HANSARD EXTRACT
| National Health
Amendment (Pharmaceutical Benefits Scheme) Bill 2007: Second
Reading |
| 31 May 2007 |
Mr HAYES
(Werriwa) (10.57 a.m.)—Health
care and health spending face multiple competing objectives and a
vast array of expectations, both realistic and unrealistic. The
facts are relatively straightforward. We have an ageing population—a
population that has an increasing number of people suffering from
chronic conditions, and advances in medical technology, particularly
in pharmaceutical treatments, are becoming increasingly expensive.
This is the dichotomy that we face, and it is what the
National Health Amendment (Pharmaceutical
Benefits Scheme) Bill 2007 is addressing. If we add to
that the expectation of the public, particularly the sick, that
modern technology can come up with cures for all sorts of diseases,
quite frankly, we have the recipe for a difficult public policy
problem, certainly when looking at the economic aspects of balancing
that dichotomy.
We
have the option of increasing health costs to either government or
the consumer—the patient. The worst possible option is to increase
the health costs to both government and the consumer. In fairness to
the government, it has introduced this bill as part of a package of
four interconnected measures announced as reforms to the
Pharmaceutical Benefits Scheme. The stated aim of the PBS reform
package is to ‘give Australians continued access to new and
expensive medicines while ensuring the PBS remains economically
sustainable into the future’. They are noble sentiments and, much
like the other motherhood statements that we hear from this
government, you would like to believe that the government delivers
this.
The bill before us amends the National Health Act and deals with the
price changes to the PBS. It includes: the creation of formularies
for classification of medicines, which is primarily aimed at
dividing innovative and generic medicines; the removal of ongoing
price links between the formularies; the introduction of pricing
mechanisms to reduce price to government through stated price
reductions for medicines coding to formulary classification and
requirements as to price disclosure for all new brands; principles
for the calculation of the weighted average price; and the
requirement for suppliers of new brands of medicines listed on the
PBS to guarantee supply for a minimum period and imposing penalties
for failure to meet this commitment.
The main change in the bill is the creation of formularies for all
medications. From
1 August 2007, PBS medicines will be listed on two separate
formularies. Formulary 1 will comprise some 450 single brand
medicines. These are generally new, innovative or niche medicines.
However, it will not contain single brand medicines which are
interchangeable at the patient level with multiple brand medicines.
Formulary 2 will comprise approximately 230 multiple brand medicines
and any single brand medicines which are interchangeable with
multiple brand medicines at the patient level. These are generally
the generics, the off-patent drugs and different versions of older
drugs.
A
transitional pricing arrangement will apply to F2 drugs, with two
sub-formularies being created. There will be no ongoing price link
across medicines listed on the F1 and those in the F2 category.
Reference pricing will continue to apply between medicines that are
linked within reference pricing groups on formulary 1. The reference
price will continue to apply within the therapeutic group premium—TGP—groups
and across different brands of the same medicine listed on formulary
2.
As
I mentioned earlier, this bill deals with components of changes to
the PBS that were announced in November 2006. These changes are set
to come into effect from 1 August of this year. I note that if they
are not able to come into operation by that date it will cause
serious and substantial cost to the industry itself. The PBS is one
of the most remarkable elements of health policy within the
developed world. It is a means through which the public can access
medicines it needs at affordable prices, while allowing new
medicines to be developed and introduced. It is a model that, quite
frankly, most of the developed world would love to be able to
emulate. There are costs to this. In 1948-49 the PBS cost the
federal government a grand total of around $298,000. Some 40 years
later, it reached the billion dollar mark. PBS costs have continued
to rise. In the 2005-06 period, the government paid just over $6
billion in PBS subsidies. This is expected to reach approximately
$6.5 billion by 2006-07.
The cost of the PBS has increased, but it must also be remembered
that the PBS has given Australians access to medicines that many
would not have had access to had it not been in place. A rise in a
budget item of the magnitude of the PBS is going to be a cause for
concern of, quite frankly, governments of any persuasion. But the
question must be asked: does simply tightening the purse strings
make for a better system or does this start to act as a progressive
destruction of a system that, while not perfect, is widely
considered to be a good one?
The main driver for these changes—these so-called reforms—that the
government has set about introducing is the alarmist conclusion that
was reached in the first Intergenerational report. The
Intergenerational report predicted that the PBS would grow from
0.6 per cent of GDP in 2002 to 3.4 per cent of GDP by the year 2042,
a five-fold increase. The Intergenerational report assumed
that the growth rate of the PBS would continue, but neglected to
consider the changes that might occur or factors that might come
into play that would reduce the growth in the cost of the PBS
system. The government’s reaction to the conclusion drawn in the
Intergenerational report has provided the basis on which it has
set about reining in the cost of the PBS.
I
posed the question earlier: will the simple tightening of the purse
strings of the PBS arrive at what Australians really want? I am
concerned, and I am sure I am not alone in this, that simply
tightening the purse strings may result in the denial of access to
new and innovative medicines to Australians. The experience of
New Zealand
is one that warrants careful consideration. The New Zealand
government considered cost at the expense of patients. Medicines
Australia reports that, since the turn of the century, Australians
have been able to access some 23 innovative new medicines on the PBS,
while New Zealanders have gained access to only two. The first
Intergenerational report focused a great deal on the cost of the
PBS but largely neglected the benefits of early intervention. I note
that the recently updated Intergenerational report has scaled
back the estimates of the growth in the PBS, but once again it
largely ignores the benefits—both social and economic—of proper
management of chronic diseases and the benefits of prevention
programs.
In
examining the multiple dimensions of health care, it is important
that we consider the important role of prevention. Medicines funded
under the PBS play a vital role in prolonging the activity and
working lives of Australians. Pharmaceutical treatments have the
potential to improve productivity and workforce participation and
contribute to savings in other areas of the health budget.
Responsible spending on the PBS contributes to economic growth and
should be seen as an investment not just a cost. To continue to
improve participation in the workforce it will need to be maintained
to enhance the health of our ageing population. Continued access to
medicines through the PBS will play a significant role in that aim
alone. Increasing the participation rate in our workforce will have
a significant impact on the productivity of this country.
Medicines can never be the be all and end all of health care.
Medical treatments are a support mechanism but consideration should
be given to the benefits of lifestyle factors, such as exercise and
diet. Medicines form part of our total health plan, but they are in
a support role. They nevertheless play a significant role in
ensuring the health of our population, and in doing so they
contribute to the productivity of our nation.
We
can always do better. We can always manage our health care system
better, and the way we manage our medications can no doubt improve.
By treating symptoms and extending life, medicines improve people’s
activity and functions in their daily lives, including their
physical, social, emotional and cognitive wellbeing. The economic
dimensions of health care—its role in increasing and improving
workforce participation and productivity—mean that health care
spending should also be considered an investment in the social
wellbeing of our population. It should not just be considered from a
one-dimensional cost perspective alone.
Earlier this year the Productivity Commission released a report that
estimated that the benefits to the Australian economy of health
promotion and disease prevention could increase GDP by around six
per cent. Early intervention programs preventing and treating
diseases all contribute to minimising the need for costly treatment
after disease becomes established.
This package is structured to bring down the prices of generics and
those drugs which were there in competition, and to leave headroom
for new and innovative drugs. Labor supports obtaining lower and
more realistic prices for generics and rewarding the development of
innovative medicines. This support does not come without
qualification. I do not want to see a situation emerge where the
unilateral consequences are greater cost pressure being imposed on
patients. I am concerned that the plans to include an annual
mandatory two per cent cut to the price paid by the government for
medicines on the PBS, on top of the already 12.5 per cent mandatory
cut which currently exists, could lead to higher health costs on
patients obtaining medicines. It is important that a solution does
not emerge where the Australian government’s saving comes at the
cost of the patient. We need always to be mindful that we do not
want to repeat the exercise or the experiences of New Zealand.
In
a recent survey in my electorate of Werriwa on the main things
impacting on family budgets, the cost of medicines and seeing
doctors came in the top three. It stood alongside, and very closely
to, the increase in mortgage repayments and the increase in petrol
prices. So when you talk to local residents in Werriwa—in Minto,
Ingleburn, Liverpool, Hoxton Park and other suburbs—you talk to real
people out there, real families. And the cost of medicines is
certainly something that is very much factored into the weekly
budgets of many young families. It is important in every change we
make to the PBS and to health care that we keep the consumers of
health services—the patients—central in our considerations. This is
not passing the buck; this is not just moving a line item from one
to another. Cuts to medicines should not be passed on as costs to be
absorbed by local families alone. Simply examining the cost side of
health care in isolation is a short-term approach and should be
avoided at all costs.
I
understand that there are some 2,000 new medicines in the pipeline,
developed mainly by private sector organisations, for mental health
and for the treatment of a wide range of conditions, including
cancers and cardio-vascular disease, just to name a few. A survey
commissioned by Medicines Australia reported that 92 per cent of
respondents agreed:
...
subsidising the latest innovative medicines through the PBS so that
they are available for all Australians who need them, is a good
investment for the nation.
I could not agree with that quote more. The expectation that new
medicines will be developed and, more importantly, made available to
all Australians at an affordable cost is at the core of the
community’s expectations for the management of the healthcare
system. My constituents are deeply concerned about what they
consider to be the Americanisation of the Australian healthcare
system. They hear stories about the 47 million people with no health
insurance in the
United States, the other 40 million with minimal health care and
those who face very real budgetary considerations about whether or
not they can afford the treatment they need. They worry about the
future of our healthcare system as it applies to their families.
Healthcare has always rated near the top of the list of concerns of
the Australian public.
The
PBS, and access to high-quality medicines at an affordable price, is
considered by many to be the cornerstone of Australia’s health
system. It is important that we balance the competing tensions
around its cost and continued effective operation. Labor’s approach
to health care involves the recognition of the broader impacts of
high-quality health care and the role that prevention and chronic
disease management plays. Health care is not simply about healing
the ill, but we should always have in place a system where people
receive treatment when they need it. Health care is both a cost and
an investment in the future. For Labor health care goes hand in hand
with our overall economic strategy and what is good for the
long-term future of this country. Labor do not intend to treat the
PBS in the way that this government has tended to—that is, as simply
a line item of expenditure. There is no denying that the PBS needs
to be managed wisely so that it continues to play an effective role
while also delivering the best value for money for both the
government and patients.
Whilst there are some concerns with this bill, which we hope will be
fleshed out in the Senate committee process, I am supporting the
bill. I am mindful of the fact that in the past when this government
has set about the process of health reform it has, unfortunately,
meant a diminution of access to services for some of the most
vulnerable in our community.
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