Bob Brown (Tasmania, Australian Greens) Share this | Hansard source

The Greens have real concerns about the National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2007. In many ways, those concerns have been outlined by Senator Moore and Senator Sterle in the incisive speeches they just delivered to the chamber. This is very complicated territory, which is where we all need to concentrate a little more because otherwise it can lead to legislation that is not in the public interest getting through simply because it is not understood by the body politic.

The Pharmaceutical Benefits Scheme is an Australian institution which has been envied by countries around the world, but is also a matter of some chagrin for the globally big pharmaceutical companies which want to make more out of drugs. They are amongst the biggest income earners in the world. They earn phenomenal profits and they have huge political clout and the last thing they want to see is the Pharmaceutical Benefits Scheme as practiced in Australia, which is aimed at getting value for money in dispensing clinically effective drugs to the Australian community, spread elsewhere. Australians voted for this scheme in a 1946 constitutional referendum and therefore it has an unequivocal democratic mandate. The PBS provides universal subsidised access to medicines to the Australian community. Along with Medicare and the public hospital system, it forms a central component of Australia’s much envied health system.

The PBS has been in operation for almost 60 years, and some of the benefits were first made available way back in June 1948. It has evolved, from supplying a limited number of life-saving and disease-preventing drugs free of charge to the community, into a broader subsidised scheme. Currently the PBS subsidises access to more than 600 medicines available in 1,800 forms and marketed as 2,600 differently branded items. The PBS covered around 168 million prescriptions in the year to June 2006. That is about eight prescriptions per Australian. It covers all Australian residents when they fill a prescription for a medicine listed on the schedule. So it would be a very rare person indeed who has not, in some way or other, benefited from the scheme—and known about the benefit of the scheme.

General patients pay up to $30.70 for PBS medicines, while those with concession cards—over a million people on low incomes—pay up to $4.90. These payments are called patient contributions or co-payments and they are revised annually, in line with the consumer price index, and on other occasions when the government seeks to further increase the share of the cost of the PBS borne by individual patients. For example, there was a 30 per cent increase in co-payments on 1 January 2005 which, you will remember, we opposed.

Government expenditure on the PBS for the year ending 30 June 2006—the last full year for which there are accounts—totalled $6.16 billion, compared with $6 billion for the previous years. That is up by 2.7 per cent. That amounts to about 83 per cent of the total cost of PBS prescriptions. The remainder of PBS expenditure is made up from those patient contributions—and that is increasing too. In this financial year’s budget papers it is suggested that PBS expenditure will increase to $6.433 billion in the current year and $7.279 billion the next year. Other governments are looking at this, and it worries the pharmaceutical industry greatly. I understand the Korean government is one of those that are studying the system at the moment.

The bill before us seeks to create a distinction between the way that generic drugs are priced and the way that new drugs with patent protection are priced. If the bill goes through, the US negotiators under the United States-Australia Free Trade Agreement—we warned about this during the debate some years ago in this chamber—will have taken a step towards cutting the nexus between the price that will be paid for new patent protected drugs, largely coming from the big international corporations, and the existing drugs that deliver the same benefits. The result will be that Australian consumers and taxpayers will be paying higher prices for new drugs that are yet to be listed or that come on to the listing in Australia.

We were the only party to unequivocally oppose the inclusion of the PBS in the United States-Australia Free Trade Agreement, which we opposed generally, because of its impact on a whole range of Australian economic and social considerations, from the agricultural industry right through to the health industry and the matter before us today. We predicted that the very thing that is happening in this bill would happen. In 2004, the chamber was told that the PBS would never be included in the free trade agreement. Then, after it was included almost from the start of negotiations, we were informed that no fundamental aspects of the PBS would change as a result. With the furore that arose through the passage of the evergreening amendment, little attention was paid to the creation of the medicines working group. I will be asking the government about that during the debate in the committee stages of this bill. Two key issues to focus on were the removal of the reference pricing and the role of the Medicines Working Group.

When it comes to reference pricing—as the previous two speakers from the opposition have made clear—Australia’s PBS is underpinned by this reference pricing system which links the amount paid for a drug by the Commonwealth on behalf of the Australian people to the relative effectiveness of that drug compared to drugs already available on the market and doing the same job. The US companies loathe reference pricing as they make their money inventing new drugs, patenting them and bringing them onto the market. I do not think things have changed since I was a general practitioner. I well recollect the bombarding of busy medical practitioners with information about new drugs—branding them as the thing your patients should have—and in practice finding no benefit over that available through other treatments or, if they had to be resorted to, from drugs already available on the market.

The notion that a drug should be priced according to what it can do to help patients rather than how much they claim it costs to produce is anathema to the big drug companies. They want to talk about getting a return on their investment and their research and development. That is how corporations work—they look at the bottom line—but the PBS is designed to give maximum benefit at the cheapest price to the Australian public. That is quite a different philosophy, and it clashes with the corporate philosophy. We will see the corporate philosophy have a win through the legislation before us, if it goes through this chamber.

Three years ago, when the US-Australia Free Trade Agreement was being negotiated, the US companies wanted reference pricing abolished. I have seen no evidence to say that they do not still want to see reference pricing abolished. Both governments on either side of the Pacific denied that this was a United States government objective. Mr Vaile, the then Minister for Trade, said:

... the Labor Party still cannot get the message. They cannot understand simple English: they are not going after the PBS.

That is, the drug companies are not going after the PBS. After it became clear that the drug companies were going after the PBS, the Prime Minister denied that they had succeeded. He said:

We have secured an absolute protection of the Pharmaceutical Benefits Scheme. Yes, some of the American drug companies did try and get in under the radar on that subject, but we didn’t agree.

But it appears that the US drug companies are winning. They are getting their way. It is not a lay-down misere yet. This is a gradual process. However, we are seeing evidence of that in the legislation before us today. At the end of the day, it will be Australia’s pensioners and, indeed, all Australians who rely heavily on pharmaceuticals who will be paying the biggest price, or the taxpayers through the subsidy to the scheme paid by the government itself.

The Australia-US Free Trade Agreement included the formation of the access to medicines working group, which is made up of Medicines Australia and health department bureaucrats, to continue discussions about changes to the PBS. I will be asking some questions about this group, their role, where they are headed and what their philosophy is. The only substantive agenda item on the meeting of the first medicines working group that I am aware of was concerned with the pricing of pharmaceuticals.

The National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2007, which is now before the Senate, undermines the reference pricing system that underpins and is a heartland to the success of the Pharmaceutical Benefits Scheme, going back for decades. The changes proposed in this legislation are exactly what the US drug companies are after and what they were after back in 2004. My questions about the Medicines Working Group include: isn’t this group and the department working closely and secretively—where are their minutes?—to change the nature of the Pharmaceutical Benefits Scheme to the detriment of all Australian consumers? The process is effectively outsourcing policy development on medicines in the PBS. Medicines Australia is the pharmaceutical equivalent of those policy working groups that benefit big corporations in other matters such as coal, tobacco, uranium and a whole range of other industry outcomes. I am putting that proposition, and I want to hear the government’s response to it, because we are here not to protect the interests of big pharmaceutical corporations but to protect the interests of Australians who are prescribed medicines for their health and at the lowest price possible. Where is the transparency in this process?

Let me finish with this: we trenchantly opposed the US-Australia Free Trade Agreement. One of its problems is that, where there is a dispute between Australia and the US, arbitration goes to faceless organisations which are not obliged to report to this parliament. During that debate it was made abundantly clear that, when it came to arbitration, the appointees—three by the Minister for Trade in Australia and three by the President of the US—made a determination that there would be no input from this parliament or from the Australian public without their leave and that there would be no report back to this parliament, no transparency and no minutes. Even if there were a report to this parliament, it has no power left. This parliament was disempowered by that legislation, which was supported by both the big parties, from reviewing what those faceless arbiters would do and the impact that would have on Australians, whether they be in agriculture, in manufacturing, in the workplace or in issues like this.

This is not a dispute mechanism that we are talking about here; it is a policy development mechanism. This group ought to be accountable to this place. I will be asking the minister to table the minutes of this group so that we and the public are able to see how it functions, what it discusses, how its decisions are made and what its outcomes are. And if not, why not? Why the secrecy? This group is supposed to be acting on behalf of the Australian people. The Australian people cannot have faith in a process that is secret or when FOI applications have to be made to find out what it is doing. The deliberations and outcomes of this group should automatically come to this parliament for us and the people of Australia to investigate.

There are real concerns about this legislation and about the process that we are having in this place at the moment. Senator Moore spoke about how truncated the committee process was. That has been happening to everything since the government got control of the Senate and turned it into a rubber stamp for decisions made in the Prime Minister’s office and around the cabinet table. There will be an opportunity for Australians to change that and to take away that government majority at the election which is coming up later this year. But, for now, we are dealing with a situation where the government has the numbers to ram this legislation through, regardless of what the debate is. However, let us get more information about this matter and make sure that it is an informed chamber before this legislation comes to a vote, presumably later today.