug companies and the generics and biosimilars. But the first thing that is enabled through this is a one-off five per cent reduction in the premium price for single-brand drugs once they have been on the Pharmaceutical Benefits Scheme for five years. Sometimes this can actually shortcut the period of the patent because—as you are no doubt aware, Mr Deputy Speaker Randall—in the patent world, for primary drugs, you may not get your product developed and into a safe delivery system for 12 or 13 years of the 20 years, such is the length of time that it takes to get things through drug trials and through approval processes. But the government does not have a blank, unending funding vehicle. Like with everything, we have to be prudent with our finances because we have to be responsible for so many areas of life across Australia.

There are also changes in a similar fashion on the F2 formulary, although it is involved in a different way by removing, particularly in combination drugs, the originator drug from any of the combination formularies. There was a price impact for including a new branded originator drug in a combination drug. It extended the premium price for a bit longer. This is an open way of removing that originator from the calculations and delivering a saving.

As we know, the price disclosure mechanism has had major cost implications for the end dispensary system, but there were changes that were brought in at five minutes to midnight by the previous government which slashed an awful lot of money out of community pharmacies. The changes in this bill address some of that, but there are still price disclosure flow-on price reductions from component drugs to multiple combination formulations which will have an additional, once only, back-capture reduction on 1 October 2016.

These negotiations are important because what we are trying to achieve is to have many more of the new drugs that deliver amazing results that have gone through the regulatory process, which are waiting to be approved and funded so that they can be accessed by Australian patients. If we have a bigger pie of new drugs available because there is money to get them onto the market, overall the patient base that depends on these new drugs will be better off. That is the essential dilemma with pharmaceuticals and health delivery, whether it is hospitals or primary care. There is an inexorable rise in the costs. As the federal government are directly liable for a large part of that cost, we had to have these difficult decisions made. This legislation is putting these changes into action.

The PBAC also has some changes delivered to it because the volume and complexity of the drugs that are coming through now are increasing exponentially. This legislation allows more-skilled people, and more people, onto the PBAC to cope with this extra volume of assessment and work.

The last thing I would like to talk about is the Community Pharmacy Agreement and the safety net. A total of about $3 billion is rolled into the Community Pharmacy Agreement in a variety of manners. First of all, there is an infrastructure and handling fee. The nuts and bolts of what was destroying the viability of pharmacy agreements were that there was a mark-up on the cost of drugs at various wholesale or retail levels, and that is what paid for all the costs of running a pharmacy and of formulation, but when this was accelerated overnight from the original 18 months to, I think, six months by the previous government—as I said, at five minutes to midnight—there were many people who were having to continually lay off more and more staff. So, instead of a consultation and high-service community pharmacy, you were getting fewer and fewer staff and more and more blank dispensing, without all the value-adding extras. But an infrastructure and handling fee is a bit of a relief for our colleagues in the pharmacy space from the vagaries of trying to run a business on an incredible shrinking mark-up that was putting the whole business model at risk.

The other thing is that there is growth in scrip numbers, and dispensing fee growth has to keep up with the costs of delivering it. Many pharmacies have fixed costs and ever-increasing wage costs to deliver the service. Hopefully, with a reliable way for them to judge what their income is going to be rather than a continuous downturn in their income, we will not have the mass lay-offs or pharmacy closures that were threatened.

Another significant change is that there is a funding stream for some pharmacies to deliver simple primary care. Pharmacies used to do this a lot in an informal way, and this is a way of recognising what I think they have been doing for a long time already without compensation except through previous funding and mark-up arrangements. This will be scrutinised. It will be analysed by the Medical Services Advisory Committee, because we do not know for sure whether it is going to deliver value for money or whether it is just going to duplicate what happens when people eventually go to a general practice if they do have a condition that needs medical care. Hopefully it will make simple, uncomplicated health advice and access available, particularly in the rural and remote areas where often the pharmacy is a much available source of health advice than a general practitioner.

We know pharmacies are very widespread across regional and rural Australia, and nowhere more so than in the Lyne electorate. I think I have 36 different pharmacies across the electorate. Part of this agreement allows the geographic location to continue, which actually works pretty well, I find. Whether I am in Wingham, Taree, Lake Cathie or Port Macquarie, there is always a pharmacy nearby. There are a couple of new medical centres that have grown exponentially over the last five or six years. As well as location, there are allowances made for large practices with, I think, more than 10 practitioners all the time. It makes sense, if you have that many practitioners in one spot all the time, to have a pharmacy co-located. So there is flexibility within it.

Hopefully, at the end of this period, all these things will be analysed, because one of the agreements was that there will be an analysis of the geographical locations and their effects. But pharmacies now are very widespread. There is hardly a shopping centre in my area that does not have some pharmacy. If you go to the big medical centres, you have a pharmacy. You have pharmacies at or very near the hospitals. You do not want it to end up being like bottle shops. If you free up the geographic location, there would be an explosion at the retail end of pharmacy, which I do not think would be a good manoeuvre.

We cannot finish this discussion without mentioning the discounted co-payment. It is a win for consumers, but it is a loss for the pharmacist because it comes out of their bottom line. If they have fixed costs and that is where they make their remuneration, it will be at the expense of their bottom line. You might see some pharmacies that have huge retail spaces in them, with non-pharmaceutical stuff like shampoos, beauty products and perfumes, but not every pharmacy is like that. I have several pharmacies in my electorate right next to medical centres where they do not have the space to have all the fluffy retail stuff. They just do pure clinical pharmaceutical dispensing, and they do a great job at it, like the one at the base hospital, the one at the Hermitage Medical Centre or the one at Lake Cathie, which is not a big retail pharmacy; it makes its money purely out of dispensing. If the average pharmacy is doing 60,000 or 90,000 scrips a year and, through competition, having to take a hit of a dollar for every one, it will really challenge their business model.

So you have to keep things in perspective, and it is horses for courses. Not every pharmacy is the same. I must say a word about competition. As the member for Dawson mentioned before, there was a lot of very aggressive, pointed commentary in the popular press and the newspapers, some of which was quite outrageous and quite incorrect. The fact of the matter is that pharmacies are already very competitive. There are, as you know, discount pharmacies where the prescription part of the business is really superfluous. They do not aim to make any money out of the scrips. Sure, they can and they will bank that, but it is a loss leader for the beauty products and all the other things in a supermarket.

They are competing with the supermarkets as well. So you have competition from supermarkets and discount warehouses. There is the expectation that the pharmacist will speak to you to explain the drugs and give you advice and work on your drug combinations. They will give you pharmacological advice as opposed to just a price difference and other simple advice. You are getting a professional person who has been to university for four years and has to keep themselves up-to-date.

So the consumer and the government are getting a professional service. I think the pharmacy community model is a good model. As I have mentioned, there will be a review of the geographical locations. If you look at it dispassionately and if that were to be changed, you would have quite a different landscape to what we have now, which is a very professional community pharmacy sector that gives good advice, takes a lot of care and does more than just lick and stick, which is what you get when you go to supermarket run pharmacies overseas. (Time expired)

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