Jane Prentice (Ryan, Liberal Party) Share this | Hansard source

I am pleased to have the opportunity to rise to speak on the National Health Amendment (Pharmaceutical Benefits) Bill 2015—pleased, because this bill is yet another example of our government getting on with the job of responsible governance by providing stability and certainty to the millions of Australians who access medication through the Pharmaceutical Benefits Scheme, or PBS, each year.

This bill will implement the government's Pharmaceutical Benefits Scheme Access and Sustainability Package. It will also legislate the outcomes of the successful negotiations on the Sixth Community Pharmacy Agreement. The bill will ensure that Australians will benefit from cheaper medicines, a more competitive pharmacy sector and greater investment in new medicines and patient support services. It is the result of a consultation process that has taken many months, and which has for the first time involved consultation with a much broader range of stakeholders. In addition to the Pharmacy Guild of Australia and Medicines Australia, the government has also consulted with the Generic Medicines Industry Association, the Consumers Health Forum of Australia and other stakeholders, including consumers and consumer advocacy groups. The end product is an agreement that strikes the best possible balance between the interests of consumers, producers, retailers and government.

Not all stakeholders will agree with all components of the package—it is a requirement in negotiations such as these, with so many divergent and competing interests, that all sides make concessions in some areas in order to achieve an outcome that works for everyone. An agreement has now been reached that achieves the best possible outcome for Australians. That a suitable agreement has been reached is a testament to the work of the Minister for Health, and I commend her and her office for their no-fuss attitude in getting the job done and the agreement signed.

This agreement puts health consumers first. It will see the price of medicines discounted for patients, improved access to new medicines, greater certainty for medicine manufacturers and an additional $2.8 billion in direct investment across the pharmacy sector. Savings to the PBS will be delivered under this agreement that will ensure its sustainability, and will allow the government to continue to list new medicines under the scheme as we have done successfully in the 2015 budget.

It is also worth noting that the Treasurer indicated when introducing the Medical Research Future Fund Bill 2015 that once the fund is established, future savings from the health portfolio will be contributed to the fund. What this means is that savings to the PBS implemented in this bill will be retained and reinvested for the health benefit of all Australians.

As the minister has outlined, the majority of savings achieved by these measures will come from PBS pricing changes. For the first time, on 1 April 2016 there will be a one-off five per cent reduction in the price of what are termed under the National Health Act 1953 as 'F1' or single-brand drugs. This reduction will only apply to drugs that have been PBS listed for at least five years. The change will reduce the price paid by government for these drugs, and for some lower cost drugs, that already sell for less than the co-payment amount, it will mean a reduction in the price paid by the consumer.

For F2 drugs—that is, drugs sold under multiple brands—the price of the originator brand will be removed from the weighted average disclosed price after a period of three years. As the price of the originator drug tends to be higher than that of its generic competitors, the effect of this will be to reduce the price paid by government and consumers after three years. To allow for industry adjustment, this policy will take effect from 1 October 2016.

The net effect of these policies, as well as the closure of other loopholes in the price disclosure framework, mean that the government and consumers are getting a better deal for medicines already listed on the PBS. These savings will be reinvested into new medicine listings that will improve the lives of more Australians.

From my perspective, one of the best parts of the 2015 budget package was the $1.3 billion over five years that the government will be spending on the listing of new drugs on the PBS and the additional $2.5 billion set aside for consideration of new listings of drugs to treat conditions such as hepatitis C and cancer. These drugs will change lives.

New items listed in May include a new treatment for melanoma, expected to assist approximately 1,000 patients who would otherwise have been required to pay $131,000 per treatment. A further 590 patients a year will benefit from a newly listed breast cancer treatment that would have cost $82,700 a year without subsidy. The existing drug Lucentis will now be PBS subsidised to treat a wider range of blindness-causing eye conditions, that will assist approximately 18,000 more patients, set at a cost of $541 million over four years.

I was particularly pleased that Zostavax, a vaccine for the prevention of shingles, will be subsidized for Australians aged 70 to 79 through the National Immunisation Program. Shingles is a painful, blistering rash that can occur on any part of the body and can also cause long-term nerve pain, vision impairment, facial paralysis and hearing problems. The new listing will help vaccinate up to 240,000 older Australians, on an ongoing basis each year, as the unsubsidised price of over $200 per dose is beyond the means of many older Australians on fixed incomes.

These new listings would not be possible if the costs of the existing PBS were not kept under control. It is the coalition government's responsible management of the PBS, encapsulated in the measures proposed in this bill, that will enable more new listings to be made in the coming years as newer and more effective drugs come on to the market.

I now turn to the measures of the bill that address the outcome of negotiations regarding the 6th Community Pharmacy Agreement. The negotiations were followed very closely by pharmacists in my electorate of Ryan. Throughout the negotiation period, I received correspondence from many pharmacists raising a variety of concerns about the progress of negotiations. Most of the concerns related to the proposal to allow pharmacies to discount the patient co-payment for PBS medicines by up to $1 per prescription. These are concerns that I understand and acknowledge, and I raised them with the minister at the time. As a former business owner myself, I know that margins can be tight and that every dollar discounted comes off the business bottom line.

Pharmacists in my electorate know that I am a strong supporter of community pharmacies. In fact, last year in this House I presented a petition on behalf of the Pharmacy Guild of Australia of more than 1.2 million signatures—the largest ever tabled in the history of the House of Representatives. The petition called on the government to:

… take whatever action is needed to ensure that community pharmacy receives the funding support it needs to stay in business, serve patients, employ staff and remain open after hours.

As a government, I believe that we have done this. And certainly the feedback I have received from the industry is favourable. I quote from a letter received from prominent Queensland pharmacy owner Terry White AO, who says:

At the end of the day the industry has ended up with a 5 year agreement that will give certainty for small business like pharmacy to invest, and at the same time, give comfort back to the banking industry to continue to support an industry employing over 60,000 staff.

But even more importantly, he also says:

The Minister has certainly done her job looking after the interest of Australian taxpayers.

For a government there is no higher praise than that.

While I accept that not all pharmacists will be satisfied with all aspects of the agreement, it is the view of both the government and the Pharmacy Guild that this agreement achieves an appropriate balance.

The $1 discount is included but it is not mandated. Pharmacies can choose whether to offer a reduction and they can decide on the level of discount up to a maximum of $1. The coalition government believes that this measure will improve competition in the sector and reduce the prices paid by some of the most vulnerable members of our society for vital medication.

For pharmacy owners, this agreement also offers the renewed certainty of a five-year extension to current location rules. These rules offer protection from competition. The National Commission of Audit, the Competition Policy Review and the Productivity Commission have all advocated for their revision or removal. However, the government will retain the existing location rules pending a comprehensive and publicly accountable review to be conducted over the next 18 months. The review will also cover pharmacy remuneration and wholesaler arrangements, as it is important that future pharmacy agreements are informed by a full understanding of the PBS supply chain.

As part of the new agreement, some low-cost, over-the-counter medicines will be removed from the PBS. These medicines can be sold directly to a consumer without a prescription. For example, the government spent $73 million in 2013-14 subsidising paracetamol that only costs a few dollars. The government believes that this is not an effective use of PBS funds that could instead have been used to subsidise life-saving drugs, costing thousands of dollars per treatment.

In total, the 6th Community Pharmacy Agreement will deliver up to $18.9 billion to community pharmacy and wholesalers over the next five years. This is an increase of over $3 billion compared to the Fifth Community Pharmacy Agreement, recognising that this is a time of transition for the sector and that pharmacy owners need to have confidence to invest for the future. In implementing this agreement we must avoid the mistakes made by Labor when negotiating the Fifth Community Pharmacy Agreement in 2010.

The Australian National Audit Office conducted an audit into Labor's pharmacy agreement and identified glaring deficiencies in its design and administration. For instance, the audit office found that the agreement did not clearly document expected net savings under the agreement, nor did it provide a mechanism for parliament or other stakeholders to be informed of the actual cost of various components. Shortcomings in performance reporting meant that the department was unable to effectively assess whether the Commonwealth received value for money from the agreement. And the Department of Health did not obtain key PBS data from pharmacies—data collection that Labor Ministers at the time considered to be 'non-negotiable'. I am confident that the minister and the coalition government have learned the lessons from Labor's mistakes and taken steps to improve the design and monitoring of this pharmacy agreement.

As a result of consulting widely, this bill strikes an appropriate balance between competing interests and offers a better deal to health consumers and taxpayers while providing regulatory certainty and necessary protections to pharmacy owners. I congratulate the minister and I commend the bill to the House.

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