Stephen Jones (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Regional Development and Infrastructure) Share this | Link to this | Hansard source

I rise to speak on the National Health Amendment (Pharmaceutical Benefits) Bill 2015 and to speak in favour of the following amendment. While not declining to give the bill a second reading, the House notes Labor's concerns about the potential unintended consequences caused by a lack of consultation during the negotiations for the Sixth Community Pharmacy Agreement.

This government bill seeks to amend the National Health Act 1953 to implement measures in the Pharmaceutical Benefits Access and Sustainability Package. This includes changes to the Pharmaceutical Benefits Scheme, measures implementing agreements with the Generic Medicines Industry Association and Medicines Australia, and of course the Sixth Community Pharmacy Agreement, the new five-year agreement with the Pharmacy Guild of Australia.

I should note at the outset that at no stage was Labor consulted by either the government or indeed any of the parties to these agreements prior to this legislation being tabled. Indeed, the first time Labor was ever made aware of the substantive detail in the legislation was the night before it was tabled, in a briefing from the department. Yet here we are, less than a month before the existing pharmacy agreement expires, with the government insisting that we now have to get this through the House this week so that it can be taken to the Senate in time to pass before the 30 June deadline. This is entirely due to the government's own incompetence—and I say 'incompetence' quite deliberately, because the Fifth Community Pharmacy Agreement sets out a timetable, and it is very specific about this, to ensure that negotiations for a new community pharmacy agreement will commence 12 months prior to the expiry of the agreement and conclude by 31 March 2015.

So, we have had 12 months notice, if not five years. And the agreements were supposed to conclude by 31 March. And while we are now standing here with a gun to our head being asked to vote on and send this to the other place so that it can be concluded before the deadline, it is an urgency of the government's own making and it speaks to the complete chaos which is the hallmark of this government when it comes to health policy. Instead of having 12 months, negotiations did not start until just four months before the expiry date, and they concluded only last week. Now, that is not understandable, given the complexity of this matter. But they have been in government for over 18 months—a fact that is often lost on many members of the public who tune in to question time and hear the Prime Minister and so many other members of the government spending so much time talking about Labor and not nearly enough time talking about their plans for the country. So, now the minister insists, because of her government's incompetence, that it is vital that the parliament rushes this straight through to the Senate without a proper debate. Well, when a bill commits a government that has ripped the guts out of health funding to spending another $18.9 billion, Labor believes that it is worth taking some time to have a good look at the detail. That is what I will be doing in the time available to me today and that is what all Labor members will be doing when they speak in relation to the bill and the proposed amendments. I also indicate that we believe, notwithstanding the urgency created by the government's incompetence, that this bill does warrant more detailed investigation in the Senate, and that is what we will be moving for when the bill goes to the other place.

I will now talk about the PBS package. Unlike the previous pharmacy agreements, this bill seeks to bundle up a series of other measures that are not directly linked to the remuneration of pharmacists and what commentators have suggested was a deliberate tactic to put pressure on the government. The government is calling this the PBS Access and Sustainability Package, which it says aims to deliver a more sustainable Pharmaceutical Benefits Scheme, with better value for taxpayers, cheaper medicines for consumers and improved access to innovative medicines. Given the government's repeated claims that its massive cuts to health funding and the GP tax were also about sustainability, one could forgive us on this side of the parliament if the warning lights go off every time we hear members opposite talking about wanting to make any part of the health system more sustainable. This is a government, it is worth noting, which last week described a cut of $600 million out of the health flexible funds, which are devastating crucial health support groups and services around the country, as rationalising and streamlining health programs.

According to the government, the Access and Sustainability Package contains more than 20 measures and is designed to achieve $3.7 billion in net savings over the next five years. It includes $6.6 billion in savings across the entire pharmaceutical supply chain, partially offset by $2.8 billion of these savings going back into the pharmacies as part of the Sixth Community Pharmacy Agreement. Of the remaining $3.7 billion, the government is proposing, though not at this stage, budgeting for some of this money to be invested in new drugs. In other words, cuts to the prices paid to the drug companies are being used to prop up the budget and fund the additional money going into the Sixth Community Pharmacy Agreement, with industry newsletter Pharma in Focus declaring that research pharma companies are by far the hardest hit in contributing $6.6 billion in total savings.

Key components of this package are: one, a new PBS pricing policy to reduce the price paid by the Commonwealth for innovative drugs, which are F1 formula drugs, and generic drugs, which are F2 formula drugs and medicines; two, increasing pharmacy competition by allowing pharmacies to discount the co-payment; three, removing some of the over-the-counter medicines from the PBS; four, changing the structure of the pharmacy remuneration to remove the link to PBS prices; and, five, providing for pharmacy to expand its role in the community. The government expects the majority of the savings achieved by the measures to come from PBS pricing changes. The key pricing changes are discussed individually below.

In terms of the F1 five per cent price reduction, around $1 billion of the cuts in this package come from the inclusion, for the first time, of a statutory price reduction for patented, or F1, medicines. The price paid for all patented medicines that have been listed on the PBS for at least five years will be cut by five per cent on 1 April 2016. This is expected to affect 400 medicines. Newer medicines that reach their five-year anniversary on the PBS following that date will take a five per cent price cut on the following April. The government argues that delaying the price reduction for five years after listing is intended to give the manufacturers time to recoup their investment costs. Prior to this agreement, Medicines Australia argued that drug companies had been forced to take significant cuts in recent years, most notably as a result of Labor's expanded accelerated price disclosure, and that reductions could put at risk Australia's access to innovative medicines. That was the argument of Medicines Australia immediately following Labor's introduction of accelerated price disclosure.

The industry argues that this F1 phase is when it recoups its research investment. It says it would affect the listing price of new drugs because part of the price struck was directly related to the price of comparable drugs. It also warned that the proposals made it more likely that some medicines would be delisted and could impact on research and development worth $1 billion. However a 2013 report by the Grattan Institute found exactly the opposite: Australia is paying more than many Western countries for pharmaceuticals in general and more than New Zealand for patented as well as generic drugs. Against this backdrop it is appropriate that these matters be investigated and debated. A proper parliamentary process, not the process that we are currently enjoying, would allow this to occur.

In the end, Medicines Australia signed on, though perhaps more because it had little choice and that, with a little hope, it might at least be protected from further cuts for some time to come. Medicines Australia CEO, Tim James, said:

In return for providing the majority of $6.6 billion in cuts outlined by the Government, our members have been given a number of undertakings and concessions regarding any future price-related savings throughout the life of the Agreement.

He goes on to say:

The continuation of this social compact requires stability in policy making. While this agreement does contain cuts to medicines already proven to be cost-effective, we welcome the limited stability and certainty that this agreement will provide over the coming 5 years.

I will talk about the F2, or generic, price disclosure. Generic and off-patented medicines, also referred to as F2 drugs, are, as a result of Labor's reforms, subject to accelerated price disclosure which requires the suppliers of these medicines to advise the Department of Health of the prices at which they are selling their brands. The government then uses this information to move the price paid by the government closer to the price at which the drugs are supplied in the market. It makes good sense. Under these changes, from 1 October next year the market price of medicines listed on the F2 for three years or more will no longer take into account the originator brand of the drug. This should see lower prices for both government and consumers as originator, or premium, brand names tend to maintain higher prices than their generic competitors, which draws the average price up. This measure alone is expected to deliver $2 billion in savings by the end of the agreement and is expected to reduce the price of generic medicines for consumers by as much as 50 per cent. Prices should also fall for general patients, though not concessional patients, who make up around 80 per cent of PBS prescriptions, as all PBS prescriptions are priced above the concessional co-payment of $6.10.

Another change expected to save $610 million, over five years, is the closing of a loophole relating to combination drugs that allow them to avoid price cuts, from price disclosure, in certain circumstances. Price changes to the individual drugs in the combination generally flow onto the price of the combination drug. However, some companies have been able to avoid the price cuts required under price disclosure by rebranding their own combination drugs. The bill has provisions to close this loophole so that price-disclosure reductions for component drugs of combination drugs, on the F2 formulary, will flow onto the combination drugs, starting on 1 April 2016.

Perhaps the most significant and least understood change in this package is what is referred to as a technical amendment relating to PBS listing for bioequivalent and biosimilar medicines, which is expected to save the Commonwealth another $880 million. This involves the insertion of a new subsection into the act, allowing bioequivalent and biosimilar medicines to be taken as having the same drug as a listed brand. Another technical amendment allows the minister to determine that a brand is equivalent to another brand, for the purposes of substitution by a pharmacist, and requires the minister to have regard to any advice on equivalence given by the PBAC. Exactly how this is going to operate is unclear, with even the industry at this stage unsure as to the full details of the move.

On the surface, it appears to be designed to promote across-the-board substitution, which the industry magazine PharmaDispatch reports has 'shocked many in the industry, primarily because it would represent a profound and fundamental shift in Australia's approach to the regulation and reimbursement of medicines'. The magazine says:

… if biosimilars are just generics, and the plan is to treat them as such, then why has every Government around the world, including in Australia, developed and implemented approval processes that dearly distinguish them from generics.

This also appears to contradict the Therapeutic Goods Administration's biosimilar guideline. While this is currently under review, the existing July 2013 guideline specifically says that a biosimilar's product information should include a statement ruling out substitution.

Stephen Murby, a former chair of the Consumer Health Forum and now biosimilar's spokesperson for the International Alliance of Patients' Organizations, has recently written to my office and that of the minister expressing concern over these proposed changes to the regulation and reimbursement of biosimilars. In the letter, Mr Murby says there are 'growing concerns' internationally over Australia's move to implement pharmacy-level substitution of biosimilars, which he warns 'is not only moving away from best practice but seemingly is about to set itself on a path that will see patients at unnecessary risk'. As always, Labor will support moves to make the PBS more sustainable and medicines cheaper for patients, but we do believe this issue has not been explained properly by the government and requires further investigation. That is something that should be ventilated in a Senate inquiry. Quite simply, if we have a different basis from which we approve a drug for substitution, in a pharmacy, this is a matter which requires further investigation.

All of the pharmacy measures I have detailed to this point are, in effect, the lead-in to the real reason for this legislation—that is, the Sixth Community Pharmacy Agreement. This legislation encapsulates how the Commonwealth has, in the words of one commentator, 'basically, raided the drug company' to pay for the additional funding promised as part of the Sixth Community Pharmacy Agreement. However, it is deeply disappointing and of great concern to Labor that while the government boasts of how it has ripped $6.6 billion out of health as a result of these cuts across the pharmaceutical chain, just $2.8 billion is going back into the health system by way of increased payments to pharmacists.

The government has made vague promises about some of that money being made available for new drugs, but there is no mention of this, whatsoever, in the legislation. The government has not been able to commit that this $3.7 billion will go to reinvesting into new medicines or to other areas of health where, we know, the government has already cut billions of dollars. These include more than $57 billion from public hospitals, half-a-billion dollars from public dental programs, $397 million from preventative health and a further $2 billion from health programs, generally, in this year's budget. It is a budget that also cut $125 million from the Child Dental Benefits Schedule; $144 million from the MBS, including halving the amount paid for child-health assessments; $70 million from the veterans' dental and allied-health payments; $214 million from e-health and, most cruelly of all, $3 million by scrapping a tiny $250-a-month payment granted to assist people who need special foods because of genetic disorders.

This legislation—for all the fine words about pharmacists and drugs of the future—is, in the end, just another excuse to bash health as a savings exercise, with a net loss of $3.7 billion to the system. At no stage was Labor ever consulted about the details of this agreement and it had no involvement in any of the proposals that we now see before the parliament. The first time we received any details of this agreement was on Tuesday night, and on Wednesday morning it was before the parliament.

With that disclaimer, I now turn to the details of the bill and how they apply to the pharmacy sector. I will talk first about the pharmacy-location rules. A component of the National Health Amendment (Pharmaceutical Benefits) Bill is the extension of the pharmacy-location rules for another five years. These rules generally restrict a new pharmacy from operating within a certain distance of an existing pharmacy, usually 1.5 kilometres in a metropolitan area or 10 kilometres in more remote locations. These rules also prevent pharmacies from being placed either within or in a position directly accessible from a supermarket. This is, in effect, a Coles and Woolworths rule which prevents big supermarket chains from directly competing with chemists by denying them the right to dispense medicines. In recent years, there have been a number of inquiries concluding that the location rule should be scrapped. Earlier this year, the minister publicly indicated she was considering this—although mainly it appeared as a form of blackmail in negotiations with the Pharmacy Guild. It did not go well.

Labor support the retention of the location rules which we believe do play an important role in ensuring the viability of community pharmacies. Pharmacies are not just another store in the shopping centre; they play a vital role in our communities dispensing medicines and looking after their customers, and in particular the most elderly concession card holders, who make up the bulk of their patients. No-one here—no-one—could seriously argue that this sort of service could be provided out of a supermarket. There could be few more devastating blows to any town or suburb than if the local pharmacy closed up shop because the business was no longer viable. I do understand the arguments about competition and prices. But Labor believe community pharmacy does play a vital role in our society that goes beyond dollars and cents, and does deserve our support.

As such, Labor do support amending the existing legislation which sets a 30 June 2015 expiry date for the location rules. We support the amendment which will extend the location rules to 30 June 2020. This, of course, is the main reason the bill is before the House and is being attempted to be rushed through the House. Were this bill not to pass this month, then the location rules would expire on 30 June. In theory—in theory at least—anyone could apply for the right to open a new pharmacy in any location.

Once again, this haste highlights the competence—or, actually, the complete incompetence—of this government. The entire time it has been in office, it has known about this deadline. It has had nearly two years to do something about it but had done very little about it until February. Now, with just weeks left until the deadline expires, it rushes legislation into the parliament and demands that everyone else act with great haste to make up for its utter incompetence. The minister and, indeed, the explanatory memorandum note that a review of pharmacy location rules will be conducted within two years as part of a broader review of the pharmacy remuneration and other arrangements. Interestingly, there is no mention of this review in the bill, so I assume we will just have to take the minister's word on this matter—assuming, of course, she lasts in the position a little longer than her predecessor.

I want to say something about the co-payment discount. Easily the most contentious part of this legislation is the proposal to allow pharmacists to discount the PBS co-payment by up to $1 for every dispensed medicine from 1 January next year—perhaps an attractive proposition at a superficial level. But, from the moment this proposal first became public, it has prompted a furious backlash from those who know the details of how it would work in practice, in particular from pharmacists who have argued that it will harm chronically ill patients as it will take them longer to reach the PBS safety net and will, thus, be paying more for medications for a longer period of time. This is because the safety net is not set, as many have assumed, at a certain number of prescriptions but at a dollar amount. In the case of a concession card holder, for example, that dollar amount is $366 per annum. Therefore, cheaper drugs mean it will take them longer to reach the safety net. It is this delay which explains how the government expects to save more than $360 million over five years from this measure alone—again, superficial on its face but, as we can see, it is actually listed as a savings measure.

A reduction in the number of people reaching their safety net threshold means fewer free or concessional patients—or cheaper for general patients—medicines. A couple of points need to be made here. First of all, this discount is entirely voluntary. Unlike the cuts applied to drug companies, chemists can choose whether to offer their discounts to customers. Some will, perhaps, choose to do this because they want to offer their customers the best price. Others may be required to discount because of competition from a neighbouring chemist. But, ultimately, this will be their choice. It is not mandated by this bill. And, as the safety net is unchanged, ultimately no-one can be worse off. No patient can pay a cent more for their prescriptions under the proposal and many, indeed, may pay a bit less.

The average concession card holder fills 40 scripts a year and 80 per cent do not reach the safety net. If their prescriptions were all filled by a chemist offering the discount, that is a saving of $40 a year—which, for many pensioners, is quite a significant amount. Notwithstanding the fact this is entirely voluntary, my office—as with, indeed, I know just about every other member in this place—has been deluged with emails, letters and phone calls and requests for meetings with local pharmacists, all urging us to block this measure. Even after the signing of the agreement last week, pharmacists continue to contact members urging that we reject this measure. I note that the Pharmacy Guild has indicated that it supports the package 'with the exception of the discounted co-payment, which is a matter for government'.

But the fact is this co-payment is embedded in the package and cannot be dealt with in isolation. Were the Senate to attempt to remove this measure and this were rejected by the government, the entire package would be blocked, including the location rules, which expire in 30 June, as I have noted. There is very little room to manoeuvre on any of this, which, again, goes back to the last-minute, chaotic handling of this legislation which is seeing it come before parliament so late. It is leaving virtually no room for members of either house to properly scrutinise these measures and, perhaps, make the changes necessary. Again, I also highlight the fact that at no stage was Labor even consulted about any of these aspects before the bill was brought before the House.

It is also worth noting at this point—and I am digressing slightly—to highlight the absolute hypocrisy involved here. The minister has boasted that the move to allow chemists to discount the PBS co-payment by $1 was making medicines more affordable for consumers, but at the very same time in the other place there is a bill before the Senate which proposes to increase the co-payments by $5 per prescription for general patients and 80c for concession card holders.

This is a perfect example of the government with its foot on the accelerator and the brake at the very same time. Only an Abbott government minister could seek to make medicines more affordable for consumers by asking chemists to cut their own income by $1 a script while simultaneously jacking up its own charges by $5. And, with the discount unlikely to be taken up in many parts of Australia, the Abbott government's policy is for people in rural and regional areas to pay even higher prices. If the minister is serious about making medicines more affordable for consumers, she must immediately scrap plans to hike the cost of the PBS co-payment which, unlike the fee charged by chemists, will not be voluntary at all.

Sadly, yet again the Abbott government's handling of this matter is complete chaos. Despite the price hikes being stalled in the Senate since last year, the budget recommitted to the increase in the PBS co-payment which, along with changes to the safety nets, will punish the most chronically ill by forcing them to pay for more and more drugs before the government sets in.

But just nine days later the health minister blew a $1.3 billion hole in that budget by declaring that she would not proceed with the legislation, insisting that she was not going to waste time putting things through the parliament that are going to be voted down by my colleagues. Before the day was out she was forced into an embarrassing backflip by the Treasurer, who was not happy with having this hole blown in his budget, and told the minister: 'No, those savings definitely are back on the table.' So we are back in the ridiculous situation where we have one foot on the accelerator and one foot on the brake.

We have one bill before the House which proposes to have a voluntary reduction in PBS listed pharmaceuticals and, at the same time, we have a bill before the Senate which proposes to increase the cost by a minimum of 80c for pensioners and by up to $5 for general patients. The government has got to make its mind up what it wants to do here: does it want to reduce the cost of pharmaceuticals or does it want to increase them? This is just one example of the chaotic approach that this government has to health policy. It is why we have deep concerns about this matter, and we believe it requires full scrutiny in the other place.

In conclusion, Labor welcomes the decision to recognise the hard work that has been done by chemists. We believe they are deserving of a living wage. We do believe that this bill requires full scrutiny, and that is why we are moving the following amendment to the bill, while not declining to give the bill a second reading: that the House notes Labor's concerns about what are potential unintended consequences.

I move:

while not declining to give the bill a second reading, the House notes Labor's concerns about the potential unintended consequences caused by a lack of consultation during negotiations for the 6th Community Pharmacy Agreement.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I second the amendment.

Ms Anna Burke (Chisholm, Australian Labor Party) Share this | Link to this | Hansard source

The original question was that the bill be now read a second time. To this the honourable member for Throsby has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. If it suits the House, I will state the question in the form that the amendment be agreed to. The question now is that the amendment be agreed to.

Andrew Southcott (Boothby, Liberal Party) Share this | Link to this | Hansard source

I am pleased to speak on the National Health Amendment (Pharmaceutical Benefits) Bill 2015, which implements a number of the measures from the Sixth Community Pharmacy Agreement. I think it is fair to say that it was a very robust negotiation between the Commonwealth government and a number of stakeholders, including the Pharmacy Guild of Australia and a number of others such as Consumer Health Forum, Medicines Australia and the Pharmaceutical Society of Australia.

This is the sixth one; the first one was in 1990. They generally go for five years and they give some certainty to pharmacists and some certainty to the Commonwealth taxpayer. It is also true to say that the steps that we took 10 years ago mean that the Pharmaceutical Benefits Scheme is on a much more sustainable track. Having said that, the public accounts committee has commenced an inquiry into the performance audit report on the Fifth Community Pharmacy Agreement. We have put out a media release and we are seeking submissions on that to look at issues raised from that performance audit into the Fifth Community Pharmacy Agreement.

I want to commend the Minister for Health on coming up with this package of reforms, which really did take months and months. It is a very complex negotiation involving the entire pharmaceutical supply chain, including consumers, pharmacists, medicines manufacturers, wholesalers and doctors.

There is a number of new changes in the community pharmacy agreement—not only will the price of medicines be discounted for patients and access to new medicines improved but there will also be greater certainty for medicines manufacturers over this five-year agreement and a $2.8 billion investment supporting pharmacy and primary care.

On a related issue, the Pharmaceutical Society of Australia were particularly interested to see measures within the agreement which related to better education and better training of the profession. They were happy to see that in the final agreement. All the stakeholders recognise the need to deliver a more sustainable PBS to ensure that the government can continue to list new medicines, and the package does have total efficiencies of $6.6 billion over five years across the entire pharmaceutical supply chain.

One of the things that happened in the previous government was that we had the extraordinary situation where, previously, drugs would be listed and they had to go through the advisory committee, have a price set and then go to cabinet if they were over a certain threshold. I well remember the industry minister, Kim Carr, turning up to a Medicines Australia dinner and saying that the government, having already established that robust process, had decided that they would stop listing new drugs until there was a budget in surplus. We know what happened: there never was a budget in surplus. Luckily that decision did not stand, like so many others.

I want to talk a little bit about some of the medicines which have been listed since the election, which include Mekinist, for melanoma. That would be $131,000 per patient if it were not subsidised through the PBS. Kalydeco, for cystic fibrosis, would be $300,000 per patient if it were not subsidised through the PBS. Herceptin, for breast cancer, would be $82,000 per patient if it were not subsidised through the PBS. I could go on. There is a whole list here. We are seeing an average of about 30 new and amended drug listings for patients each month, compared to an average of just eight under the previous government.

One drug which I hope will be listed soon as Keytruda. Having sat on the House of Representatives Standing Committee on Health inquiry into skin cancer, I am well aware of the potential that the newer immunotherapy drugs offer. This is an anti-PD-1—anti-phosphodiesterase-1—immunotherapy agent also known as pembrolizumab. It has really crossed all the hurdles, so hopefully that will be listed soon. Having had family members who have died from advanced melanoma, I know that, with this disease, months really do count.

I do not want to speak for long on this. This is an $18.9 billion agreement. There are a number of efficiencies here. There is also an investment which will help with infrastructure. I welcome this and welcome the way that the minister was able to conclude this negotiation with the Pharmacy Guild.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

The one thing about this government is that it is pretty reliable in the way it goes about things, so, in health, we see cuts to the health budget, cuts to hospitals, cuts to doctors' rebates—an attack on the healthcare system. We see it constantly attempting to push costs onto consumers. We see savings made from health—and the member for Boothby referred to efficiencies in this bill of $6.6 billion—but we never see those savings or those efficiencies reinvested into health, which is what should happen. If you are going to make savings from health, they should be reinvested into health. We see no consultation with stakeholder groups, no consultation with the opposition, no consultation with the community. In this case, we saw this agreement as it rolled into parliament—no Senate committee. We have a government playing chicken with the parliament, wrapping this all up into a big package, presenting it at five minutes to midnight and expecting the parliament to sign off on it with an up-and-down vote, a yes-or-no vote, on the whole package. It is simply an attempt to obscure some of the consequences of passing this bill. That is what this government is all about. That is its modus operandi. That is the way it goes about things.

We know that Labor had quite a different approach in government. We did not hack into health. We protected consumers. We had good consultation. We did good things for public health. And the savings we made—and in this area, the area of medicine, the savings were $20 billion to the PBS over 10 years—were reinvested into health. It was the same with means-testing the private health insurance rebate. That saving was reinvested into health. That is an important philosophical and practical difference between the way that the respective parties of the government and the opposition go about these arrangements.

It is a very sad day for the community when the government behaves this way. It undermines certainty in the sector. It undermines certainty in the community. It adds to great consternation in the community. You feel it if you go to a general practice or if you go out in the community. I was doing one of my shopping centre stalls at Elizabeth Park shopping centre not so long ago, and the pharmacist came out and had a talk with me about their concerns about the way this government was going about things. They were very great concerns indeed, based around their very real desire to service the community.

The National Health Amendment (Pharmaceutical Benefits) Bill 2015, as other speakers have said, introduces a new PBS pricing policy to reduce costs for innovative F1 and generic F2 medicines; allows pharmacies to discount patient co-payments by up to $1; removes some of the over-the-counter medicines from the PBS; changes the structure of pharmacy remuneration to remove the link to previous prices; and increases the membership of the PBAC from 18 to 21 and introduces a full-time chair.

Labor will support this bill is it moves through this House, but we do so with great concerns. As with this government's 'initiatives' in so many other areas of health, whether it be medical research or other areas, we worry about how the government goes about things in this opaque way, a way that does not present members of this parliament with enough time to properly scrutinise them, where it is done in a blind rush. Despite having had literally years to do something about some of these things—to give certainty to the pharmacists about location rules or other matters—the government wait till the clock is at five minutes to midnight before it rolls in here in a blind rush, in a chaotic mess, presenting the parliament with an up-or-down vote. That is a very concerning thing. It is a worrying thing.

If you look at the media, there have been a number of articles about these matters. Sue Dunlevy had one on 20 May. It was quite hostile to the interests of pharmacists. Some of the commentary from Brian Owler in this is interesting. The article records him as follows:

The deal has outraged the Australian Medical Association president Professor Brian Owler who says its "shows there is one approach for pharmacists and another for everyone else in the health system".

That is a pretty interesting thing to put on the public record, I would have thought. And of course we have Medicines Australia saying:

While the Pharmacy Guild was able to secure certainty with a significant increase in funding for their members, the sector that invents and manufactures medicines is being forced to provide more than $3bn in savings.

So you have out there in the public arena very serious concern about the way the government approaches health and the way it approaches different healthcare groups in different ways.

In other areas of the PBS listings, we see this government's health minister has knocked paracetamol off the PBS. That sounds on the face of it like a reasonable thing to do, but if you look at the ABC Fact Check of 13 May 2015, in its verdict it says:

Paracetamol prescriptions cost the government around $73 million a year on the PBS, but 85 per cent of that cost comes from prescriptions for people in chronic pain from osteoarthritis.

The high dose, slow release paracetamol formulation they are prescribed can't be bought from a supermarket for $2.

It goes on to say:

Ms Ley is incorrect.

There are some important things the community might be concerned about and might well be flushed out in a Senate committee. This is traditionally the role of Senate committees. We are used to bills in this House being guillotined, not so much under this government because they have got such a lethargic legislative agenda, and what agenda they do have is stalled in the Senate, along with so much of their legislation. What has not stalled is abandoned after pressure from the backbench.

Mr Taylor interjecting—

It is good to have an audience in the backbench here. We wonder if they are part of the 39 or the 61. I guess in the member for Hume's case it might not matter because he might not be with us too much longer, despite his grand ambitions. They might all be brought undone by the vagaries of electoral redistribution. We will just have to wait and see about all that, but he would be like a shooting star coming through this chamber—there he goes, then out again. I have seen it before, having lived through a change of government—but I wander off the topic, Deputy Speaker. I can see you are paying attention—

Ms Anna Burke (Chisholm, Australian Labor Party) Share this | Link to this | Hansard source

Yes, you do; bringing a little latitude.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

as I discuss these matters with the House. What do we say about this bill and the importance of having scrutiny of it? You would have thought the member for Hume might be a little concerned about the effect of some of these measures on rural Australia. I know I am. I have got a little part of rural Australia in my electorate—

Angus Taylor (Hume, Liberal Party) Share this | Link to this | Hansard source

You do not. Where?

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

I do. I have the Barossa Valley and the Clare Valley. I have some of the best farming land in South Australia in my electorate. I grew up in Kapunda, a wonderful wheat belt down. They used to mine copper many years ago. I have got a lovely bit of rural Australia.

Angus Taylor (Hume, Liberal Party) Share this | Link to this | Hansard source

Do you put a big hat on when you go out there?

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

I grew up out there so I do not have anything to prove.

Government members interjecting—

I have got the backbench and even the front bench going now. I drop my hook in the water and they hop out like salmon. It does not take much. But how will rural South Australia fare under these changes to pharmacies? Laura Tingle had a good article in TheFinancial Review

Mr Taylor interjecting—

You might want to listen to this, so you can refer to it in your speech. Her 28 April 2015 article is titled, 'Sussan Ley says pharmacy changes may mean drugs are costlier in rural Australia'. That is the headline, and the starting line is:

Patients in rural and regional Australia may have to pay more for medicines than their city counterparts if plans to deregulate the pharmaceutical co-payment go ahead … Sussan Ley says.

Laura Tingle is a very respected journalist, and The Australian Financial Review is no socialist rag. It is a paper that represents the top end of town, and we have there an article talking about how the price of medicines might be higher in rural Australia than they are in the city because of these changes. That should be of concern. Whether it is true or not could be flushed out. The evidence could be brought before a Senate committee, but we will not see that happen under this government. We will not see the scrutiny of this opaque deal, so we will not truly know what the consequences will be, and that is what the member for Hume and others do not want to see. They do not want scrutiny of their deals. They do not want scrutiny of the fact that they are basically ripping $6.6 billion worth of savings out of health sector and putting it into general revenue. That is really what they are doing—tearing it out. And we have seen it with their cuts—$60 billion worth of cuts. We have seen them hack into the rebates that doctors get and the co-payment of $8 by stealth. We know that will happen and that bulk-billing rates will fall. It will hurt country people most of all, and we know that so many of the health determinants in this country tragically are determined by where you live.

Angus Taylor (Hume, Liberal Party) Share this | Link to this | Hansard source

Is the magic pudding in Wakefield?

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

I hear the member for Hume banging on about these things. He will get his turn. You will get your turn, Shooting Star. You will get your turn as you are in and out through the chamber. It was a stellar career, and I watched it with some interest! Before that redistribution came along, it was a fine career!

The thing about the government's approach to Health is it is badly undermining people's confidence in the healthcare sector. You cannot find a GP in my electorate nor, I would imagine, in many others who is happy with the performance of this government who feels like it has a commitment to good public health. What we see is cut after cut after cut. What we see are opaque deals. What we see is cost being pushed onto consumers. What we see are cuts to public hospitals and other preventative health care—drug and alcohol counselling; you name it, they have cut it. It is a very, very serious thing.

For this government to be lauding their record on Health is ludicrous. We know that, historically, this has always been the case. They have been hostile to universal health care, and they have been hostile to Medicare. But we have rarely seen such aggression from a federal government towards health care professionals, towards the basic infrastructure that keeps people healthy in this country. The opposition will be holding them to account for the effects of their legislation and their deals out there in the community.

It does not matter whether it is in the electorate of Hume or in my home town of Kapunda, or anywhere else—people who can least afford it will often feel the sting of this government's budget, the sting of their policies in health care. That situation should not be allowed to stand, and I say bring on an election and let us have a proper referendum on what this government says and does. We know they were full of promises before the last election. I often refer to Real Solutions. If you look at Real Solutions—

Stuart Robert (Fadden, Liberal Party, Assistant Minister for Defence) Share this | Link to this | Hansard source

You should—you'd learn something. You'd learn what a plan was.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

What you learn is how disingenuous the Prime Minister really is—how disingenuous he was in opposition and how disingenuous he has been in government and how disingenuous this government has been in the area of health care.

Angus Taylor (Hume, Liberal Party) Share this | Link to this | Hansard source

We know health is an increasingly important issue for Australia, and it is an important issue for my electorate of Hume, so it was disappointing to have to listen to the speech of the member for Wakefield. He treated this issue in a facetious way, which is how he often treats important issues. He has been thrown out of this House more than any other member, because he shows no respect. He showed this issue no respect. He talked about shooting stars, but this is a member who lives on the dark side of the moon. We have seen one great example of transparency in the last government's health policy, and that was what the Auditor-General had to say about their pharmacy agreement. I recommend it as very good reading for anyone who wants to know how not to enter into a pharmacy agreement. The Auditor-General was scathing about the agreement that that government entered into.

I do not want to talk about that today—I want to talk about our health policy. It is a health policy directed at better health outcomes and lower costs for consumers. That is what a government that understands productivity in health and health effectiveness can do that the last government was completely incapable of. Let us look at the situation left to us by the last government. We had a medical benefits scheme where costs were rising at nine per cent a year—these are the numbers from the Parliamentary Budget Office—and hospital costs were rising at seven per cent a year. You do not have to be Einstein to work out that if that keeps going, you send the country broke. When you look at the health outcomes, we were not making progress. We saw that in what the Auditor-General told us and we have seen it in a great deal of data coming through—more spending by Labor governments does not lead to better outcomes. I am sure union officials are very happy with it, but it does not lead to better outcomes.

In my electorate of Hume we do have an older population, and this is an indication of what we are going to see right across Australia in the coming years. We have less access to the highly specialised health care that other regions, particularly metropolitan regions, enjoy. Central to our health system is the network of wonderful health practitioners who provide extraordinary outcomes in rural health—the community pharmacies, the hardworking general practitioners, the specialists and the local hospitals. All of them, as well as the allied health practitioners, combine to deliver extraordinary health outcomes. My central point is that traditional rural GPs, community pharmacies and rural hospitals, as well as specialists, can work together exactly as a health system should. If you want to know how a health system should really work, go to rural Australia because those practitioners know how to combine together as a team to deliver wonderful health outcomes. But we need to encourage more of this, not less of it. Much of what these people do is unpaid work—they do it because they are professionals totally dedicated to their communities and their patients' health needs. The PBS in community pharmacy in particular plays a role in rural areas which is less common in our cities.

This legislation is part of a package which is making badly needed changes across the pharmaceutical supply chain—changes that the last government did not deliver; changes referred to in the Auditor-General's report but that the previous community pharmacy agreement did not get to. They are all focused on better health outcomes and lower costs for health consumers. Central to this government's strategy in this area is the creation of a more sustainable framework for payment to pharmacy, and a key part of this is the $18.9 billion Community Pharmacy Agreement. While not all areas of that agreement require legislation, the agreement is profound in what it is setting out to do and what it will deliver. Included in the agreement and in the amendments before this House are a number of features. The first is a shift from a margin-based model for pharmacists to a fixed dispensary fee. This is absolutely critical. We know there are significant savings to be found in the pharmaceutical supply chain but we do not think it is appropriate that pharmacists should bear the full burden of those savings. By moving them away from a margin-based model in their businesses we can ensure that they have a sustainable business model and yet we find significant savings that we can put into new drugs and better health outcomes.

A series of pilots are central to the agreement. They will support a shift in pharmacy away from pure dispensary towards wrapping health services around the dispensary. It is a $1.26 billion set of primary health programs. It is a doubling of the previous investment, with scrutiny from the government's expert Medical Services Advisory Committee—scrutiny we did not see in the last agreement—to improve transparency and ensure programs are evidence based and cost-effective.

Part of this package is a choice for pharmacists about whether to deliver a customer co-payment of up to a dollar, and that should see some savings at least to consumers, beyond those that are being achieved in the lower cost of drugs. We see in the agreement the continuation of the legislative provisions for pharmacy location rules.

Then, on the drug side, we see significant savings—and this is where I have always seen big opportunities. We want to make sure that the drug companies do have sustainable business models. But I know, from watching other chemical and drug supply chains, that there were very significant savings to be made in the wholesale price of pharmaceuticals in this country. So we have a one-off statutory price reduction for single brand medicines after they have been listed as F1s for five years, and for F2 products we are implementing a change in the price disclosure for multiple brand medicines which have been F2s for three years or more by removing the originator brand from the brand calculations. So that means we will effectively achieve a lower cost of drugs. Then we will be applying a flow-on price disclosure series of reductions from drugs to multiple brand combination medicines. So all of this is designed to deliver to consumers a lower cost of drugs, and to ensure that the government burden is reduced for those drugs that are already listed and that will allow us to list further pharmaceuticals and further health solutions and deliver better health outcomes.

I thought it was worthwhile talking to some of the pharmacists in my electorate about how they felt about this agreement. Mark Douglas is a community pharmacist with a pharmacy in Harden and also one outside of my electorate, or nearby, in Gundagai. He is the vice president of and a national councillor on the Pharmacy Guild. We have heard that the guild was somewhat critical of some aspects of this agreement along the way. Like most pharmacists, Mark does not love every aspect of this agreement, and he did voice real reservations about the co-payment in particular. But, like most pharmacists, he has evaluated this agreement in a mature and holistic way. As he says, this bill 'means that over the next five years we can plan—moving from six years ago when we were in a supply phase into a health solutions phase'. He wants to deliver health solutions, and this is an agreement that will support him to deliver health solutions. That is what pharmacists want to do—they want to deliver health solutions. They do not just want to sell products. Mark says that it is about a 'transition from one model of pharmacy to a new model.' He says: 'It means we have the heads up to change and, importantly, the time to do so.' The focus is about sustainability of the sector, leaving pharmacists, as Mark says, 'with enough petrol in the engine' to change, rather than continuing along a trajectory where there would be no capital left for the sector to adapt. So we are giving the pharmacists time to adapt to this health solutions model which they need to move to. As part of this, Mark says the government has approached this issue in a 'mature way', providing a 'clear vision' for pharmacy into the future. The government has been 'pulling the levers of transition', in conjunction with some 60,000 retail pharmacies, toward a focus on primary health care, recognising that pharmacists have an enhanced role to play in the needs of people with disease, being a 'tool in recovery' in support of GPs and in support of patients.

I certainly hope that pharmacists like Mark will be central to the pilots we run around Australia. And I am very confident that, with the sorts of aspirations that he and others I have spoken to have, they will move into a role in the health system which will be enhanced, and I am very confident that this agreement is moving them in that direction.

There is also much more to the government's health policy than just the pharmacy agreement. The minister is doing wonderful work not just in delivering this agreement but in other areas of reform. She has announced a chronic and complex illness review. We know that, in this area, we are spending as much as $300 million to $500 million each year additional to the previous year. That is extraordinary growth in expenditure on chronic and complex illness.

We spend $850 million per annum on Medicare items for producing care plans and allied health visits for people identified as having chronic disease. That is growing at 25 per cent a year. It grew 25 per cent a year between 2006 and 2014—much of it under the previous government—and we did not see the reforms in this area that were necessary.

We also know that much of this money is spent in ways which are not well targeted. In fact, we know from the data that more people in relatively low-risk categories are under care plans than people in high-risk categories. But the idea of this is to focus on high-risk patients. So the minister has put together a Primary Health Care Advisory Group led by former AMA president Steve Hambleton. The purpose of this is to provide better care for people with complex and chronic illness, as well as to look at innovative care and funding models, better recognition and treatment of mental health conditions and greater connection between primary care and hospital care. This is the future of our healthcare system.

We know that an important part of this is to make sure that the money we are spending on care plans is well spent. I am confident that there will be significant changes coming out of that review—changes that will matter greatly in my electorate.

We also have an MBS item review. The government has established a Medicare Benefits Schedule Review Taskforce led by Professor Bruce Robinson, dean of the medical school at Sydney university. We know that currently the MBS has 5½ thousand services listed, but we know that they do not all reflect clinical best practice and we know that not all of these items should be on the MBS. We have seen one example, that of vitamin D testing, where the government has spent an enormous amount of money in recent years: we went from spending nothing at all in 2001 to spending $146 million on vitamin D testing by 2012. Much of that increase was under the last government. And we know from the Medical Journal of Australia that the effectiveness of that testing is highly questionable. So these are the sorts of MBS items that we need to be reviewing, and we need to be focusing our money on outcomes that can really make a difference.

Finally, we are looking at clearer Medicare compliance rules and benchmarks, working with clinical leaders, medical organisations and patient representatives to ensure that the Medicare system, the medical benefits system, is not being abused.

It is true that the vast majority of practitioners provide first-class services. But I hear from GPs across my electorate that a small number do abuse the system, and we cannot afford for that to continue. The Auditor-General had a look at what the last government did in this area: the human services area recovered $18.9 million from these problems, having targeted $147 million. Again, the Auditor-General was scathing about how that program was executed.

Let me finish with a comment on the role of pharmacy in the health system. Every pharmacist I speak to knows that they can do more. Many of them are doing more than they are paid for, because they believe in the importance of health. They know that the MBS is not, in some cases, getting the outcomes it needs to. And they know that with the right payments and the right incentives they will be able to deliver more for our health system at a reduced cost overall.

I commend this bill to the House and I commend the pharmacy agreement to the House. I ask that all of us give our complete support to such an important set of reforms.

Alannah Mactiernan (Perth, Australian Labor Party) Share this | Link to this | Hansard source

We are supporting the National Health Amendment (Pharmaceutical Benefits) Bill 2015 here tonight. We realise that the Pharmaceutical Benefits Scheme is an absolutely essential part of the social contract within Australia. It is a very critical part of our health system, and of course dealing with the rationing of resources in this area is always a matter of extreme complexity for government.

We see that medical innovation is increasing constantly and that more and more drugs are coming onto the market. We see the move to personalise medicine, where more drugs are being targeted at a particular segment of the population that may have a particular gene. With that comes extraordinary capacity for dealing with cancers and other diseases that only five years ago would have been terminal. Now we are seeing some extraordinary results. I think just today that we heard of publication of a new drug to treat mesothelioma. Again we have seen an Australian drug that has been invented and that has shown some quite spectacular early success in the treatment of mesothelioma. Of course we want to ensure that our community has access to those drugs and that the ability to access those drugs is not constrained by one's personal means, and so there is always this enormous tension for government in trying to ensure that we have a Pharmaceutical Benefits Scheme that is sustainable.

On that basis, and notwithstanding a number of concerns that we have about the details of the legislation, we are prepared to offer our support for this legislation. In his address, the member for Throsby really outlined many of the areas of concern. I will not go through those except to say that we did not always see the same bipartisanship in relation to the agreements that Labor put forward, even though Labor did work much more collaboratively with the industry to come to a landing on these.

I want to make particular reference to some drugs, and one in particular, that have been approved by the minister. I compliment the minister on doing that. These are drugs that we have been approached by members of our communities to support, in particular—and my pronunciation of this might be a bit off—crizotinib. This is a drug which successfully treats a rare cancer mutation—ALK4. We have been dealing with this on behalf of Julie Sackett from Western Australia. She is a lovely woman with three young children and who, despite being young, fit and healthy, has been struck with this particular cancer, as has the mother of Theresa Tan. Both of these families have been unable to afford the drug. The drug costs $7,500 per month, and they have been desperately awaiting its approval. So, we are very conscious of the need to make space constantly within the PBS for these new and expensive treatments that are coming down the line.

But I also say as part of this that we have to be prepared to take on the pharmaceutical industry. I think one of the things that has most surprised me since arriving in this place is just how strong the pharmaceutical lobby is—how, on a daily basis, we have drug companies presenting us with new treatments. They are very skilful in their lobbying. They will often combine with groups; they encourage a 'Friends of' a particular illness to form and then through that vehicle promote their particular pharmaceutical. Or they will create third-party groups—extra-parliamentary groups—to support the promotion of their drugs. This is notwithstanding the fact that I believe we have in Australia a very strong system with the therapeutic goods provisions and the way in which we assess new products coming under the banner of the Pharmaceutical Benefits Scheme, which very clearly looks at cost-benefit and opportunity costs of new treatments. Notwithstanding this, we have an enormous amount of lobbying on the part of the drug companies. Indeed, from time to time we have the situation where drug companies have a drug and go out looking for a disease for which they can use their drug. Of course, we see that no more clearly than in the instance of ADHD, where the use of the psychostimulants has, in my view, been extremely controversial and highly problematic in the outcome that it has for so many young people.

It is always a challenge to rein in the aspirations of the pharmaceutical companies. We want to encourage innovation. We need that research and the development that goes on. But I am one that deeply regrets that we lost our ability, as a government, to do this. I think that the Commonwealth Serum Laboratories were a very important part of Australia's medical system, where we actually did have some in-house capacity to do that research. Recognising that it is a very expensive area, we want to encourage these pharmaceutical companies to engage in innovation, but at the same time we have to be very mindful that this can be a very avaricious beast and one that does need to be corralled if we are to be able to have a sustainable system.

I do note that the government are claiming, and indeed has some case for saying, that they have progressed in relation to advancing the use of generics. It does need to be acknowledged that Labor did much work in this area when we were in government, but I acknowledge that the government are continuing that work. I do find it a little interesting that a lot is being said about the achievement in this agreement. Yet, at the same time, we look at the Trans-Pacific Partnership that we are contemplating entering into and, from information that has recently been found via WikiLeaks, we understand that there are provisions in the TPP that could undermine the work that is being done within this agreement. And indeed the—

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

Rubbish! We have shown you the agreement.

Alannah Mactiernan (Perth, Australian Labor Party) Share this | Link to this | Hansard source

Let's see. Show us the agreement. We are prepared to stand corrected, but what we see—

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

Complete rubbish!

Alannah Mactiernan (Perth, Australian Labor Party) Share this | Link to this | Hansard source

It is not complete rubbish. Exposure drafts have been released that show that the US is proposing measures that would delay the availability of lower priced generic medicines—enhancing the monopolies of the pharmaceutical companies. These proposals exceed the patent obligations of the World Trade Organization and far exceed the standards in other US free trade agreements, including the Australia-United States Free Trade Agreement and the US-Korea Free Trade Agreement. I will quite happily provide the leaked medicines transparency annexe to the member if he has not seen it yet. The leaked medicines transparency annexe will give more rights to pharmaceutical companies and restrict the ways in which government can regulate the wholesale price of medicines and subsidise retail prices.

We have bills, such as the one we have got before us, and legislation which purports and quite properly wants to make it easier for us to get generic and biosimilar medicines into the system to reduce the cost to the taxpayer. But at the same time we are negotiating an agreement which is going to undermine our ability to ensure that these generics get onto the market. I am amazed that the members are contesting that this is the case. Even the Republican Party in the Congress of the United States is acknowledging that there are many aspects in this Trans-Pacific Partnership that are problematic. I would say that for Australia there is no part of that agreement that is more problematic than that that is relating to the Pharmaceutical Benefits Scheme. We need to have a very sophisticated conversation about this. The minister, who has been involved in negotiating this agreement, quite clearly is well and truly aware of the challenge of it.

Opposition members interjecting—

The member has asked if anyone had seen it. We would love to see it. What we are relying on is leaked parts of this document because of the secrecy—

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | Link to this | Hansard source

Order! The member for Perth should try to ignore the interjections.

Alannah Mactiernan (Perth, Australian Labor Party) Share this | Link to this | Hansard source

I am sorry, but the sheer ignorance of the members opposite deflects me—

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

Unbelievable!

Alannah Mactiernan (Perth, Australian Labor Party) Share this | Link to this | Hansard source

It is not unbelievable. For example, let us look at the China free trade agreement. We know now that there is actually a fully authorised English translation of this document, but it has still not been made available to the community. It has still not been made available to the parliament. It has still not been made available. We see day after day government getting up and spruiking what a fantastic agreement this is. And we are supposed to say, 'Yes, it's fantastic,' but we are not allowed to see it. We have just got to say, 'Yes, we are going to support this agreement with site unseen.' We are not going to agree with provisions site unseen. We need a mature and sophisticated discussion about these agreements.

As I said, it is ironic that here we have the minister exercising, and I think quite properly, all of her powers in order to ensure that we get generics and biosimilar medicines into the system at the earliest opportunity. At the same time, we have got the trade minister going over there and undermining the very essence of the Pharmaceutical Benefits Scheme in these provisions of the TPP. I go back to our original comment: this is an immensely important agreement. The PBS is a fundamental part of the social safety net that is available in Australia, a part of what makes us such an equal and fair society. We want to see it strong and we do not want to see it undermined by foolish interventions in trade agreements.

George Christensen (Dawson, National Party) Share this | Link to this | Hansard source

I rise to speak on the National Health Amendment (Pharmaceutical Benefits) Bill 2015, which, I note, does not contain the words 'transpacific partnership' in it anywhere. But, for the benefit of the previous speaker, the Minister for Trade and Investment is on the record as specifically saying that he will not accept a deal which undermines the PBS. All of the stuff that we just heard is quite irrelevant once you take that statement on board.

The bill before us comes as a result of negotiation with the Pharmacy Guild and other stakeholders for the Sixth Community Pharmacy Agreement. Negotiation with stakeholders across the medicine supply chain for this agreement was part of the government's Pharmaceutical Benefits Scheme access and sustainability package of reforms. The important thing about sustainability is that it does cut two ways. Firstly, the long-term future impact on taxpayer dollars must be sustainable obviously because taxpayers are not the unlimited ATM that some in this place, particularly on the opposition benches and over behind me on the crossbenches, think that they are.

Secondly, the businesses that do provide these valuable health services must be sustainable. If those businesses were to become no longer viable, there would be no service provision, and that was a risk that the Labor Party was willing to make during negotiations for the previous agreement—actually not during those negotiations for the previous agreement but when they actually broke that agreement. They broke the Fifth Community Pharmacy Agreement. It was in place when Labor took the decision to change it without consultation with the industry during that time when the Rudd-Gillard-Rudd government was creating havoc. I do not know exactly whose decision it was—the knifer or the knifee. Either way, they both ended up with their fingerprints on the knife handle, right alongside the opposition leader's fingerprints—and I bet he is looking forward to tomorrow night's viewing on the ABC.

It was just before the 2010 election was called that the Leader of the Opposition had dispatched his first Prime Minister and Labor announced they would change remuneration to pharmacists under the PBS. The changes were made, as I said, without consultation and in breach of the agreement, so it was not surprising that the Pharmacy Guild was shocked by those actions. At the time, the guild issued a statement on 16 August 2013 which said:

The changes may force some pharmacies to close their doors or slash important services for the elderly, very young or chronically ill with the risk particularly high for the more than 1,000 pharmacies in rural and regional areas, and for the 410 Australian towns which have just one pharmacy.

It went on to say:

The Pharmacy Guild of Australia national president Kos Sclavos said the unexpected change would leave each community pharmacy $90,000 out of pocket in 2014-15, when added to existing price change arrangements.

I offer that short extract from Labor's 'How to destroy business and kill jobs' playbook for two very important reasons. Firstly, that betrayal by Labor made pharmacists very wary of what might be in store under the sixth agreement, which was being negotiated this year. I held numerous meetings with pharmacists in my North Queensland electorate of Dawson while those negotiations were going on. Pharmacists in Mackay, in the Whitsundays, in the Burdekin and up in Townsville did have a fear, based on what Labor had done, about this new agreement. They feared the worst for their business and the worst for the health needs of their local community. Secondly, I hark back to that Labor decision to show the perilous nature of the position in which pharmacists were placed under the previous Labor government to reinforce how important it is to get this agreement right from both sides of the ledger—sustainability for tax payers, yes, but also sustainability for important health care providers in our community.

Fortunately the Liberal-National coalition government understands that business has to remain viable to stay in business. If pharmacies do not stay in business, we would lose an important first line of health provision for the community. If we look to what the health minister and the Pharmacy Guild have negotiated here, we can see there are benefits for pharmacy, which include: a more than doubling of program funding from $613 million to $1.2 billion; a continued growth in prescription volumes; the moving of dispensing fee growth from wage cost index to the consumer price index; and $1.5 billion for an administration handling and infrastructure fee. The administration, handling and infrastructure fee will bring pharmacy remuneration back to the average it was under the Fifth Community Pharmacy Agreement. By delinking that from the cost of medicines, the fee now recognises there are costs associated with the dispensing of medicines regardless of the price of those medicines.

When I was talking to pharmacists in my electorate, they explained some of the valuable services they provide to the community that they simply could not perform if this government had not come up with a sustainable deal. One of those services is medicine deliveries to the elderly. There are many old people who do not have the means or the ability to get into the pharmacy to have those prescriptions filled. I went into a Dupuy's Pharmacy in Mackay and in the back room was a great team of pharmacists working on all of this. It was surprising to see what happens in the back end of a pharmacy that you do not actually see behind the counter. They were beavering away on all these home deliveries and also deliveries to aged-care centres. This is stuff that we do not see that pharmacists do every day, making sure those pills are correct, that the prescriptions are all laid out, that there is going to be no problem once it is delivered to a nursing home and someone else is administering it. It is sometimes, I have to say, painstaking stuff that they are doing. But that is all happening and now it is being recognised.

There are many other maintenance programs, checks and testing that pharmacies provide the customers at no charge and at no expense to the taxpayer. Some of those now will get some payments. There are many benefits that the Sixth Community Pharmacy Agreement will provide to the community simply by making pharmacy more sustainable as a business. More specifically, the agreement includes a doubling of investment in pharmacy primary care support by taking funding to $1.26 billion over the next five years. This investment recognises how important pharmacies can be and are as primary healthcare providers. In so many ways these pharmacies can be the first port of call for minor ailments to get people out of the GP system, to get them off bulk billing, taking pressure off Medicare and the public health system by dealing with these minor problems quickly and efficiently.

Pharmacies already deliver important services such as medication reviews and dose administration aids, but there is much more that they can do. Many member of the community already consult with their pharmacists as a first port of call for things like coughs, colds, bumps and bruises. This is not to suggest that pharmacists are replacing doctors when a doctor is needed, but it is recognition that pharmacists are very well qualified to recommend when a doctor should be consulted and when they can simply sort out a problem with the patient there in the pharmacy. Part of the new funding under this agreement will be specifically targeted at trials to provide evidence for both new and existing programs. The government's expert Medical Services Advisory Committee will be overseeing new and existing programs for greater transparency and to ensure the programs are both cost-effective and evidence-based.

Another part of this agreement—it was probably a little bit more controversial in the lead-up to negotiations—is that, under this legislation, the government signed a five-year deal with the Generic Medicines Industry Association and the Pharmacy Guild as part of a broader package of measures. The PBS reform is one of the biggest proposals we have seen in the past decade, and the government has come to an agreement that will significantly reduce the price of generic medicines for patients and taxpayers.

I would say that, as we go forward with that, we are going to have to be very careful that we are not simply changing around drugs that people might be accessing and end up costing more. I hope there is going to be some monitoring of this, because it was pointed out to me by pharmacies that sometimes there are false economies in this approach. But let's have a look and see how this goes a year down the track.

The optional discounting is also one area of contention, and I have to say I am still a little bit unconvinced about it, but nevertheless it is part of the agreement, and we go forward with the agreement given the Pharmacy Guild has signed off on it. The pharmacy agreement includes an optional discounted co-payment that will, I admit, give savings to consumers. Where that optional discount is applied, concessional patients' co-payment will be reduced from $6.10 to $5.10. Where a patient uses, for example, 40 scripts a year, that apparently translates to an up-front saving of $40. I note the average concession cardholder uses about 17 scripts per year and could save about $17 per year. In the older age brackets, where more significant savings for consumers are made, the average concessional patient in the over-65 age group uses 43 scripts per year, making their potential saving $43 for the year. I worry about the impact that some of this may have on smaller pharmacies, particularly in rural and regional areas, and I hope we are going to monitor this to ensure that we do not see a lessening of competition as a result of this part of the agreement. The guild has agreed and signed off on this, but I think we need to monitor it.

This government acknowledges that the health needs of some people are higher than the needs of others, and these people will continue to have the full protection of the PBS safety net. As result of this agreement, those patients could also benefit from lower monthly costs for their medicines in the lead-up to reaching that safety net. Once the patient reaches the safety net, all their medicines are free of charge.

The cost of medicines can be very high for many families, and it is the role of the PBS to ensure medicines remain affordable. Since forming government less than two years ago the Abbott government has doubled the number of drug listings for consumers, making 652 new and amended drug listings on the PBS at about $3 billion. That is already double the 331 new and amended drug listings that were under the previous, Labor government. Among those new listings are new life-saving drugs for breast cancer, melanoma, blindness and the debilitating shingles virus.

These are important measures for reducing the cost to consumers, but we cannot forget that there is a service provider in the middle who also faces cost burdens, and many of these pharmacies, especially in regional areas, are marginal and struggling. I really do say we cannot afford to lose them.

I note that during this process there were a lot of attacks on the sector, not the least of which was an extraordinary attack by News Limited journalist Sue Dunlevy, whose partner, I might point out, is a senior adviser to the shadow health minister. Her article on 15 March this year, where she likened pharmacists to crooks ripping off the taxpayer, ran under the banner 'How a pharmacy monopoly pushes up your medicine price and makes pharmacies million dollar businesses'. She certainly has not been talking to Robert Di Marchio, who owns the Guardian Pharmacy in the Burdekin; Allan Milostic, who runs another small pharmacy in Airlie Beach; Lynne Dupuy and her pharmacy in Mackay; or Bill Brewer and his pharmacy at Annandale. These pharmacies are simply small businesses. It is not multimillionaires or billionaires running it; it is everyday people, good people, and they need to be considered in this process.

It was important that the government underwent extensive consultation with this vital industry rather than simply taking a slash-and-burn approach to small business or an approach where they were completely ignored as Labor did or riding roughshod over them like they did with breaking the fifth agreement. I know that the government has tried to strike a balance between what is good for the consumer and keeping pharmacy viable—and I have to say that that is also good for the consumer—but I have to note that neither I nor pharmacies in my electorate are 100 per cent happy with this outcome. We have to remember that these businesses suffered a huge step backward under Labor, and it is going to take a huge step forward to get them back to where they were.

In effect, what Labor did when they broke the fifth agreement was to slash health funding. What this government has done with the sixth agreement is to restore funding to health while making the system more sustainable for taxpayers and sustainable for the providing services. In the meantime, there are significant savings for consumers. All in all, I do support the bill, with some concerns. I hope that the monitoring of this will see those concerns not be concerns at the end of the day.

David Gillespie (Lyne, National Party) Share this | Link to 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)

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

I am pleased to speak on the National Health Amendment (Pharmaceutical Benefits) Bill 2015. I commend the Minister for Health on her consultation with the whole of the supply chain and her work in this area. As we know, the PBS operates under the National Health Act 1953 and provides Australians right around Australia with timely, reliable and affordable access to necessary and cost-effective medicines. The PBS Access and Sustainability Package was announced by the Australian government in May 2015. The package establishes pharmacy funding, medicine-pricing arrangements and a range of sector improvements to ensure ongoing access to innovative medicine through a sustainable PBS. That is the critical issue—a sustainable PBS.

I note as well that since coming to office the Abbott government has doubled the number of drug listings for consumers—a significant investment of over $3 billion in just over 18 months. This is a major achievement by the government. It has doubled the number of drugs in half of the time, compared to the previous government. This investment will continue to grow. There are new medicines listed. There is one for melanoma that would cost $131,000 per patient if it were not subsidised through the PBS. A cystic fibrosis treatment would cost $300,000 per patient if it were not subsidised through the PBS. A further one for breast cancer would cost $82,000 per patient if it were not subsidised through the PBS. A medicine for pancreatic cancer would cost $16,000 per patient if it were not subsidised. There is also a retinal treatment that would cost $10,000 per patient if it were not subsidised. The importance of these to the individual patients cannot be underestimated. I meet people all of the time who say to me that they would have had to sell their houses if these drugs were not available on the PBS. They tell me how grateful they are to the government for listing them. None of us should underestimate what this means for the people suffering from these diseases and conditions.

As a result of this agreement Australians will benefit from cheaper medicines, a more competitive pharmacy sector and greater investment in new medicines, as I have discussed. This investment in new medicines is a key issue. There is also investment in patient support services as part of a balanced package of pharmaceutical reforms. This was developed after months of constructive consultation and robust negotiation across the entire pharmaceutical supply chain. That included consumers, pharmacists, medicine manufacturers, wholesalers and doctors. During consultations to deliver this package stakeholders all recognised the need to deliver a more sustainable PBS to ensure that the government could continue to list these new medicines I have mentioned and others to come. Each one is in its own way a life-changing and sometimes life-saving medicine.

The consultations included the Consumers Health Forum, the Pharmacy Guild of Australia, the Generic Medicines Industry Association, Medicines Australia, the Royal Australian College of General Practitioners, the National Pharmaceutical Services Association, the Pharmaceutical Society of Australia, the ASMI and the Australian Medical Association. This resulted in a package proposing total efficiencies of $6.6 billion over five years across the entire pharmaceutical supply chain. The cost of the PBS over the next five years is expected to be $50 billion.

As I said, since coming to office this government has doubled the number of drug listings for consumers. That is a significant investment of almost $3 billion in just over 18 months. As I mentioned when I started my comments, the people who are affected by this significant investment are extremely grateful that the government has taken this particular course. We are now delivering each month an average of 30 new and amended drug listings for patients. That is huge. I hope nobody underestimates the value of that to the individuals and families who are affected. Often that can be overlooked in a robust discussion. This government is certainly delivering.

And of course efficiency is necessary to contain a blowing-out of costs. For example, removing originator brands from price calculations could save some consumers up to 50 per cent off the price of medicines, and taxpayers $2 billion over five years. To spend it, you have to have the money in the first place. Changes to price disclosure arrangements apply to medicines that are subject to competition, which will see the price of generic medicines for consumers reduce as much as 50 per cent from October 2016. This will be done by removing the originator brand version of the drug from pricing calculations. These cheaper medicine prices will also see taxpayers paying less, delivering $2 billion worth of efficiencies for taxpayers between October 2016 and the end of the agreement, which will assist the government's capacity to continue to list new medicines. We have to continue to list new medicines, and this is part of how we will deliver that.

The package also proposes a $20 million awareness campaign to support the increased use of biosimilar medicines by patients, pharmacists and specialists. Biosimilars are complex biological medicines that are approved by the Therapeutic Goods Administration as an alternative to an existing brand. The proposal to allow pharmacists to discount the price of medicines by up to $1 per script could save some pensioners over $40 per year while also delivering the government around $400 million worth of efficiencies over five years. This could see a concessional patient's co-payment drop from $6.10 to $5.10 and deliver someone who uses 40 scripts a year an annual up-front saving of up to $40. It will also apply to non-concessional patients, who pay a co-payment worth $37.70.

The government is proposing a Pharmaceutical Benefits Scheme access and sustainability package over the next five years which will include    the Sixth Community Pharmacy Agreement, a strategic agreement with the Generic Medicines Industry Association, and a $2.8 billion additional direct investment across the pharmacy sector. An in-principle strategic agreement with Medicines Australia is also being progressed. The proposal is to reduce the cost of these medicines for consumers and taxpayers. It includes a $1.5 billion investment in a new handling and infrastructure fee for pharmacists, to help restore pharmacist remuneration to average levels provided under the previous Fifth Community Pharmacy Agreement and provide greater certainty by delinking remuneration from the variability of price disclosure—something important to the pharmacists themselves. They have not been asked to give up location advantages as part of this package. The head of power in the act for the pharmacy location rules and the Australian Community Pharmacy Authority will be extended until 30 June 2020. Because the details of the pharmacy location rules are determined separately, the effect of extending the expiry is that current arrangements can continue without interruption past the end of June 2015—the certainty issue. A review of pharmacy location rules will be conducted within two years as part of a broader review of pharmacy remuneration and other arrangements.

Many members have spoken about the pharmacies in their electorates. I have one compounding pharmacy in my electorate that is particularly important to people with specific needs. There are some families who rely entirely on this particular pharmacy. It provides an invaluable service to many families who live in rural and regional areas. A lot of pharmacies in smaller communities play a really significant role in providing a range of services to communities that otherwise would not have them. There are small communities in my electorate that do not have a resident doctor. Frequently people will go to the local pharmacist and have a chat. Often that may result in them attending their general practitioner, but equally they rely on the pharmacy in that small community for practical advice on what their issues are. Mr Deputy Speaker Randall, you would have seen much of this in your own electorate. There are communities that rely very heavily on those small pharmacies. And of course these people are small business people and they have invested in those communities as well. That is certainly valued by those smaller communities.

The one issue that I do not want to see overlooked is the significant investment in new medicines, the impact that has on individuals and families, and the commitment that this government has made to continuing that process. Many of us have met people who are profoundly impacted by the diseases and conditions that I spoke about and are incredibly grateful for the fact that this government has made very tough decisions in very difficult financial circumstances but is committed to the health and wellbeing of Australians in many ways, significantly through the additional listings of these medicines. There are a number of reasons why I support the bill before the House but very much a part of it is the ongoing listing of those medicines for Australians. I commend the bill to the House.

Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

The electorate of Grey covers the vast majority of South Australia and has many rural towns. I estimate by the Rowan Ramsey calculator—the thing that says that if the town has a licensed premise it is a town and if it does not have a licensed premise it is not—that there are about 134. Not all of these have pharmacies but most of the towns—anything over about 500 people generally does. In many cases these are very small operations. Often they belong to a cluster of pharmacies, where you might have one pharmacy with outreach networks. They are so important to our small rural communities. I know some pharmacists have more than five or six stores and they offer ongoing services. Even in the town I come from we have an in-house videoconferencing dispensing system, which enables the pharmacist to be remote. The drug bottle is held up by the staff and identified properly and dealt with in that manner, which retains a service where otherwise it would fail. It is very important, because our local hospitals rely on having local pharmacies, and our ability to provide ongoing medical services relies on having local pharmacies. There is hardly any point having a doctor in the town if, when he or she prescribes drugs for a person, that person cannot purchase them anywhere. So these are essential services.

I have come to know many pharmacists and they have become my friends. There was quite a bit of concern in the negotiation of the Sixth Community Pharmacy Agreement, and they wore a pretty regular path to my door—or to my email and my telephone—to make sure that I understood what was at stake here. I must congratulate the Minister for Health, the Hon. Sussan Ley, who picked up this responsibility in December and had six months to come to an agreement over the sixth pharmacy agreement. All through that process, it was very comforting to my constituency that the minister comes from regional Australia and actually understands what impacts, in a small community, a reliable and, hopefully, profitable pharmacy can have—because, in the end, if they are not profitable, they will not be there. I was able to assure my constituents through that time that I had great faith in the minister. I must say that the agreement she has finally reached has absolutely justified that faith. It has been welcomed by pharmacists within my constituency. The fact that we have an agreement now for the next five years is good for pharmacies, it is good for all of Australia but it is particularly good for rural and regional Australia.

Pharmacists have been increasingly expected to supply a growing range of services, at great net benefit to the customer. These are things that we just take for granted now, things like—I have dealt with aged parents in the past—blister packs, medication reviews, screenings for various ailments that maybe we do not have to go to doctors for anymore, whole-of-healthcare plans and even delivery of flu shots, I noticed last season. Pharmacists will be asked to do increasingly more as the health dollar becomes scarcer and harder to come by in Australia. All of these services have been supplied without a fee for service. Pharmacists have been doing good things for their communities, for the health of the general public, and have not been rewarded for it.

In this period when pharmacists were contacting me, I became increasingly aware of how much they had been affected by the recent changes that shorten the period in which drugs remain at a cost when they came off patent. It had resulted in a fairly serious financial hit to many of these pharmacies, and they were telling me: 'We can't handle any more. Government might need savings in this area, but pharmacy cannot handle any more.' They were telling me it was close to the wire and they were already looking at lay-offs in their pharmacies. Of course, that would have led to a lessening of those services that we have now come to rely on pharmacies to provide—services that in fact they were not getting paid for. In that period, I had the privilege of having Minister Sussan Ley visit my electorate—about six weeks ago now—and I took her to a town called Kadina and another one called Peterborough. We had extensive meetings with pharmacists on those days, and I was very pleased that they were heard. One of the things the Sixth Community Pharmacy Agreement has done is provide a funding stream directly to the pharmacists to address this issue. It has delinked the income that pharmacists derive from the sale price of the medicines that they sell and actually now provides income via fee for service. That is a great move forward. It is something that they can build a business model on. They know that, as the price of drugs fluctuates in the market, their income will not be affected.

The Fifth Community Pharmacy Agreement was for $15.7 billion. The Sixth Community Pharmacy Agreement is for $18.9 billion. I did some calculations on that, and that comes to about 20 per cent. Twenty per cent over five years is pretty good, I reckon, in the current economic environment. It is certainly better than CPI. In fact, it is better than our recent growth rate as well. So it is a good deal for pharmacy, and it is not greatly surprising that pharmacists have welcomed it. In that extra money, there is an extra $600 million to help pharmacies provide primary health care—these other services I have been talking about. This enables them to reach out to the community and, rather than just being a medicine retail operation, provide better service in those areas that I have talked about, where we sometimes have limited medical services. Pharmacies can take an increasing role. I have already spoken about the fact that pharmacists' incomes will be delinked somewhat from the cost of the medicines themselves. At the Pharmacy Guild's request, the minister was able to move the indexation of the dispensing fees from the wage price index to CPI. I am very pleased that that was also able to be delivered.

When revolutionary new drugs come on the market, Australians want to have immediate access to them. There is very good reason for that. If you have someone close to you who is suffering greatly from a disease, an ailment—cancer, for example—and you know there is a new drug out there on the market, you want immediate access to that drug. This government has been very good at listing new drugs on the PBS. In May alone, $1.3 billion worth of new drugs were listed on the PBS. There is another $2.5 billion worth under consideration at the moment. It is entirely justifiable and understandable that the public would be demanding access to those drugs, no matter what they cost. But at the end of the day, while the government approves that process we have to find money to cover the costings of those new listings.

One of the areas that has been targeted under this agreement is the supply of over-the-counter drugs under the PBS. This came as a bit of a surprise to me because I am like everyone else and go to the doctor from time to time. The idea of getting Panadol or one of its generic counterparts on the PBS had never occurred to me. I can understand why people might like to get their medicines that way, but something that can be bought quite simply at the supermarket without prescription hardly qualifies as a vital medical drug to me. I think that is the kind of tightening up we need in government. Sure—it might cost people a couple of dollars more than they had before, but it seems to be almost irresponsible to be going to the doctor for Panadol in the first place. If you need it, it is pretty cheap. These types of things are discounted in supermarket chains, and it just seems to be a rather strange place for the government and the taxpayer to be in.

There are 20 million scripts a year written for things that do not require a prescription, and 6.7 million scripts a year for paracetamol. I should not name Panadol as such, but that is the name that so many of us recognise paracetamol by. It is right that we should move on this area, and I think the public will generally understand that if we want those magnificent new cancer treatment drugs and things that are going to help our kids with diabetes, or whatever it might be, then we have to accept that we might have to buy our paracetamol down at the shop.

The other area the government has moved into is a variable co-payment. There has been quite a bit of discussion about how this might affect regional and rural communities. I am of the opinion that most of them that serve in communities where there is little or no competition will not pass this $1 variable deduction on to the consumer. I think there are pretty good reasons for that. If you said to those consumers, 'You have got a choice here, you can pay the extra dollar or you can lose your pharmacy,' I do not have much doubt what the answer would be. It is not as if they are going to pay any more. What it means is that in places in the city where there is normally genuine and multiple competition, we may see that $1 come off, and it will be a saving to the consumer.

I do not think that is something we are going to see in regional Australia and I do not think it is something that is really demanded. Most of us that live in the country accept that there are some added expenses to living in the country. There are also some fantastic benefits to living in the country, and I wish I could drag half of those people from the city out to just give it a go. This is really where they should live to get their stress levels down and enjoy the wide open spaces. These are incredibly safe places to bring up their families. There are so many good things about living in the country. In fact, the only thing I can say against living in the country is that I have not got enough time to do everything. We all know that those people who live in rural communities have far busier lifestyles on average than those who live in the city. It is almost counterintuitive.

I think the country residents will bear that in very good stead, and we look forward to the fact that we will continue to have pharmacies within our communities. This government is committed to having the pharmacy sector stand alone and to making sure that it not only survives but prospers and delivers more and better services for all Australians.

John Alexander (Bennelong, Liberal Party) Share this | Link to this | Hansard source

I am grateful for the opportunity to speak on the National Health Amendment (Pharmaceuticals Benefits) Bill 2015, which establishes a sustainable direction for all players in the medicine supply chain and, most importantly, delivers some major wins for Australian consumers.

As the member for Bennelong and chair of the Parliamentary Friends of Medicine, I have taken a keen interest in the progress of difficult and complicated negotiations between the government and the pharmacy, innovative medicines and generic medicines sectors.

Of course, there is no magic pudding of taxpayer funding and therefore the result of this negotiation has not left every stakeholder happy. But this government has delivered something that those opposite were never able to: a stable and sustainable environment for each of these stakeholders to operate in. This bill offers pricing stability for the medicines sector and security to the Pharmacy Guild through the extension of the location rules.

Many of my colleagues have spoken with great eloquence of the beneficial impacts of these changes on the pharmacy sector. I have held many meetings with hardworking local pharmacists and with Pharmacy Guild representatives throughout these negotiations, so rather than go over ground already covered, I wish to speak about other stakeholders.

Bennelong is fortunate to host the head offices for a majority of pharmaceutical companies in Australia, which manufacture both innovative and generic medicines. Over the past nearly five years as the local member, I have been delighted to learn of the remarkable contribution made by these companies to both the physical health of Australians and the economic health of our nation. This is an industry that is responsible for over $3 billion in export earnings each year. That is more than the wine industry, which occupies a significantly greater role in our national consciousness and pleasure. This industry also brings in approximately $650 million for clinical trials—a vital employer of highly qualified and highly paid Australian jobs.

More importantly, the innovative medicines sector has delivered extraordinary outcomes over recent years for Australians suffering with some of the ugliest, most debilitating illnesses, from heart disease to wet macular degeneration to diabetes. Tens of thousands of our constituents enjoy a significantly greater quality of life, and a more productive life, as a result of the contributions of this industry. Recently the health minister announced the PBS listing of the next generation of medicines, with $1.3 billion in the recent budget for new life-saving drugs to help treat breast cancer, melanoma, blindness and the debilitating shingles virus. Some of these medicines could cost patients in the order of $100,000 without government subsidy. This takes to 652 the number of new and amended drug listings on the PBS, totalling $2.9 billion in the 18 months since this government's election in September 2013. This is nearly double the 331 listings during the full three-year term of the previous Labor government. These listings include drugs like Lucentis, manufactured by Novartis, which will save some of my constituents from blindness. It would cost $10,000 per patient if not listed on the PBS.

The costs to bring these drugs to market are significant because of the very long time period and complicated process required to get from the patenting of a molecule to a safe, proven product on the pharmacy shelf. On average this process can take up to 12 years and cost up to $1 billion, giving the company only eight years to make back their costs of investment before the patent expires and the generic manufacturers move in. As a result, time and again I have heard from these companies that the commodity they crave more than anything is a stable operating environment. When in government the Labor Party clearly did not deliver in this regard, with cabinet deferrals of listings despite PBAC approval and the existence of a memorandum of understanding that clearly set out an agreement to do otherwise. By comparison, this government has honoured its election commitment to lift the minimum amount required for cabinet approval and has signed a letter of intent with the industry that provides five years of pricing stability. This stability goes hand in hand with savings, delivering great benefits for both the consumers purchasing the medicines and the Australian taxpayer. This includes changes to the pricing of generic medicines, leading to as much as a 50 per cent drop in prices by October next year and giving pharmacists the ability to provide patients with a $1 per script discount, therefore delivering a direct benefit to consumers.

I wish to thank Minister Sussan Ley for her tireless work in managing the complicated negotiations that have led to the bill we have before us today. On many occasions over recent months I have sought her assistance and her counsel, and she has always been willing and generous. I also wish to thank the many industry participants I have engaged with throughout this process—both pharmacists and medicine manufacturers. Whilst some may have felt a little battered and bruised as the negotiations wore on, all stakeholders maintained a sense of the greater good for the Australian taxpayer and a respect for the tough job inherited by this government to fix the budget. They recognise a partnership of common purpose with the government to, above all else, achieve the best possible health outcomes. Whilst some differences are still being ironed out, it is to the minister's credit that broad agreement with all participants, and even with those opposite, has been achieved.    I commend the bill to the House.

Don Randall (Canning, Liberal Party) Share this | Link to this | Hansard source

I am pleased to speak on the National Health Amendment (Pharmaceutical Benefits) Bill 2015. This is a very important issue for my constituents and the pharmacies within my electorate. Like the member for Lyne, I have something like 36 pharmacies in the electorate of Canning. The key component of this bill is the federal government's ongoing effort to provide Australians with reliable and efficient access to necessary and affordable medicines. This bill will allow for the implementation of the Sixth Community Pharmacy Agreement and the PBS Access and Sustainability Package, which will bring about a wider range of improvements within the pharmaceuticals sector to ensure ongoing access to innovative medicines through a sustainable PBS. This bill provides for a considerable boost for pharmacy in this country. It includes $18.9 billion of investment negotiated as part of the Sixth Community Pharmacy Agreement. This is a landmark agreement which will ensure that the sector is provided with security for the next five years in terms of funding and pricing.

What is the context of the debate on this bill? The fact of the matter is that every five years there is a renegotiation of the pharmacy agreement. Why? Because, as other members have said, many medicines are incredibly expensive. Some are not too expensive—as we have heard, paracetamol is not very expensive, and we have dealt with that in this bill by taking it out. It is unnecessary, because you can go into Woolies or Coles and buy yourself a pack of 24 paracetamol tablets and it will do the job. You do not need to get it from a pharmacist, but it was being used to help them with thresholds.

I met in my office a delegation of some of these 36 pharmacists that either live in or have pharmacies in the electorate of Canning. They are small business people desperate to put together a business model for themselves but also to provide a service. Matthew Tweedie, the Western Australian representative of the Pharmacy Guild of Australia—Mr Deputy Speaker Goodenough, you may have met him when he came to see you in your electorate—is a fearsome advocate for the guild in Western Australia. Some might even say he is pugnacious, but he does his job very well. The stories that were coming from some of these pharmacists were quite heartrending.

A lot of people think that because a pharmacist goes along to university and gets themselves a degree that allows them to be a pharmacist it is a licence to print money. It is not. Think about it: if they are a young person who has just left university with nothing they either have to go to work for another pharmacist, or, if they set up their own pharmacy, it is going to cost them an absolute fortune not only to set up a building but also to get the amount of goods in the office, and there are all the regulations that go with it.

It is true that pharmacists have had to diversify. There is not a lot of money in providing scripts alone. So what do they do? They have almost become a pharmacy supermarket. Dare I digress, Mr Deputy Speaker? In Cuba, which I recently visited—which has one of the best health systems in the world, I might add—they have a whole range of things you can buy in a pharmacy, from coffees to other things; they are basically delis with pharmacies in them. We do not have that in Australia, but we do have a diversity of goods. So you go in there and, yes, you can buy the stuffed toys and aftershaves and all the trinkets that go with that, like hairbrushes, and that is what is needed.

People say, 'Look at them now, though; they are able to give injections to people.' But, as this delegation of pharmacists said to me, the regulations surrounding that make it almost prohibitive to make an economic model out of it. If you give injections in your pharmacy, you have to get a separate room, you have to make sure you get a qualified person, you have to have a second person there administering and watching—it is a huge cost to do this.

Do remember that not only do the pharmacists have to set up this incredibly large infrastructure to provide the full service, but also they have to deal with their landlords in the shopping centres. For goodness sake! Some of these landlords are some of the most voracious people in the world. They rip these poor guys off in terms of rents, and ratchets on their rents, and everything that goes with it. And they have got to try and turn a dollar before they go anywhere in terms of shopping centres.

As somebody who has been absolutely torn apart in a business myself by the shopping centre management, I feel for these poor pharmacists. To give you an idea of it, in the Waterford Plaza shopping centre, not far from where I live, there is a large pharmacy. So what did the shopping centre management do? They decided to put another pharmacy in, just metres away in the other section of the shopping centre. That first pharmacy was battling to survive. Now the management have put another one in there to compete with them. The landlords are not interested in whether the pharmacy is going to make any money; they just want to fill their shops.

The pharmacy then has to deal with things like the large pharmacy warehouses. I do not know if you, Mr Deputy Speaker Goodenough, have been into a large pharmacy warehouse, but writing scripts and giving medicine is not their core business. You go in there and you find all the other voodoo medicines—the pills and the vitamins and everything. There is one product that will give you hair and another that will take your hair away; there is one that will help you with sores and another that will create something else; there is one that will help you lose weight and another that will help you not lose weight. They have to sell all these diet products. They are festooned with all these things, but they do not provide a service.

A genuine pharmacy in the suburbs, like those in my outer metropolitan electorate, is needed, because when someone goes to the doctor and gets a script they need to fill it. That is what people are really looking for. But these pharmacies do more than that. As we know, they help manage people's medicines. They even put together things like Webster packs which allow the elderly in particular to make sure they get the right medicines in the right dosage at the right time. But they not only do that; they also go and deliver them to the patient's house. Can you imagine the pharmacy warehouse doing that? They would have no idea. They would not be interested; it is all about bulk and turnover.

I do not have a problem with large pharmacy warehouses. They have got their place. But it is the difference between going to a nice little boutique cafe on the corner and being willing to pay a bit extra to get a service, and going to the great cafeteria on the corner where you have got many tiny little restaurants housed inside some food hall and you can have a choice and have it as cheap as chips. This is the difference between a decent pharmacy and those.

In my outer metropolitan electorate, sometimes, in the towns, as the member for Grey mentioned, you would be lucky to have one pharmacy in a small town and they are battling to survive. I have a town called Serpentine in my electorate. The local people there have been battling for years and years to get access to a doctor and get access to medicine at all. We were lucky enough to get a couple of Nigerian doctors to go down there, and they set themselves up in the local pony club of all things. But the problem was: when the doctors wrote scripts, patients had to go off to a town 30 or 40 kilometres away to fill the script. Dare I say it: as soon as these two doctors got their medical provider numbers, they went straight back to the city with them and left the town without a doctor. But, thank goodness, at the moment in Serpentine there is a pharmacist who has come there, selling pharmaceutical products largely, because there probably is not a lot. When you put all that other stock in—the stuffed toys and the vitamins and everything—you have got to have a fair old bank overdraft to make sure you carry that sort of stock.

Those are the realities of trying to set up a pharmacy in an outer metropolitan area and make it work. One of these gentlemen who came to see me, along with Matthew Tweedie and the people from my electorate, was telling me that, by the time he pays all of his bills and the set-up costs and the loans, he is battling to make $40,000 a year. That does not pay the bills. That does not feed the kids. That is battling to run your car. So there has to be a decent pharmacy agreement. This is what this sixth agreement was about.

Those opposite have been saying in their speeches in the House today that there has been no consultation from this government side of the House. That is totally untrue. The previous minister, Peter Dutton, began the consultation process on the sixth agreement. And the current minister, Sussan Ley, is doing an outstanding job. She is somebody who is incredibly approachable and somebody who has a great disposition to dealing with people and consulting. I have rung the minister on this issue and she is going to come to my electorate, along with the member for Hasluck, and sit down and meet with a delegation of these chemists. Even though the agreement is finished and over, she is committed to doing that. That is the sort of person she is: she is interested in the minutia of the detail. She is interested in making sure that she is taking a practical measure. As another speaker said, it probably has something to do with coming from the bush herself, from the seat of Farrer. There is no vast metropolitan area there. People need pharmacists in their area not only to hold the town together but to make sure there is a decent service.

So, when we hear about lack of consultation we just need to remember and put into context that on the eve of the last federal election, the Labor Party cut $800 million of funding from the pharmacies without any consultation whatsoever—not at any point in the discussion. That is what are dealing with: one who has had the discussion and one who took the money without a discussion. That is the difference between us.

As I said, this bill does put about 20 per cent more into the agreement over five years—to $18.9 billion. The member for Lyne, who is a doctor himself—an eminent doctor; he has probably taken a huge pay cut to come into this place—pointed out the business about the concessional co-payment dropping from $6.10 to $5.10. For those who use 40 scripts a year there is a potential saving of up to $40. That is a concern for pharmacists. As he said, if somebody does 60,000 scripts a year—which is not unreasonable—that is $60,000 off the bottom line, trying to make that work. Remember: it is not mandatory, it is negotiated. So if you actually want to do this and be sure that you are viable then I am sure the person is quite happy to pay the extra dollar—sorry about that noise, Mr Deputy Speaker Goodenough! I was getting so excited that I pointed this out too strongly! This is voluntary, but it will affect the chemists.

To all the chemists out there, I have spent a lot of time talking about the pharmacists themselves—the practical measures without a lot of the detail. I know that a lot of my colleagues have done that so there is no point in me rehashing what has been said before. What I do need to say in the last few moments is that this pharmaceutical agreement is something that the rest of the world holds in high regard. We deliver affordable medicines to the Australian people because we can. We are a rich and affluent country, but we have to be careful about how we use our taxpayers' money. We do it in a proper way, where we renegotiate with the major pharmaceuticals, and at the end of the day we deliver a good result for the constituents in our electorates.

As I said, we had the delegation in Canning. One of my local pharmacists, who owns two pharmacies near my electorate office—Natalie Smart, who owns the Wizard Pharmacy and another one—felt that this pharmacy agreement has gone a long way. Obviously, in an ambit claim you are not going to get everything. But they got a lot, thanks to the minister and the negotiation that the minister did on this agreement.

Ms Smart, the local chemist, said that she was particularly happy with the additional government investment in patient care programs and dosage delivery aids, such as Webster-paks. We are delivering real benefits to the community and that is what we intend to do well into the future. This is a government that is interested in value for money and in providing a decent and proper service. I commend the bill to the House.

Jane Prentice (Ryan, Liberal Party) Share this | Link to 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.

Sussan Ley (Farrer, Liberal Party, Minister for Health) Share this | Link to this | Hansard source

I thank members for their contributions to the debate on this bill. I can assure all members of the parliament that this government understands the importance of community pharmacy, access to the PBS and health more broadly. Like you, we know first-hand from the people in our electorates the expectations that patients and families have of the PBS. They want affordable access to the treatments they need regardless of their income, family make-up, health status or location.

The PBS comes at a price. We have an ageing population and increasing rates of chronic disease. New medicines are increasingly complex and expensive. In 1991, there were no listings over $1,000. Now, there are almost 600 listings for medicines that cost over $1,000 for each prescription. Only last month we announced a $1.3-billion investment in new medicines, most of which would cost consumers in excess of $10,000 a year without the PBS subsidy.

The government used the negotiation of Sixth Community Pharmacy Agreement as an opportunity to consider a wide range of ways to improve access to medicines and improve the sustainability of the PBS. Consultation occurred across the PBS supply chain with the involvement of over 20 stakeholder organisations and has resulted in a supported package of measures. The consultations and negotiations for the package and the resulting agreements with pharmacy and industry were conducted in a way that took into account the recommendations from the ANAO review of the Fifth Community Pharmacy Agreement. The responses to those recommendations benefited the consultation process in a very positive way. I am aware that not all stakeholders agree with all components of the package. However, all components have a solid body of support from across the stakeholder groups. While on the subject of consultations, I know those opposite raised issues of time lines and consultations with the Labor Party. Perhaps members opposite have forgotten that they announced their simplified price disclosure changes—an $800-million hit on pharmacy—on 2 August, at five minutes to midnight, before the election and with no consultation whatsoever with affected parties.

This is the kind of hypocrisy that we have come to expect. I also note that Labor introduced legislation for the Fifth Community Pharmacy Agreement on 12 May 2010, I am advised, with no prior consultation with the opposition at this time. If the government is guilty of anything, it is of having a similar time frame for finalising this agreement as Labor did when they were in government.

On 24 May I was pleased to announce that the Pharmacy Guild of Australia and the Generic Medicines Industry Association had signed agreements with the Commonwealth committing their support to implementing the measures in the package. I thank the guild and the GMIA for their hard work and collaboration in achieving their respective agreements. Medicines Australia has also signalled its intention to make an agreement, and I expect that process to be finalised soon.

These agreements recognise that everyone must contribute to a sustainable PBS in order to share the benefits. The measures in the package will deliver up to $18.9 billion to community pharmacy and wholesalers over the next five years, an increase of over $3 billion on the fifth CPA. This is a fair investment in pharmacy and a balanced investment in these current fiscal circumstances. The measures also deliver net savings to the PBS of around $3.7 billion over five years. But, equally, these measures also deliver savings to consumers through cheaper medicines under price disclosure and cheaper medicines through allowing discounting of the patient co-payment. Importantly, the government continues to invest in new medicines with more than $1.3 billion invested in the May budget, with more high-cost drugs currently before government.

The changes in this bill are required to implement seven of the measures contained in the Access and Sustainability Package. Savings from price reductions in F1 and F2 will continue to support subsidies for new and innovative products. Changes to the operation of price disclosure for originated brands and combination items will deliver benefits from competition at the generic end of the market.

For the pharmacy sector, the Sixth Community Pharmacy Agreement provides revised remuneration arrangements that will enable pharmacy to innovate and transition from a focus on medicine supply to medicines management and pharmacy services. There is increased funding for new pharmacy programs with evaluation to ensure they are clinically appropriate and cost-effective. For consumers, the ability of pharmacists to reduce co-payments moments by $1 will lower out-of-pocket costs. The safety net will still be there to protect individuals and families who require a lot of medicines.

The government, for the PBS, relies on the expert advice of the Pharmaceutical Benefits Advisory Committee. I recently announced the appointment of Professor Andrew Wilson as the new chairperson for the committee. The revised PBAC membership structure provided for in the bill will allow for more streamlined processes and provide the flexibility required to handle the committee's increased workload.

The measures in the package focus PBS funding towards treatments that would otherwise be out of reach for individuals, important advances in therapy and expensive, complex medicines for serious conditions. It is no longer in the interests of patients or taxpayers to continue to subsidise relatively low cost items available directly from pharmacies. The proposed delisting of certain over-the-counter medicines from the PBS reflects this. The cost of paracetamol for one year is equal to the cost of funding ipilimumab for late-stage melanoma for one year. One costs between $2 and $7 a packet and the other tens of thousands of dollars per injection. Affordability is a paramount consideration in the future of the PBS.

I thank members for comments and thank the stakeholders involved in working with the government to develop the proposals and agreements. This is a balanced package of measures which provides fair outcomes for pharmacy, the medicines industry, patients and the Australian community. These changes deserve to be supported. They will help to strengthen the PBS into the future. They are reasonable, they are necessary and they are needed now. I commend the bill to the House.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

I put the question that the amendment be agreed to.

Question negatived.

Original question agreed to.

Bill read a second time.