Scott Ryan (Victoria, Liberal Party, Shadow Parliamentary Secretary for Small Business and Fair Competition) Share this | Link to this | Hansard source

I present the report of the Finance and Public Administration References Committee on the administration of the Pharmaceutical Benefits Scheme, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

I move:

That the Senate take note of the report.

This report outlines one of the great debacles in our Commonwealth health system for many years. This report outlines a govern­ment that has exhibited a profound mis­understanding or a profound lack of under­standing of the role and importance of the Pharmaceutical Benefits Scheme. For years the Labor Party has attempted to hold itself up as the great saviour of Australia's public health system but in February this year what the Australian people discovered was that was nothing but a sham. Just like everything else that comes out of this government when it claims to have credibility on the economy, on education or on health policy, it was nothing more than empty rhetoric. I say that because in February this year this govern­ment made a major U-turn on how medicines are subsidised for Australians. It made that major U-turn when it decided to defer, rather than consider, the listing of new medicines that had been approved by the Pharma­ceutical Benefits Advisory Committee. No obfuscation, no excuse, no amount of spin or rhetoric can actually excuse this, because it did represent a profound change. That is outlined in great detail by the overwhelming response that this committee inquiry received from patient groups, from the pharmaceutical industry and from a rare agreement between the generic pharmaceutical industry and the originator companies of the pharmaceutical industry. But, most importantly, I refer to the overwhelming response of the patient groups who outlined exactly where this government had got it wrong.

This government came out with a number of excuses that explained why it was going to defer consideration of medicines. It did not want to say no. It thought, in typical Labor government style, that might get it into a bit of trouble but it did not want to say yes either. One of the reasons it gave, and this is outlined in the committee report, was 'there are existing or alternative treatments that are already available or there is no additional clinical benefit'. They were the words of the minister when she put out her statement in February this year stating that these medicines would not be listed, despite the fact that one of the medicines, Botox, for hyperhidrosis, had no alternative treatment available on the PBS that achieved the same outcomes. But if we put that to one side for a second, and I would like to return to that, the patients of Australia and the patient groups that represent them were outraged because this profound misunderstanding can be expressed very simply: there might be eight or 10 different ACE inhibitors on the market and there might be four or five statins on the market and, on a population level when we are looking at samples of 10,000 people, the health outcomes of those may actually be the same but that does not mean they are going to work in 10,000 individuals in the same way. That does not mean that each individual patient is going to have the same response or deliver the same health outcome.

This is at the core of the government's misunder­standing: the idea that population health assessments mean it is the same for an individual patient. What doctors do, Madam Acting Deputy President, is actually treat you with a different ACE inhibitor or a different statin because different people actually react in very different ways. Yet the government said, for some reason, 'Oh, there's another treatment there. It doesn't matter if we don't list this other medicine.' They were not caring at all about the fact that for individual patients this actually meant some of them were not going to get the medicine they needed. This goes to the core of one of the two principles that we have when we are listing new medicines. There is the cost-effectiveness test, as outlined by the Pharmaceutical Benefits Advisory Com­mittee and used in Australia for nearly 20 years. Quite frankly, it is a world-leading example of how to list new medicines. But we also have a cost-minimisation model that allows a company to say, 'If this medicine B is as good as medicine A for treating blood pressure'—or for treating high cholesterol—'then we can actually list that new medicine as well.' There is no cost if patients are actually substituting one medicine for another that works better. There may be an additional cost because of the point that I raised earlier, that some patients now have access to a medicine that works. These might all be in the same class of medicines and they might all be very similar but they are very different if they work for you but they do not work for someone else, particularly if you are that person for whom they do not work and now you have the chance of a better health outcome. Ithink I can speak on behalf of the entire committee about what we heard from a particularly brave young woman, Chey-Anne Ellsum from Gippsland in Victoria. I said that I wanted to return to those who suffer from hyperhidrosis. We can disagree on some of the politics of this in the sense of whether it is fair that this medicine was not listed, but I think we will all agree that it was particularly brave of this young woman to put on the record her experience. It impressed the committee and the majority of the committee found her evidence to be particularly persuasive.

The recommendations of the majority of this committee are quite simple. It is that the government retract its statement of February this year when it implied that there had to be cost savings to list new medicines and that it recommit to the memorandum of under­standing and really consider the listing of medicines. Only in the world of the modern Labor Party is the deferral of a decision a decision. Only this Labor Party would say that a deferral of a decision constituted a decision. But we will let them live with that, because this is something that needs to be addressed.

Finally, we have also asked that what is known as the $10 million rule be reinstated. The $10 million rule has been very unpopular with the pharmaceutical industry and many industry players. The minister for health had the capacity to list new medicines, without reference to cabinet, as long as the medicines did not cost more than $10 million in any given year. What we have in Australia increasingly now is a lot of smaller population medicines that treat very small numbers of people and that do not actually provide a huge commercial return. This rule provided those industry participants with certainty. It meant that patients with very small numbers of fellow patients suffering the same condition could get access to medicines because, once the PBAC approved it, the minister had the capacity to list it. We are not saying that cabinet should not be able to consider the more expensive medications but that when the cost of a medicine is less than $10 million and the government—a government for which we can simply add up the tens of billions of dollars that have been wasted in a budget that has gone from $260 million to $350 billion in only four years and billions were wasted on pink batts and school halls—tries to tie the denial of access to new medicines to the idea of fiscal rectitude, this not only shows its profound inability to handle Commonwealth finances but also its lack of prioritisation of what really matters to the Australian people.

I will comment briefly on a couple of comments made in the dissenting report of the ALP members of the committee. In paragraph 1.14 they claim that this has been done before when the previous government refused to list Viagra. To all those people who are suffering hyperhidrosis and to all those people who have conditions for which there is no available treatment, I urge them to hold Labor to that statement that somehow this is actually comparable to not listing Viagra. I am not trying to dismiss any particular medical condition but a decision was made at that point that we had to priori­tise the treatment of conditions. What Labor has done with this decision is prioritise the treatment of individual patients. What really matters now is whether or not you are lucky enough to have one of the medicines that is currently listed and that works.

The government members are disingenuous in paragraph 1.15 where they say that previous PBAC recommendations had not been followed. Those recommend­ations did not deny access to medicines; they were pricing decisions. Those recommend­ations did not actually mean that a patient could not get access to a medical treatment. They were simply about the administration of the PBS. It is misleading to try and compare that decision to this one. This represents, in the words of a number of the stakeholders that came before the committee, a profound change in the administration of pharmaceutical benefits in Australia.

I urge people who are interested in this area of policy to read the report. It is quite extensive. I would like to conclude by thanking, as always, the exceptional work of the committee secretariat. We would not be as effective in our jobs without their ongoing and tireless support.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Government senators have considered the majority report of the Finance and Public Administration References Committee on the administration of the Pharmaceutical Bene­fits Scheme and disagree with its findings. The evidence taken during the inquiry does not support the position that the govern­ment's decision to defer the listing of certain medicines under the Pharmaceutical Benefits Scheme is a major change in government policy or will have a serious detrimental effect on the PBS, as noted by Professor Lloyd Sansom AO, Chair of the Pharmaceut­ical Benefits Advisory Committee. Before I go on to quote him, I would like to formally thank him here, in the chamber, for his services, as I understand he will be retiring from that position. Professor Sansom said:

Governments have also accepted other PBAC recommen­dations, such as price reductions for biological disease-modifying antirheumatic drugs listed on the PBS for the treatment of rheumatoid arthritis and recommendations that certain medicines should comprise therapeutic groups. ... Previous governments have decided not to accept other recommendations of the PBAC. For example, the recommendation of the PBAC in 2001 to maintain the price relativity between the ACE-inhibitor class of drugs and ATRA class of drugs.

The government of the day sometimes accepts recom­mendations of the Pharmaceut­ical Benefits Advisory Committee and sometimes it does not. The contention that somehow this 'constitutes a major, unnecess­ary and unwelcome change in Government policy' is not borne out. Professor Sansom said that advisory committees 'advise gov­ernments, and we have a democracy where governments make decisions'. But coalition senators continue to put the following view:

This profound and ill-considered change in policy puts at risk affordable access to medicines for Australians, and will have significant consequences for the pharmaceutical sector, including research and development.

What did the industry say? Mr John Latham of Pfizer echoed these sentiments:

When you look at the role of the pharmaceutical industry and what we do, our role is really to innovate and work in a system that discovers and brings new medicines to market. Those medicines are there to treat diseases. For critics to say that the industry are threatening to not bring new products to Australia because we do not like the system is rubbish. We are here and our job is to discover medicines and bring them to citizens around the world.

Yet the coalition senators continue in their view:

Further, the committee is concerned that the independence and reputation of the PBAC will be irreversibly damaged by the referral of all listings for Cabinet consideration.

But Mr David Learmonth, Deputy Secretary of the Department of Health and Ageing, said:

Companies are still actively seeking listing on the PBS, as evidenced by the fact that there has been no change in the total number of submissions received for consideration by the PBAC over the last three months. On the contrary, the July meeting of the PBAC received a record number of submissions.

Besides, the coalition senators have ignored that the number of deferrals is very small and will not impact upon the overall operations the Pharmaceutical Benefits Scheme. The deputy secretary went on to say:

Finally, whilst eight deferrals were announced in February this year, two of these have subsequently been listed. No medicines recommended by the PBAC, at its March 2011 meeting, were deferred by the government and, by September this year, 152 new drugs or amendments to listings of existing drugs will have been listed on the PBS, reflecting the government's continued commitment to list medicines.

The coalition continued:

The government has made much of the need to be fiscally responsible in the current economic climate.

Various witnesses concurred that fiscal responsibility was an important consideration for the government. Mrs Liliana Bulfone from Deakin University said:

In a perfect world there would be no need for a cabinet review of the PBAC decisions, but we acknowledge that affordability of medications in the short term is definitely an issue that the government may need to consider, particularly in circumstances where the drug has an effect over a very long time horizon.

Professor Sansom said:

... there will always be some patients who will not have access to a particular medicine under the PBS, as it is not sustainable to list every single medicine.

Finally, the Deputy Secretary of the Department of Health and Ageing concluded:

I would argue that the biggest hurdle for a company as to whether a drug ends up being subsidised on the PBS remains the PBAC, the Pharmaceutical Benefits Advisory Committee.

And:

In 2010, 63 per cent of all first-time, cost-effective submissions were rejected by the PBAC. This is not a one-off statistic but a consistent marker of the rigour of the assessment process undertaken. It is this assessment process which I would suggest is the main decision point for companies in determining whether to bring a drug to the subsidised market in Australia.

This inquiry did not conclude that the Pharmaceutical Benefits Scheme was seriously harmed. It did not conclude that industry would withdraw from the Australian market. The inquiry did not conclude that the government should not be fiscally responsible, nor should it and nor has it ever rubber stamped the Pharmaceutical Benefits Advisory Committee's recommendations and it did not conclude that the memorandum of understanding with Medicines Australia had been undermined.

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

I am very pleased to have the opportunity to speak for the first time on the real business of the Senate by joining the debate on the report of the Finance and Public Administra­tion References Committee on the admini­stration of the Pharmaceutical Benefits Scheme. This was my first engagement with the committee system. It is an invaluable way for the government, the parliament and the community to engage with issues that affect their lives. I thank the committee members for helping me through my first days and, in particular, Senator Ryan, who was very helpful with some of my questions.

The PBS is well regarded internationally. The Pharmaceutical Benefits Scheme is loved by Aust­ralians. It is a scheme which provides secure access to lifesaving medication for Australians and they quite rightly are very protective of it. It is a sound invest­ment in the health of Australians and it is one of the few areas of public policy that has been based on demonstrated cost effectiveness. So we need to be very protective of the Pharmaceutical Benefits Scheme.

We understand the dilemma that the government is in. It is expensive and the cost of medication is increasing all the time. We know that there are competing priorities for our healthcare spending and it is prudent for the government to review the expen­diture of the Pharmaceutical Benefits Scheme. But the decision by this government to defer the listing of a number of important medications was a serious mistake and we urge the government to reconsider that decision.

It is one of the few areas of public policy that has managed to unite the coalition, the Greens, the pharmaceutical companies, the health professionals, industry groups and consumer health groups against a decision made by a government. It was a bad decision and it has in fact undermined the integrity of what is a very rigorous process. It has shaken the faith of people in the industry, consumers and the industry itself because it relies on the fact that the industry is able to invest in medication, achieve certain benchmarks and know that when the time comes, if those benchmarks are achieved, that medication will be listed.

The Greens have tried to be very constructive through this process, and we think that there are other areas of action that may warrant some attention. In particular, we think that the issue of the generic industry has the potential to save the government billions of dollars. One of the critical things that needs to happen is that generic medication needs to be made available without delay when patents expire on originator medications.

We need to make sure that there are incentives within the system to ensure that manufacturers have proper incentives to discount their drugs. We need to make sure that mandatory price reporting is not weakened and applies across all major therapeutic classes. We also need to ensure that the medical profession is prescribing medication according to guidelines that are efficient and that we are prescribing medications for the prescribed indications. We do believe it is a mistake. We know that there have been precedents for this. We know that there have been several occasions where the government has made a decision to defer the listing of a medication that has been approved by the PBAC. However, on this occasion the circumstances are very different. We think that it is critical that the government review this decision in light of the number of submissions that were presented to this committee and we think we need to be focusing on the long-term sustainability of the Pharmaceutical Benefits Scheme through the measures that we have described in that report. We urge the government to reconsider.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

I rise to speak on the report of the Finance and Public Administration References Committee on the administration of the PBS which Senator Ryan justly referred to as another government debacle. The treatment of life-threatening illnesses has been compromised by the decision of the Gillard Labor government to defer listing new drugs on the PBS. A Senate inquiry heard in Canberra that there was no formal criteria for the deferral of drugs and that the government's own advisory body had no inkling of this turnaround in policy prior to the announcement by the Minister for Health and Ageing on 25 February. Patients have every right to feel cheated by this decision and the Pharmaceutical Benefits Advisory Committee had every right to feel ignored.

It was obvious from the evidence that there was no consultation before the Gillard cabinet made this arbitrary decision to defer the listing of eight new medicines and vaccines. The Department of Health and Ageing even admitted that the initial decision to defer drugs was made in February 'in the context of the overall fiscal environment'. The penny-pinching Gillard government have been caught out trying to cut life-saving treatment to make its own bottom line appear healthier than it is. This is after they have squandered billions of dollars on fluffy stuff in people's ceilings and on the Building the Education Revolu­tion—you name it, they have wasted money it. Now here they are playing with people's lives—penny-pinching when it comes to life-saving drugs so they can make their own bottom line appear healthier than it is.

Minister Roxon thought she could win brownie points, but the inquiry rightly exposed the hot anger in the medical and pharmaceutical communities over the meddling by a group of people unqualified to make life-and-death decisions on people's treatment. How must the independent members of the Pharmaceutical Benefits Advisory Committee feel knowing that their expertise was ignored by Minister Roxon? Wouldn't you like to have been a fly on the wall when they had their closed-door meeting shortly thereafter when all their officials were sent out of the room? Surely this must compromise the professional integrity of the members of the committee.

We learnt from the inquiry that patients with conditions needing treatment with the deferred drugs had to take their chances. If they could afford to pay, they won the treatment lottery. If they could not, they missed out. The Deputy Secretary of the Department of Health and Ageing, Mr David Learmonth, told the hearing in answer to my question that the decision to knock back the listing of Botox as a treatment for excessive sweating, as explained by a young witness—

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Tony Abbott cut a billion dollars out of health.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

Madam Acting Deputy President, I ask you to kindly call Senator Cameron to order and exercise your discretion from the chair.

Honourable senators interjecting—

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

Order! Senators must come to order and allow Senator Fierravanti-Wells to continue.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Take him on like you did the aged-care system when you were in government.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

Or like your mate Mr Thomson on the weekend with his disgusting behaviour, Senator Polley.

Senator Polley interjecting—

Yes, absolutely; happy to take him on like the other day.

Honourable senators interjecting—

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

Order, Senators! Senator Fierravanti-Wells, I am on my feet. I ask the Senate to exercise some orderly behaviour. I call Senator Fierravanti-Wells to continue her remarks and ask her to direct her comments through the chair.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

I was referring to the comments by Mr David Learmonth. In answering my question, he told the hearing that the decision to knock back the listing of Botox as a treatment for excessive sweating, as explained by a young witness, Ms Cheye-Ann Ellsum, at the Melbourne hearing:

... was the decision of government in the case of that particular medicine.

He dismissed it offhand just like that—just like Minister Roxon dismissed it offhand. This young lady needed Botox injections to treat severe sweating. Her grandparents had to pay after the treatment was refused subsidy. As she gave evidence, we thought thank goodness for her grandparents. This young woman was prepared to appear before the committee so that we could hear how these decisions taken around the cabinet table in Canberra have drastic and debilitat­ing effects on people's lives. This young witness is the face of that bad decision.

And there was another witness who appeared before the committee: Renee Hindson, a single mother who had a brain tumour and needed certain drugs. I wish to put on the record my admiration of both these witnesses for their courage in coming to give evidence. Frequently at these inquir­ies we have officials and companies, but we do not often see these sorts of witnesses. It was difficult but very good that these people gave evidence.

Initial costs for new drugs can mean long-term savings, but the PBAC's recommend­ations have been ignored by Minister Roxon and her cabinet colleagues. This is not an ideal way to formulate health policy. What is the point of having an expert advisory body if its advice is ignored? These decisions have a real impact on the quality of people's lives. The committee heard that the pharmaceutical companies felt frustrated. The deferrals go against the spirit of the memorandum of understanding between the industry and the government. The inquiry exposed the anger in the medical and pharmaceutical commun­ities over the meddling by a group of people unqualified to make life-and-death decisions on people's treatment. This is the same government responsible for billions of dollars of waste, as I said, in pink batts, BER and the rest.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Billions and billions!

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

Billions and billions—thank you, Senator Williams. It has refused to subsidise life-saving treatments for thousands of Australians so that it can pay for its mismanagement—its utter, total mismanage­ment—of the economy.

Government senators interjecting—

All that waste, and yes, people will pay for this as a consequence of your mismanagement. Witnesses from the pharmaceutical companies said tens of thousands of patients had been affected and potentially many more would be if new drugs were not made available. Of course, federal cabinet will be making life-and-death decisions, a point succinctly and repeatedly made by so many witnesses. Companies were being discour­aged from investing in research and develop­ment because there was no certainty in the process anymore. Senator Ryan referred to the five recommendations that the committee is making. These go to overturning the decision that the Gillard cabinet made to get involved in the process. It should not have been involved.

Senator Polley went on about the record number of applications to the PBAC during the July meeting. Of course, Senator Polley, there were record numbers, because the process started—as if you were not listen­ing—years ago, and the July meeting was the end result of a process. Even you, Senator Polley, should be able to understand what was said in simple English, and that was that this was the end of a process.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Time!

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

I have still got a minute and 51 seconds, Senator Conroy. The government should withdraw the statement it made on 25 February 2011 regarding the deferral of the listings of new medicines and the new rules applying to listing from that point forward. The government should retract the statement that the PBAC listing recommendations will not be proceeded with until savings are found to offset the costs of listing those medicines under the PBS. The government should explicitly state that it rejects any implications that the listing of new medi­cines requires savings to be made elsewhere in the health portfolio. The government should restate its commitment to making an explicit decision regarding the listing of new medicines on the PBS within the terms and intent of the memorandum of understanding signed with Medicines Australia on 6 May 2010 and re-signed on 28 September 2010, and it should reinstate the $10 million rule so that medicines that have a financial impact of less than $10 million in each year over the forward estimates can be listed on the PBS schedule by the minister without waiting for cabinet approval.

Question agreed to.