Nicola Roxon (Gellibrand, Australian Labor Party, Minister for Health and Ageing) Share this | Link to this | Hansard source

by leave—This year we celebrate a notable milestone in the provision of life-saving medicines to all Australians and the history of the Australian health system. In doing so, we reach back to 1948 and beyond. Sixty years ago Ben Chifley was Prime Minister and Doc Evatt was President of the United Nations General Assembly. William Dobell controversially won the Archibald Prize with his portrait of Margaret Olley, Don Bradman put aside the cricket whites and we mourned the death of Isaac Isaacs, member of the first Australian parliament and our first Australian born Governor-General.

So 1948 was a time of great beginnings. Post-war migration changed forever the face of Australia. The first Holden rolled off the production line—apparently yours for just $1,330 plus tax and on-road costs. Lionel Rose and Olivia Newton-John, and Kim Beazley, in fact, were born and so too was a government program that was to become such an integral part of the Australian health system that it would eventually come to embody the very notion of a fair society—the Pharmaceutical Benefits Scheme (PBS).

By the time the PBS commenced under the Chifley Labor government in June 1948, the Pharmaceutical Benefits Act had been passed twice, overturned once, and been the subject of a national referendum, a constitutional challenge, and a very heated public debate over the powers of the federal government. Before this though, in fact as early as 1919, the Australian government had introduced the Repatriation Pharmaceutical Benefits Scheme (RPBS) to provide free pharmaceuticals to ex-service men and women.

Social reform was firmly on the public agenda when, in 1941, in the midst of a world war, the Curtin Labor government introduced child endowment payments and, in 1942, the widows’ pension. In 1943 wartime tax increases were made more palatable by the establishment of a national welfare fund. It was used to finance maternity allowances and unemployment benefits. Importantly, for the first time, Aboriginal and Torres Strait Islanders were entitled to receive social service payments.

A profound social effect of the war was the entry of 200,000 women into the workforce. While necessary in wartime, taking mothers away from the home aroused concern and led the Curtin government to introduce child care. The first home-help to assist women in looking after older relations was also introduced.

Health authorities were also concerned about nutrition, especially after the introduction of rationing. A national survey identified a need for the controlled distribution of milk and eggs to vulnerable members of the community, in particular pregnant and nursing mothers. Supplies were also sent to remote parts of the country—just as today special arrangements allow for PBS medicines to be available to those in remote areas.

The war saw important breakthroughs in the pharmaceutical industry. Most significant was the discovery of penicillin in 1943 by Alexander Fleming and the Australian Nobel laureate Howard Walter Florey, later Chancellor of the Australian National University and one of the founding fathers of the John Curtin School of Medical Research. By the end of 1943 the Commonwealth Serum Laboratories—now CSL and one of the two largest providers of plasma therapeutic products in the world—were producing penicillin for Australian soldiers and civilians.

The health department oversaw wartime campaigns against tuberculosis and venereal diseases, and established a medical service for munitions workers. The Acoustic Testing Laboratories, which later became the National Acoustics Laboratory, was created to conduct research into the effects of noise on servicemen and later into deafness caused by maternal rubella. The laboratory also devised hearing aids and rehabilitation programs, a precursor to the work by Professor Graeme Clark in developing the multichannel cochlear implant, the bionic ear.

By the early forties there was a growing call for some sort of national health insurance to ensure that all Australians who needed health care were able to access it, regardless of their economic situation. This was opposed by the British Medical Association (BMA), which had yet to become the AMA. It would take another three decades before the Whitlam Labor government would be able to introduce national health insurance, in the form of the Medibank scheme. Medibank was dismantled by the Fraser government before being reintroduced as Medicare by the Hawke Labor government in 1983. While there was strong opposition to its introduction at the time, Medicare is of course now a fundamental pillar of the Australian health system which enjoys strong bipartisan support.

But I digress. It was in the environment of rapid social change and social reform that, in 1944, the Chifley Labor government announced its intention to legislate, through the Pharmaceutical Benefits Act 1944, for the provision, free of charge, of all medicines listed in an official formulary. The point of this was to ensure that social disadvantage was no obstacle to patients accessing the medicines they need.

The government was, again, fiercely opposed by the BMA, which was strongly opposed to the regulation of prescriptions on the grounds that it placed limits on what doctors were able to prescribe. The BMA wanted the new scheme to apply to all prescriptions, not just those listed on the Commonwealth formulary. As a result, the BMA refused to cooperate in the implementation of the new scheme and urged its members to sign a pledge not to use the proposed formulary and prescription forms. The BMA took their opposition to the High Court, which ruled that the Commonwealth did not have the power to legislate on pharmaceutical and medical services. So, a victory for the BMA and one that delayed the start of what we now know as the PBS by several years.

The doctors’ challenge prompted a referendum in 1946 where voters were asked, ‘Do you approve of the proposed law for the alteration of the Constitution entitled Constitution Alteration (Social Services) 1946?’ The referendum succeeded and gave the Commonwealth powers to legislate for the provision of pharmaceutical, sickness and hospital benefits, as well as medical and dental services. In 1946, the Australian government started negotiating five-year agreements with the states to provide hospital patient subsidies in return for the abolition of fees and means tests for the users of public wards. Subsidies were also provided for private hospital patients. These basic principles—both the introduction of the first PBS scheme and these hospital agreements that public hospital patients should receive free hospital care—are still in force today.

Following the referendum, in June 1947 the Chifley Labor government introduced a second Pharmaceutical Benefits Act. And as a result, in June 1948 the PBS came into being, providing 139 lifesaving drugs at no cost to patients. In its first year the PBS budget was £150,000 and antibiotics were the most recent medical discovery. The scheme was still opposed at this time by the British Medical Association amidst acrimonious exchanges with the government, but this time the PBS was here to stay. The PBS is now, like Medicare, a central pillar of the Australian health system and one of Labor’s great legacies to the Australian people. Labor persisted, as it persists today, in reforms such as these to ensure that patients receive the treatment they need, regardless of their position in society.

The PBS has continued to evolve; the needs of the disadvantaged were recognised when in 1983 concession card holders were given access to PBS scripts at a greatly reduced personal cost. In 1986 the Hawke Labor government introduced the PBS safety net to cap the amount that families would have to spend each year on PBS medicines. The evolution of course continues.

Since 1948 the number and variety of drugs subsidised and the number of patients benefiting has grown every year. From the 139 ‘lifesaving and disease preventing drugs’ originally subsidised in 1948, the PBS has expanded to cover 639 medicines with 2,986 branded products. Today, over 170 million scripts are subsidised through the PBS, at a cost which will exceed $7 billion this year. Every day, directly or indirectly, the PBS benefits all Australians. Whether in the treatment of the most virulent of cancers or providing treatments to manage cholesterol or to help give up smoking, the PBS is a vital tool in both the treatment and prevention of disease.

As the Minister for Health and Ageing I have a delegation under the National Health Act 1953 to approve listing of drugs on the PBS, but it is important that I note that the Pharmaceutical Benefits Advisory Committee is charged with the significant responsibility of recommending which drugs should be subsidised by the government. Neither I nor any other person can approve the subsidy of any drug on the PBS without their recommendation. This is how it should be and this is how it will remain.

Over recent years successive governments have agreed to consider PBS listings outside of annual budget considerations. This, and the move to publishing the schedule of pharmaceutical benefits online, has meant that new drugs can be added each month, giving earlier access for eligible patients to necessary medicines. In the few months since coming to office this government has demonstrated its commitment to providing all Australians with reliable, timely and affordable access to cost-effective and high-quality pharmaceuticals in a number of initiatives. The government has also extended the PBS to give Australians serving their country in diplomatic missions overseas access to the PBS.

My department is working to improve the transparency of the PBS process by publishing a list of drugs which are to be considered by PBAC for subsidy. This will allow for greater input from consumers and inform PBAC considerations. Importantly, too, the government is working with PBAC and the pharmaceutical industry to identify and make available the PBS medicines that meet the distinct needs of Aboriginal and Torres Strait Islander Australians, some of whom live in the most remote parts of Australia.

The cost of the PBS to the government has been an issue since soon after the commencement of the scheme. As author and health economist Sydney Sax notes:

Despite a tightly regulated system which empowered the Minister to determine rates of payment for, and conditions of supply of, pharmaceutical benefits, costs rose rapidly after 1956-57, when they totaled ₤11.7 million, to ₤15 million in 1957-58 and ₤21 million in 1958-59. The legislation had provided for the establishment of medical and pharmaceutical benefit committees in each state to examine and report on possible abuses in the supply of benefits, but it was still found necessary in 1949 to introduce a 5 shilling charge in the hope that it would discourage over-prescribing by doctors, and so act as a brake on costs.

It is interesting to note that where once the PBS was opposed by the medical profession, we are now faced with the opposite problem of overprescribing. While the historic growth of the PBS has been significant, a number of specific measures are being adopted to ensure the balance between the growth of the PBS and appropriate access by Australians to cost-effective, emerging pharmaceutical therapies. The mechanisms we are putting in place are appropriate to manage the growth of the PBS.

On 1 August 2008, a little over a month from now, the Australian government will apply statutory price reductions to PBS medicines where multiple brands are available. Some medicines will receive a two per cent price reduction while others will receive a 25 per cent price reduction. Ad hoc price reductions are also an ongoing feature of PBS management. The most notable of these in recent times was the 20 per cent price reduction for simvastatin. It is forecast that this one-off reduction will reduce the forward estimates for the PBS by approximately $300 million.

Given the ever-increasing cost of the PBS, measures such as these are necessary to ensure that the scheme remains sustainable into the future and that Australians will continue to have reliable, timely and affordable access to a wide range of medicines. Stewardship of the PBS is a tremendous responsibility, because ultimately it is about ensuring that Australians have affordable access to medicines that they need. We inhabit a world seemingly ruled by statistics. We have all sorts of statistics on life expectancy, on infant mortality, on diseases that are cured. Certainly the PBS has contributed to those statistics improving, but there are many things that we cannot measure in dollars or fractions of a per cent—the joy of a life saved; the security that comes with knowing we have access to affordable medicines for our family. As a nation as well as individuals we have set ourselves a responsibility. We have acknowledged that the health of one of us is the responsibility of all of us. By doing so we show that we appreciate that when as a community we are enriched we all benefit as individuals.

We could think of the PBS as Chifley’s gift to us. The story of Labor’s fight to introduce the PBS is consistent with the Labor tradition of fighting for necessary reforms in health—and, indeed, in all sectors of Australian society. This government will continue in this great tradition of reform by working to build an Australian health system to deal with the new challenges of the 21st century.

I ask leave of the House to move a motion to enable the member for North Sydney to speak for 14 minutes.

Leave granted.

I move:

That so much of the standing and sessional orders be suspended as would prevent Mr Hockey speaking for a period not exceeding 14 minutes.

Question agreed to.

Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

I do not know whether I will take the full 14 minutes for my speech, but I do want to fill in some of the historical holes that the minister tended to omit—which just happened to fit in with when the Liberal Party was in government. I know it is going to come as a rude shock to you, Madam Deputy Speaker Burke, and everyone listening to this broadcast, but the minister’s statement omitted—what would it be?—the 40 years that the coalition was in government and the changes for the better made to the Pharmaceutical Benefits Scheme during those years.

I want to go back to 1919, when it is arguable the Pharmaceutical Benefits Scheme actually started under one of my predecessors, the former member for North Sydney, Billy Hughes, and the Nationalist Party. In 1919 he set up the Repatriation Pharmaceutical Benefits Scheme, which I am advised by the library was established to provide free pharmaceuticals to ex-service men and women. It was the Repatriation Commission that reached agreements with the various Australian pharmaceutical societies to provide necessary medications for veterans of the First World War and the Boer War. So, even though Billy Hughes was obviously a member of a number of different political parties, I am reasonably confident that at that time he was a member of the Nationalist Party and as Prime Minister he introduced that significant initiative. He was a discerning man, Billy Hughes. In fact, I am going down to Old Parliament House this afternoon, where there is an exhibition on Billy Hughes’s life. He was the member for a number of seats. He was the longest serving member of the House of Representatives and one of my predecessors.

Having said that, I think old Billy should be given some proper recognition, because it is hard to believe—and, Madam Deputy Speaker Burke, I know you are struggling with the concept—but not all good things were solely the responsibility of the Labor Party! There were other parts of the development of this great nation that were actually borne by the Liberal Party, the National Party or the Country Party, and in fact the Pharmaceutical Benefits Scheme was part of that. Having said that, as I said in a discussion in this chamber on one of the bills on the PBS, I was actually very bipartisan. Perhaps that is where the minister got the idea to have this ministerial statement, because at that time I talked about the fact that it might arguably be the 60th anniversary of the Pharmaceutical Benefits Scheme even though there is an argument that it actually started back in 1919.

I recognise that the Curtin government and the Chifley government contributed substantially to the creation of the Pharmaceutical Benefits Scheme. It was in 1949, on the election of Menzies, that the new government introduced a limited scheme to provide a list of 139 life-saving and disease-preventing drugs free of charge to the whole community—that was in the Pharmaceutical Benefits Act 1947. That was the act that was passed under Chifley, but the new regulations providing for those 139 drugs came in on 14 September 1950 under Menzies.

What that indicates is that there was a level of bipartisanship at that time on the PBS, although I must say that the Labor Party at that time had supported a more comprehensive scheme and, because of the close relationship at that time between the British Medical Association and the new Menzies government, I would assume that was one of the reasons why there was some opposition to a comprehensive scheme. Having said that, I regret that I do not know why the BMA was so opposed to a comprehensive scheme, other than the fact that the doctors groups in those days would have been very conservative and probably would have taken the view that introducing a scheme of this nature would place restrictions on the delivery of the pharmaceuticals rather than enhancing the delivery of the pharmaceuticals. Quite frankly, the government, as a total solution to all problems, is not necessarily the answer.

However, in 1951, again under the Menzies Liberal government, the National Health (Medicines for Pensioners) Regulations came in. Those regulations authorised the free provision of medicines listed on the British Pharmacopoeia for pensioners—that is, for the aged, invalids, widows or former service personnel. So in 1951 Menzies actually extended the pharmaceutical scheme as it was at the time. The minister also failed to take account of the fact that in 1953 the Pharmaceutical Benefits Advisory Committee, PBAC, was set up—just a minor part of the PBS, I say with some degree of cynicism. It was and still is a substantial part of the PBS. Even though the medical profession at that time was very opposed to the establishment of a government-appointed committee controlling the pharmaceutical formulary, the government was firm in its decision to restrict pharmaceutical benefits to items on the formulary, and the formulary committee was embodied in the Pharmaceutical Benefits Act. It originally consisted of the Director-General of Health as the chairman and six other people appointed by the minister, and this became the PBAC over time. It became an independent statutory body under the National Health Act 1953, again under the Menzies government. The member for Brand would appreciate my attempts to be bipartisan on this, because these are important historic points.

On 1 March 1960—and let me think for a second here; oh, yes, Menzies was the Prime Minister; how about that—the Pharmaceutical Benefits Scheme, or the PBS as we know it today, was established. The main components of the scheme were: a combination of the existing pensioner and general schemes, an expanded range of drugs for the general public and the introduction of a patient contribution, or copayment, of five shillings to provide some control of volumes and expenditure. That is an important point: that was the beginning of the copayment. As we and members on the other side know, it is an important moment when you actually get some copayment in there, so things are not entirely free. Once you break that seal, it gives you an opportunity to have a reasonable charge associated with the public benefit to make that public benefit more sustainable.

But, despite the introduction of the copayment, prescription volumes increased from $24.6 million in 1959 to $60.4 million—that is nearly a tripling—eight years later, in 1968, and Commonwealth expenditure rose from $43 million to $100 million at the end of the 1960s. There was further growth in the PBS over the seventies. From 1969 expenditure was $100 million a year and in 1975 it reached $211 million a year, so there was a substantial increase over that period of time. It should also be recognised, because it was omitted by the minister, that in 1978, under the Fraser government, dentists were invited into the PBS to be able to prescribe a limited range of antibiotics and antibacterial and antifungal drugs as pharmaceutical benefits. They could do that from 1 April 1979. It was the Fraser Liberal government that made those changes. They made a further change on 1 January 1983: a concessional beneficiary category was created to assist the disadvantaged. So it was a Liberal-National government that introduced an initiative so that low-income earners and the unemployed, who are now concession card holders, would pay a concessional amount for listed pharmaceuticals.

I should add that, under the Howard government, access to ophthalmologists was provided under the 2007 initiatives. There is a significant initiative, which the minister did refer to but failed to give credit for, which starts on 1 August 2008, when the Australian government will apply statutory price reductions to the PBS medicines where multiple brands are available and when some medicines will receive a two per cent price reduction and others a 25 per cent reduction. That is very important, and that was an initiative taken by the Howard government to provide the opportunity for the generics to come on board.

This is a very important scheme. Putting aside an important history, one of the reasons the Pharmaceutical Benefits Scheme is successful is that there is bipartisan support for the scheme. I do not take total ownership of the PBS for the Liberal and National parties, but nor should the Labor Party take ownership of the entire history of the PBS. I think we can look at the historical development of the PBS and see that there were various interests at that time—with the benefit of hindsight, perhaps misguided—that were focused on the interests of the patients and on the wide distribution of medicine. For example, India has no PBS, and yet a lot of pharmaceutical companies believe that it is one of the best markets in the world to operate in because there is large demand, they can get the drugs out there quickly, there are not the same sorts of restrictions in any way, shape or form that there are in Australia, and the drugs are more accessible for the general Indian population. But India has a vast number of challenges and one of them is how you ensure that the entire population gets access to pharmaceuticals on a sustainable basis.

We also need to have a rational, level-headed debate about the sustainability of the pharmaceutical industry, which is significant in mainstream Europe and the United States. Obviously, despite having a reasonable presence and a number of manufacturing plants and research facilities in Australia, the pharmaceutical industry is under certain pressures, and we have to recognise that. The other day I likened the pharmaceutical industry to the big movie houses in Hollywood. They are always looking for their next blockbuster. They have very high up-front costs, they have significant research costs and they are hoping that it really works. The difference with pharmaceuticals is that the numbers are so much larger in the main than for any of the big movie houses in Hollywood and, rather than nourishing the entertainment needs of the community, the pharmaceutical industry nourishes the body, saves people’s health and provides wellness support to people when they most need it.

So we welcome the initiatives to recognise the success of the PBS. I hope that the PBS lives to 100 and beyond and that it continues to be sustainable. Sometimes hard decisions have to be made about sustainability. One of those hard decisions was made in the budget, I think, back in 2003-04, when we had to increase the copayment. That was a tough decision. My recollection is that it was opposed by the opposition at that time.

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Broadband, Communication and the Digital Economy) Share this | Link to this | Hansard source

No. Is that right?

Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

I know it is hard to believe. That is my recollection.

Nicola Roxon (Gellibrand, Australian Labor Party, Minister for Health and Ageing) Share this | Link to this | Hansard source

Ms Roxon interjecting

Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

It must be, because the minister is agreeing with me that it was opposed by the Labor Party at that time.

Nicola Roxon (Gellibrand, Australian Labor Party, Minister for Health and Ageing) Share this | Link to this | Hansard source

I think we might have agreed to it in the end.

Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

I think that is right. In fairness, you agreed to it in the end. I remember that it was a tortured process. That is why I am scarred by the experience.

Nicola Roxon (Gellibrand, Australian Labor Party, Minister for Health and Ageing) Share this | Link to this | Hansard source

I can see you going through that now!

Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Yes, I am. The sustainability of the PBS is based on the fact that we are all committed to ensuring that Australians have widespread access to the best pharmaceuticals, that the pharmaceuticals are affordable and that those people most in need are provided with all the pharmaceuticals that they can be provided with. Finally, we recognise and accept that these are hard decisions for a government, but at the end of the day we also recognise that everyone is trying to get the best outcome for the whole nation. (Time expired)