Mr MARTYN EVANS (8:55 PM) —The National Health Amendment (Pharmaceutical Benefits—Budget Measures) Bill 2002 deals with increases in the patient co-contribution for the Pharmaceutical Benefits Scheme. Of itself that is unremarkable. In recent decades since the establishment of the scheme, the parliament—under governments of all political persuasions and colours—has from time to time been called upon to increase the patient co-contribution that applies when drugs are prescribed by doctors. Of itself, increasing the patient co-contribution is not an extraordinary or remarkable event. However, this particular occasion is remarkable and extraordinary in two ways. Firstly, the government with this bill is proposing a very substantial, indeed massive, increase in the level of the patient co-contribution. The patient co-contribution goes up very significantly. For the general population the co-contribution is going to increase quite markedly to over $28. For concession cardholders the co-contribution will increase by $1. That amount is of itself a very significant percentage increase and is a significant absolute amount for those who are on a concessional income and have a very limited income to dispose of things such as drugs.

Secondly, it is remarkable not only because of the magnitude of the increase—which is important, as many of my collea-gues including the shadow minister have indicated this evening—but also because on this particular occasion the government has sought to dress up this significant increase not as a revenue-raising measure but rather as an intergenerational report which seeks to address what the government alleges are fundamental problems with the sustainability of the scheme. Not that the increases are required for revenue purposes, mind you, but because it is good for the population as a whole that we should increase the size of the patient co-contribution quite significantly so that we can rein in the cost of the scheme over the next 40 years and ensure that it remains sustainable. Indeed, those government members who have spoken this evening have spoken along those lines, saying, `If you want to keep the scheme available for the broad majority of the community, especially concessional patients, then you need to increase the cost of the drugs to everyone now so that over the course of the next 40 years the scheme as a whole will remain sustainable.'

That proposition is fundamentally flawed and, as government ministers are fond of saying in question time, the premise on which those assumptions are based is flawed. Indeed, it is quite wrong. Predicting the future is always a very difficult proposition. It is one of the few things that we have trouble predicting accurately. The difficulty with attempting to predict the future over a period of some 40 years is that the potential for errors in your predictions becomes quite significant. Small changes in your initial starting assumptions and in things like the rate of increase over a period of 40 years with compound growth rates can have very dramatic effects on the end points in this equation. But there are some fundamental flaws in the projections which the government has come forward with here that go beyond the simple statistical and linear projection analysis issues which are always going to be the case in these kinds of future oriented exercises.

The scheme has been in operation now for over 50 years. It came into being on 1 June 1948. That happens to be five years before I was born. It also happens to be five years before the discovery of the structure of DNA. If you are going to date modern medicine from any time you would have to date it from that period in 1953 when Watson and Crick decoded, so to speak, the structure of DNA, identified the double helical structure of the molecule, and set us on the path of modern molecular biology—which ultimately will be regarded as the most significant influencing factor in the development of drugs and medical treatment over the course not only of the last century but of this century as well.

Where does this take us in the context of this long-term debate over the PBS? In the period of 50 years since the structural analysis of DNA, and indeed since the establishment of the PBS, we have seen an explosion in the number of drugs available to effectively treat medical conditions. The reality is that, before the 1950s, at the time of the establishment of the scheme, there were very few if any effective drug treatments for any medical condition, and the ones that existed were of limited efficacy. We had just discovered antibiotics—and, of course, they have had a role to play subsequently in the PBS and no doubt they will be covered in future discussions—but the reality was that, apart from some of those early drugs, we had very few drugs to deal with the majority of medical conditions. Since that exciting period in 1953, we have discovered and developed a whole range of molecular identities that are effective in the treatment of a wide range of medical conditions that cause real hardship and suffering in the community. Of course, they come at a cost: a cost to the patient in terms of money and a cost to taxpayers as a whole through the subsidy that is inherent in the Pharmaceutical Benefits Scheme.

Most of the costs of drugs arise from the fact that drug manufacturers can claim a monopoly on the sale of those drugs during the life of the patent that covers the drug. That was initially a period of some 20 years, and the parliament recently extended it to 25 years to reflect the long development cycle and the high cost involved in the development of drugs. But the reality is that the 40-year projection period that the government is contemplating in its Intergenerational Report is nearly two cycles of pharmaceutical patents. Not only is the cost of the Pharmaceutical Benefits Scheme projected over a period of 40 years; it is also a period of two whole patent lifecycles of drugs.

The reality is that many of the drugs that the Treasurer often quotes as being particularly expensive will in the very near future fall off the patent list. Two of the more significant statin drugs that are often referred to in this debate, Pravachol and Zocor, face patent expiry in late 2005. Clariten is a very common antihistamine, and its patent expires in December 2002. They are just a few examples of the many drugs that constantly fall from the end of that patent queue. While manufacturers gain a monopoly for the 10 to 15 years of life of the patent, once that period expires anyone can manufacture a generic version of that drug for a human condition that has not changed in the interim. Clariten will treat hay fever now when it is on patent, and it will treat hay fever after the patent expires. The difference is that once generic drugs are developed, the cost will fall. Pravachol and Zocor treat high serum lipid levels now, and they will still treat those lipid levels after the patent expires. Other drugs that are more effective may come onto the market but, as the Treasurer often indicates, drugs will fall from the end of the patent list and go down in price on an ever increasing basis as the patent system works its way through this 40-year period.

If the issue is as critical and as urgent as the government has maintained such that we must impose this high level of burden on concessional patients and on the average person in Australia, what has the government done in its term in office to ensure that this scheme—which it now says is at such risk—remains sustainable? This government, through the former minister for health, Dr Wooldridge—about whom we have heard so much recently—has done quite a lot to increase the cost of the PBS. For example, before the last election Dr Wooldridge said:

That is exactly the point. Former Minister Wooldridge correctly identified significant benefits of many of these drugs; indeed, that is the basis of their listing on the PBS. The drug companies are required to demonstrate to the authorities administering the PBS that their drug is not only medically effective but also cost effective. That is part of the assessment of all of these drugs. As then Minister Wooldridge correctly pointed out, the use of COX-2 inhibitors—drugs like Zyban and too many other drugs to mention—is a very positive contributor towards the health of the nation.

If we increase the cost of pharmaceutical patient copayments, we will have other unintended consequences. Overseas research has indicated that patients with limited means will simply discontinue expensive pharmaceuticals part way through their treatment, and they will incur much higher levels of hospitalisation. They will go back to the doctor far more frequently. They will experience greater periods of ill health, which will result in decreased economic productivity and losses for their families. There will be a cost to the nation in taxation losses and increased government expenditure on hospitalisation. There will be a cost to productivity in the economy. These areas will balloon out, and they will do so in ways that can be much more significant than the cost increases the Treasurer has foreshadowed in the PBS. The reality is that those costs are social, personal and financial.

Just how real is this increase in the PBS? We do not know the basis of these projections: whether people will be as sick over the next 20 or 30 years as they have been over the last five or 10. With the advances in molecular biology and genetic research, and with the availability of some of the drugs we are talking about, health costs may well come down in some of these areas. The stupidity of a long-term, simple mechanical projection is illustrated by the Treasurer's simplistic projections of the PBS heading to something like $158 billion in 2041-42.

If we then project forward the cost of the patient co-contribution, what would a patient's co-contribution be in 2041 when the cost of the scheme to the Commonwealth is alleged to be $158 billion? By my simplistic calculations, equally as simplistic as the Treasurer's but nonetheless valid if his are valid, the patient co-contribution would exceed $1,000. How is it sustainable and affordable for the average Australian if the cost of the patient co-contribution in 2041 will be over $1,000 per script? I do not find that a terribly sustainable proposition. The reality is that, if the cost of the scheme multiplies at that level of growth, the cost of the patient co-contribution would have to go up at that rate if we are to maintain the sustainability of the scheme as the Treasurer demands we should. Or is the Treasurer going to freeze the patient co-contribution at the $28 level while the cost of the scheme, in his view, continues to rise?

The nonsense that is perpetrated by an intergenerational report that seeks to project health and science outcomes 40 years into the future is indeed an absurd proposition. I support the notion that we should look to the future and that we should investigate the cost implications to this country of the programs which the parliament administers on behalf of the taxpayers. That is a reasonable thing to do. The mechanism which the Treasurer has employed to conceal his wish to increase the financial return to the government from the patient co-contribution in this case—the smokescreen that he has erected around a very simple cost increase, a cost slug to pensioners and to citizens—is unfortunately a very artificial, indeed absurd, edifice. It is one which I am sure will come down around this government's house not only in the context of the absurdity of these projections but also in the public response to the massive increase in pharmaceutical costs which they now face.

Families cannot afford these changes. Families cannot afford this government; that is the reality of it. The basis of the science and the statistics which underlies the Treasurer's proposition here is fatally flawed, I am afraid. The PBS is a worthy scheme. It has been with us for well over 50 years and it will be with us into the future. It is an important scheme that we need to maintain. I support the shadow minister for health's second reading amendment. It is one that the House should support.