Gary Humphries (ACT, Liberal Party) Share this | Hansard source

I am surprised Senator McLucas could not work that out, but that is what happened. If Senator McLucas had sat through the evidence that was presented to the Senate Standing Committee on Community Affairs she would have seen very clearly that the stakeholders in this industry were concerned. I do not mean just the pharmaceutical companies themselves but people like those in the Australian Medical Association were concerned about the direction of this legislation and the impact that it might have on the availability particularly of low-volume drugs in the Australian marketplace and the off-label uses of a number of those drugs in all sorts of settings in Australian medicine. We discard or put aside those concerns expressed by industry at our peril.

Obviously the government has put forward legislation which seeks to increase the cost of delivering medicines to the marketplace. That is the inevitable effect of this legislation. The question is whether that additional cost will be absorbed by the pharmaceutical companies themselves or whether it will be passed on to the consumers. It would have been nice to hear, in the course the community affairs committee inquiry—perhaps we might hear it here it in the course of today’s debate—from the government that it has assurances of some sort that these measures will not translate into higher costs of medicines and that it has discussed this with the industry and has obtained such an assurance or that it has some other understanding of the economic modelling at work here which would lead us to believe that there would not be higher costs. But I have not heard that evidence as yet, and I frankly do not believe that evidence is available, because I do not think there is anything that would lead us to expect that these costs will not be passed on, ultimately, to Australian consumers.

As I have mentioned, the bill was analysed by the community affairs committee. The absence of draft regulations made it difficult to complete that task appropriately and to the standards which that committee has set in the past, and made it difficult to assess the extent to which the new arrangements would be capable of delivering medicines without increasing costs. One has to be just a little bit cynical about the timing of the tabling of the regulations. Had they been tabled a few days before last Friday, it might have been possible for the committee to look at those regulations and make some comments about them, however rudimentary. Had the regulations being tabled a few days after they were actually produced, it would not have allowed the committee to make the point that the inquiry was done without the exposure of the regulations. By tabling them on the day that the committee report was tabled, out of session, it allowed the government to say: ‘Oh, the regulations are there; we’ve made them available. We just didn’t get them to the committee in time for it to have a look at them as well.’ One can be a little bit cynical about that kind of process.

The other point about consultation that needs to be made is that since November 2007 there has been no indication, none whatsoever, that the government was going to change its policy on cost recovery or introduce this element of cost recovery into the operation of the Pharmaceutical Benefits Scheme—in fact, quite the contrary. The only public policy statement by the government prior to the budget announcement—which did not support the implementation of cost recovery—also places the measure at odds with the guidelines. Although the scheme was considered previously, in 2005, as I have said, the lack of consultation with industry in this case I think reinforces concern about whether this is actually based on a properly considered and consulted-on model or on an ideological view that the industry can just wear these extra costs, on a hope and a prayer that the costs will not be passed on to consumers.

Of course, since the former government undertook its consultation in 2005, there have been a number of key changes in this area. There has been a renegotiation of the prices that the government pays for PBS medication, for example. It was interesting to see the submissions and the line-up of witnesses to the inquiry almost unanimously opposing what the government was trying to do. There was one supporter of the government’s proposals, Professor Tom Faunce—only one—and even he made it clear that he felt that this was only going to work if the savings or extra revenue the government generated by this measure were ploughed back into measures to do with better health outcomes. The government has offered no assurance that that is going to be the case at all, and simply pointing to another area where more money is being spent is hardly the kind of hypothecation that I think Professor Faunce was really getting at.

A major concern is the lack of detail in the proposals, as mentioned by previous speakers, including Senator Colbeck. Drugs used for paediatrics, palliative care and in Indigenous settings may be hardest hit, as they often fall into the low-volume indications. Medicines Australia have indicated that the cost recovery measures may run counter to the government’s own cost recovery guidelines, including lack of consultation on them and their cost-effectiveness, and the fact that they would create an unnecessary delay in bringing drugs to market and stifle competition through exacerbation of ‘free-ride’ effects. Exemptions granted for listings for low-volume drugs or indication expansions might be passed on to other, non-exempt submissions, thus hiding the disincentive of this measure from the Australian public. As exemptions are in the regulations, the committee’s inability to scrutinise the regulations before the report was brought down was of concern.

And that is why the opposition has decided that it will not support this legislation. It is not simply a question of poor process, with the government having left the guts of the legislation off the table until it was too late for the parliamentary scrutiny process to do its job. It is also because fundamentally it betrays the concept of a Pharmaceutical Benefits Scheme which is capable of delivering medicines at the most affordable rates to the Australian community in a timely way—because, whatever you might say about this arrangement, it is an added cost to the cost of bringing a drug to market and, in my view, it is simply inconceivable that these costs will not be passed on to Australian consumers.

The fact is that this legislation betrays two elements of Labor policy announced before the last election. One was that Labor was going to look after Australian consumers. It was concerned about the rising cost of living in Australia. It wanted people to have some relief from the way in which costs were rising. Now, if this move does result in higher costing medicines—and it would be very hard indeed to measure; no-one can say with any certainty that it will, no-one can say with any certainty that it will not—then Labor has betrayed that promise it made to the Australian community about those costs. The other is that Labor made a quite explicit statement about its concern about the proposal for cost recovery in this area. The now minister said, on 31 May last year, when she was shadow minister:

The PBAC needs to be independent of government and of industry, and we cannot see the justification for this move to the cost-recovery model. I have asked the government to reconsider this approach given the risk to the independence of the PBAC, or even to consider if cost sharing, perhaps between the government and industry, being the major stakeholders in the PBAC, would be more appropriate. I note the AMA has recently backed this call to ensure that independence is maintained.

If independence were simply a matter of making a small change to the legislation then presumably the then opposition would have done that, or suggested or proposed that, but as far as I am aware they did not do that.