John Watson (Tasmania, Liberal Party) Share this | Link to this | Hansard source

This evening I would like to address the issue of one of Australia’s most successful public policies, to congratulate the government on the healthy state of the Pharmaceutical Benefits Scheme and also to acknowledge the increased cooperation between the various health sectors that has helped to rein in a cost to taxpayers that we all thought was getting out of control. Until 18 months ago the PBS was growing faster than the economy and, in fact, was experiencing double-digit growth. At the time the fourth community pharmacy agreement was signed the PBS was only growing at two per cent. Even so, pharmacies agreed to take some of the pain in that agreement, to the tune of $350 million, recognising that everybody in the health sector had to do their bit to keep the costs contained. Doctors too have been responsible and have taken a look at their prescribing habits. Fewer prescriptions were dispensed in the financial year ending June 2006 than in the earlier year.

The PBS has kept within the government’s benchmark of not growing faster than the economy. This has happened over the last two years and will continue throughout the remainder of the five-year community pharmacy agreement. The government has achieved $2.2 billion in savings from budget measures since 1 January 2005. The Minister for Health and Ageing is to be congratulated for achieving this remarkable feat. Cost savings measures implemented by the government over the last 18 months are having a significant effect on PBS expenditure, and will continue to have an effect in the months to come. What are some of those initiatives? They are the increased patient co-contribution; the 12.5 per cent generics price reduction policy; the safety net 20-day rule; the raised safety net entitlement threshold; the reduced wholesaler margin; plus, of course, the $350 million saved in the fourth community pharmacy agreement. I believe the full impact of many of these measures has not yet been fully felt.

The industry has taken its share of the pain to ensure that the health of our PBS stays strong, and the industry will ensure that those reforms do not have any lasting negative effect on our key health providers. Our drug manufacturers, our innovators, our wholesalers and our community pharmacies all have vital roles to play in keeping the nation healthy, and research and manufacturing investment will continue to thrive in this country.

The government has given a clear commitment that it will protect our valuable model of community pharmacies throughout Australia, which are so important in the provision of front-line health services from metro to rural and remote areas. Where else in the world are medicines available to all members of the public at the same price and availability regardless of where they live? The pharmacists of Australia are the custodians of the PBS, I believe.

We realise that there is little flexibility in pharmacy remuneration given that around 62 per cent of their business is price capped under the PBS. I know—my wife is a pharmacist. I declare that interest. We recognize the valuable community services offered by pharmacies across the country: a vital network of 5,000 businesses which offer such diverse services as medicine packaging for nursing homes, which actually saves nurses valuable time, and home medicine reviews to reduce the appalling statistic of 140,000 hospitalisations every year because of medicine misadventure. Many pharmacies also run obesity and chronic disease management clinics. Congratulations, I say.

We want to ensure that, while keeping the PBS under control, we do not interfere with the valuable contributions that our professional pharmacists provide across the country. A recent article by Bruce Annabel from the leading pharmacy specialist accounting firm Johnston Rorke shows that pharmacy has had a flat or negative growth over the last 18 months as prescription volumes have fallen. We understand that by reining in the PBS we have also decreased revenues to pharmacies—and don’t they know it! At the same time, wages, rents and other costs continue to rise and competition is increasing. It is actually a tough environment for pharmacy, and the government is aware that a fine balance is needed. The stability and integrity of a successful PBS relies on the network of viable, profitable community pharmacies—and that is the message I want to leave tonight.

Australia’s PBS is now in its 58th year and is recognised around the world as one of the most efficient and effective schemes to provide timely, reliable and affordable access to cost-effective medicines to the entire Australian community. It has the public’s overwhelming support and the support of politicians from both sides of parliament. Sustainability of the PBS has to be seen holistically. A healthier population through earlier intervention, healthy lifestyles and early access to the right medicines can improve health outcomes and reduce costs enormously in other areas of our health system. Healthier Australians mean a more productive workforce, less sick leave, more efficiency and fewer early retirements due to ill health.

The less tangible yet equally important goal is a healthy community that equals a happy community. The introduction of new and high-cost drugs such as Celebrex and Zyban, and the surge in prescribing statins to lower cholesterol, led to accelerated growth in the PBS from 1999 to 2001. This growth has now levelled out, helped by the price volume arrangements where manufacturers take a shared risk if the PBS outgrows the budget of the product. These medicines have allowed workers to be healthier, more productive and also to contribute more in taxes, which ultimately go back into the health system through savings. It is also the case that a drug is never more expensive than when it first becomes available. After that the price falls and continues to fall once it comes off patent. This is a key element of the price referencing system which controls PBS growth.

We have to be watchful, though. Containment of the PBS costs should not come at the expense of patients or to the detriment of the health professionals who are integral to maintaining a healthy system—our doctors, pharmacists, wholesalers and manufacturers. We have to make sure that the whole complex system stays healthy and that we do not sacrifice any part of it in order to prop up other elements. It is good news, however, that the PBS growth has slowed considerably and that the government is on track to save an additional $1.7 billion over the next four years—funds which can be put back into providing better health for all Australians—through this lower than expected growth.

From the perspective from which I come, on which my wife advises me, the reforms are working. There are real and measurable benefits, although they come at a huge cost to individual pharmacists. We want a healthier nation and less draw on our taxes while, at the same time, maintaining the core value of the system. Drugs are to be available to all who are in need, no matter where they live, at the same low price. We all recognise the cooperation and sacrifice that the pharmacists of Australia have made to achieve this goal, and I believe it is time now to give the industry some certainty and stability and some relief from further reform.