Richard Di Natale (Victoria, Australian Greens) Share this | Hansard source

I rise to speak today to the National Health Amendment (Pharmaceutical Benefits) Bill 2015. It is a very problematic piece of legislation for the Senate to deal with. It is problematic because we have a whole range of measures that are packaged as part of this omnibus bill. Many of these measures have huge implications for the health budget and patients. You have to wonder about whether this is a strategic or deliberate tactical decision to force the Senate to pass this package of legislation as a whole rather than allow us to unpack it and deal with each piece of legislation on its merit.

The Sixth Community Pharmacy Agreement is one of the most important measures in this agreement. It is a major component of the legislation. It is worth almost $20 billion and, I suspect, that is part of the reason we are here today, on the eve of the Senate breaking for the winter period, in a rush to pass all this legislation. We did not get the Sixth Community Pharmacy Agreement signed off in time. The result is that we are in a panic to pass the bill by 30 June. The reason for that is, if the Sixth Community Pharmacy Agreement does not get passed the location rules that exist in the fifth agreement lapse and, as a result, we end up with a huge disruption to community pharmacy. The Senate should be concerned that we have had very little time for scrutiny of the bill or any scrutiny of the community pharmacy agreement. We are being asked to rush through a major piece of legislation because we did not conclude the negotiations around the community pharmacy agreement in a timely way.

Importantly for me, as somebody who has expressed concern over the criticisms levelled at the previous agreement, the Senate has been asked to take the government's word that the failings in the last community pharmacy agreement have been rectified. The audit into the Fifth Community Pharmacy Agreement was one of the most damning indictments ever handed down by the audit office and it was a shock to me to read of it. The auditor found that there was very limited basis for assessing the extent to which the fifth CPA met its key objectives. It failed at that very basic level. There was no straightforward means for the parliament or other stakeholders to know the expected or actual cost of the key components. It did not document that some of the $2.2 billion—of $13.8 billion that the Commonwealth was supposed to deliver for pharmacy remuneration—was sourced from co-payments, which were not a cost to government. There were a whole range of things.

The initiatives in the fifth agreement promised $1 billion in savings. They only delivered $400 million. There were a lot of questions about how money was transferred. There were $277 million from professional programs put into a grant to the guild. The audit office could not explain why these programs were transferred or why they became grants. There were all sorts of problems. A number of key government negotiating objectives were only partially realised. There were major shortcomings in record keeping by the department. We had a situation where the meetings between the department and the Pharmacy Guild occurred without minutes being taken. When they prepared the initial agreement the department did not develop a risk-management or probity plan and did not consult with a probity adviser. The list goes on.

Those criticisms were made by the National Audit Office and, to my knowledge, they have not been dealt with in an open and transparent way. The last discussion we had in this chamber around the Fifth Community Pharmacy Agreement was about the findings of the audit office. The next time I stand in the chamber is to sign off on a new agreement, without any clear understanding about whether those shortcomings have been addressed. I have grave concerns about that. I have grave concerns about the way the agreement was negotiated and whether we have a framework now to ensure the Sixth Community Pharmacy Agreement, which is an essential piece of this legislation, meets its key objectives.

We are now being asked to approve the Sixth Community Pharmacy Agreement with $19 billion—because of this rush to do so before the 1 July deadline. A much more sensible thing would have been for the government to remove the pharmacy location rules from the bill, for us to have passed that measure so that we get some certainty in community pharmacy and then to start unpacking the various pieces of this legislation and have a genuine hearing into the merits of each. Instead, we have been told to pass all of this—effectively, with a gun to our heads.

If we do pass this bill, the effect will be that a $19 million agreement goes through with almost no scrutiny. It is fair to say there was a committee process. It went for two hours while the parliament was sitting, while the division bells were ringing. It is remarkable to think that we could have a bill of such importance and with such a truncated committee process. It denies us in this chamber the opportunity to interrogate the legislation in any meaningful way. My concern is that we will end up passing some good reforms—I think there are some sensible reforms in the bill—but deny the parliament the opportunity to ensure we have it right when it comes to the Sixth Community Pharmacy Agreement. I do not make any direct criticism of the guild, in this, because I do not know whether what was negotiated was in the interests of patients or not—and we are being denied the opportunity to do that.

If we look at some of the other measures in the bill, there was the $6.6 billion in savings across the entire pharmaceutical supply chain. That will be partially offset because a chunk of that, $2.8 billion, is returned to pharmacies through the Sixth Community Pharmaceutical Agreement and the remainder, $3.7 billion, is going to be invested in new PBS drugs. That is a good thing, provided it happens. That is not part of this legislation. We are very keen to ensure that that is what that $3.7 billion is allocated to do. We understand that the bill amends the Pharmaceutical Benefits Scheme by implementing agreements with the Generic Medicines Industry Association and Medicines Australia—that the government at least wants to do that—and the bill, as a result, sees a new PBS pricing policy that reduces the price paid by the Commonwealth for drugs on the F1 formula by five per cent after five years, and that measure alone is expected to affect about 400 listed drugs.

Another complex part of the legislation is the change to F2 drugs. From October 2016, the market price of medicines listed on the F2 formulary for three years or more will no longer take the originator brand of the drug into account, and that will deliver significant savings: $2 billion. Another $610 million is saved by closing loopholes relating to combination drugs that allow companies to avoid price cuts as a result of price disclosure. They are measures, by and large, that have our support. They are sensible measures. We think they are changes that will ensure that consumers will pay less for their medications and we think that is a good step forward.

On the other side of that equation there are a number of reports that suggest that five million people using the most commonly prescribed medications will see prices rise—in one report by up to 39 per cent. That is of huge concern to us. When we tested that, one of the arguments that was made was that competition will ensure that we do not see price rises when it comes to medicines, but of course, as we discussed through Senate estimates, there is very little competition, particularly in rural and regional areas where there may only be one pharmacy. It is hard to see what incentive there is for pharmacies to pass price savings on to consumers.

The rise in the cost of medications is a consequence of the introduction of the new handling fee to chemists as part of the agreement. The Greens in general will support one of the positive measures that we think is in that agreement, and that is that the pharmacies will now discount the co-payment by $1 for the provision of generic medicines. We think that is important. However, we do know that the health department wanted to implement a $3 discount policy and we know that the guild fought against it. Again, because of the secretive nature of these negotiations, we do not know how the price of $1 was reached. The total lack of transparency through these negotiations means: could we have got a better deal for consumers? And, if we could have, why didn't we do that? What was the reason that we settled on the $1 discount? It is opposed by the Pharmacy Guild and I think that says a lot about the way this negotiation was reached. I have to say that it is disappointing that the guild would oppose a very small $1 discount on concession card holders. We think that is good policy, particularly when you contrast that with the fact that there is a significant increase relative to the Fifth Community Pharmacy Agreement and we now have an agreement with the guild that is worth around $19 billion.

One of the most contentious parts of the bill is the amendment to the PBS listing for equivalent and biosimilar medicines. It is a change that is expected to save the government about $880 million. It is worth exploring what biosimilars are before we get into the economic argument. With regard to biosimilars, you have a number of new medications—really effective medications for some cancers, some autoimmune conditions and so on—that are made from biological products, living cells. They are very big and complex molecules. They are very different to other existing medications which have small molecules—drugs like aspirin, paracetamol and so on. They are not drugs that are particularly complex—only a few changes in atoms—and they are easily replicated. You can replicate the manufacturing process in a way that ensures that you get exactly the same product every time, regardless of where it is made, providing that the manufacturing facility conforms to a uniform set of standards. But, when it comes to biosimilars, because they are such big and complex molecules and they are very highly sensitive to the environment in which they are manufactured, it is almost impossible to create a molecule that is identical to the molecule that you are trying to copy. So biosimilars are the generic version, if you like, of the original biological medication, but, unlike generics, it is very difficult to guarantee that what you are getting is exactly the same molecular structure, and what flows from that is whether you are going to get exactly the same physiological effects. Every biosimilar medication does have to undergo a range of clinical trials. They need to demonstrate safety and they have to go through the same process that the originator biological product had to go through to show that there are not any clinically meaningful differences.

That brings us onto the issue of substitution. If the chemicals are not identical, should we be able to substitute the original drug with the biosimilar drug? This is where the contention lies. Under this bill, the substitution provision allows pharmacists to substitute a prescribed medication—that is, the original biological medication—with a biosimilar or bioequivalent medication. There is some debate about this in the scientific community. It is true that we do permit substitution for generic medication, but the technical amendment in this bill ensures that it is allowed to happen at a pharmacy level for biosimilar medications. There is a lot of contention about this. One of the things that concern me is that Australia will be one of only a few countries that allows this substitution to happen at a pharmacy level. I do recognise that a number of concerns have been raised about this aspect of the policy. Our understanding is that the TGA's existing guidelines, which I think are currently under review, state that a biosimilar's product information should include a statement ruling out substitution. There are some experts on biosimilars who claim that pharmacy level substitution:

… 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.

On the other side of the argument, agencies like the Therapeutic Goods Administration and the PBAC—the Pharmaceutical Benefits Advisory Committee—will not allow biosimilar substitution unless there is evidence that that can occur.

What this suggests, though, is the debate that exists within this area of biological medications and substitution is not settled. That is always a cause of concern for me. I would have appreciated the opportunity to vote on this legislation after having had some time with the various academics and experts in this field to get some assurances that what we were doing is not putting patients at risk. We were denied that opportunity. We were denied it because this bill is packaged as a whole and you have to support the whole thing. Otherwise, we will have an issue with pharmacists getting remunerated and with location rules.

On balance, though, there are, as I said, a number of measures that we support. Cheaper medication for patients at a time when out-of-pocket costs are rising is a positive step forward. We do worry about some of the measures in the bill that will increase the cost of medicines. It is almost certain for a number of common prescription medications. You have to wonder why the government allowed that to occur in its negotiations with the Pharmacy Guild. We think that was a mistake. But, again, it is very difficult to make any firm judgements on that when the only people involved in the negotiations are the guild and the department. There is very little opportunity for any transparency, scrutiny or accountability of that extremely significant and very expensive agreement.

In concluding, we will support this bill, but we do so with the reservations that I have just expressed. We are being asked to pass legislation governing some pretty cutting-edge scientific debates around whether we can substitute one drug for another and what that does in terms of risk to patients. I want to put on record that we hope that some of the concerns expressed by people in this area do not materialise and that we would have liked the opportunity to interrogate those potential risks a little further. We do not think it is good practice for senators who have limited understanding in this area—and I am fortunate that I have more than most—and who want to interrogate this further to be denied the opportunity for a decent committee process where this sort of evidence can be presented and discussed.

Also, we do not think that passing the bill simply because we did not reach an agreement with the Pharmacy Guild in time is good practice. We think that needs to be taken into consideration. We should not be rushing these bills through the parliament. I am concerned about the way the Community Pharmacy Agreement was reached and I am concerned about the issue of substitution when it comes to biosimilars. On balance, though, those other measures are important. We think they are worthwhile and we welcome them. We will support this bill because of the benefit that those measures will deliver for consumers.