Mr PYNE (5:53 PM) —For nearly 50 years Australian taxpayers have unanimously supported the fundamental principles of the pharmaceutical benefits scheme. Providing a comprehensive variety of affordable and accessible medicines, the pharmaceutical benefits scheme gives all Australians a tangible degree of peace of mind. However, despite taxpayers' overwhelming support for the fundamental principles of the scheme, the unavoidable reality is that in recent years taxpayers have not been able to adequately fund the scheme—a fact that the former Labor government recognised but left to the coalition to solve. An ageing population combined with the development of highly specialised medications have significantly contributed to an alarming increase in the annual operating costs of the scheme.

In 1983, when Bob Hawke brought the Labor Party to government, the pharmaceutical benefits scheme cost taxpayers less than $500 million per year. At the end of Labor's 13 unhappy years in government, this figure had increased fivefold to a staggering $2.5 billion dollars. This amounts to 73 per cent of the total amount collected by the medicare levy. The coalition government is resolutely committed to the pharmaceutical benefits scheme. The coalition government is also committed to responsible fiscal management.

Accordingly, the Minister for Health and Family Services (Dr Wooldridge) and his parliamentary secretary, the member for Adelaide (Ms Worth), have restructured the pharmaceutical benefits scheme so that it continues to supply affordable and accessible medicine to patients without the crippling effects of unchecked, augmenting costs.

Commencing on 1 February next year, the introduction of therapeutic group premiums will save taxpayers an estimated $561 million over the following four years. It is significant to note that, despite this efficiency measure, it is anticipated that the costs of the pharmaceutical benefits scheme will increase by over $200 million in the next financial year. The therapeutic group premiums will affect a limited number of categories of medication used for the treatment of conditions including hypertension, stomach ulcers, depression and high cholesterol. The groups of medications covered in this measure were chosen thoughtfully and specifically by the advisory committee to the government. In instances where a number of medications are similar in therapeutic effect, government subsidies will be prioritised according to the best value for money medications.

It is important to note that when most of the medications in each of these defined groups were listed on the pharmaceutical benefits scheme, the sponsors claimed comparable safety and efficacy with other medications in the group and were also seeking the same price as the alternative. In such circumstances, under the therapeutic group premiums a base price is established and the benchmark price drug in each group will continue to be subsidised at the present level of $3.20 for concessional consumers and $20 for general consumers. Therefore, in each of the categories, there will be at least one specific medication which will cost the patient not one cent more than at present. Indeed, only 118 medications, or six per cent, out of a total pharmaceutical benefits scheme of 1,800 medications will be affected at all. And because this scheme encourages pharmaceutical manufacturers and distributors to become more competitive, of these 118 medications approximately half will have no premium payable whatsoever. Of the other half, no single medication will cost consumers more than $5 and only two are at a differential of $4. Of the approximately 60 medications actually affected, the average price differential is only 63c—and not $18, as irresponsibly claimed by the shadow minister for health.

The therapeutic group premiums only operate in circumstances where there are a group of comparable medications. This scheme does not inhibit access to necessary and important medications that offer a patient substantial clinical advantages over existing treatments. This new measure also allows for the flexibility of adding medications to the concessional list as they are developed.

The introduction of therapeutic group premiums does not affect the ability of the pharmaceutical benefits scheme to continue to provide subsidised medicines for consumers. Pensioners and other health care card holders, including the 220,000 new self-funded retirees who are now holders of the Commonwealth seniors health card, will continue to pay $3.20 for each pharmaceutical benefit until they reach their safety net threshold of $166.40, after which prescriptions are free. In addition, aged and sickness pensions, including part-pensioners and Veterans' Affairs benefit holders, will still receive a pharmaceutical allowance of $5.40 indexed into their pensions per fortnight to help defray the out of pocket pharmaceutical expenses.

The coalition government has consulted widely and comprehensively in the implementation of this new measure and has produced a fair, equitable and affordable scheme. (Time expired)