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Thursday, 13 October 2005
Page: 41


Ms GILLARD (12:09 PM) —The National Health Amendment (Budget Measures—Pharmaceutical Benefits Safety Net) Bill 2005 amends the National Health Act 1953 in relation to two changes to the Pharmaceutical Benefits Scheme announced in the May budget. The amendments will implement new safety net and patient copayment arrangements for some pharmaceutical benefits where the pharmaceutical benefit is supplied within 20 days of a previous supply. The amendments will also increase the thresholds for eligibility for PBS eligibility entitlements.

The safety net 20-day rule will result in the following effects: the patient copayment amount will not accrue towards the safety net threshold, and the patient copayment will be the standard amount that applies to the person’s entitlement. Reduced safety net copayments will not apply. The pharmaceutical benefits which will be subject to the measures will be determined by the minister on the advice of the Pharmaceutical Benefits Advisory Committee. The bill will also increase the thresholds for eligibility for PBS safety net entitlements for general and concessional patients. These amendments will increase the general threshold by an amount equal to two indexed general patient copayment amounts on 1 January each year from 2006 to 2009 inclusive and increase the concessional threshold by an amount equal to two indexed concessional patient copayment amounts on 1 January each year from 2006 to 2009 inclusive. The increases will result in a gradual adjustment of the eligibility thresholds for the PBS safety net entitlements via increments over four years. These increases will occur in addition to the annual indexation of the safety net thresholds on 1 January each year.

Labor will oppose this bill. Firstly, it shows the deep cynicism of the Howard government and its contempt for the electorate that, at the last election—even though it made a major statement on the Pharmaceutical Benefits Scheme—the government did not see fit to advise Australians that it would be making these changes to the PBS safety net, which are clear cutbacks. Secondly, once again from the Howard government, this is a poorly thought-through piece of policy in relation to the Pharmaceutical Benefits Scheme, which will have all sorts of unintended effects and consequences.

I will just paint the background to this bill before coming to its specific points. We know that the Howard government has been in a mode to cut back the Pharmaceutical Benefits Scheme since the Treasurer first produced the Intergenerational report in the context of the 2002-03 budget. This was, of course, supposed to be a major opportunity for the man who would be Prime Minister to parade his credentials and his ability to think about the big picture, the big national issues and the forces which will shape our nation over the next 40, 50 or 60 years. He correctly identified one of those forces as being the ageing of the population and, consequently, the need to think about how providing benefits to an ageing population can have intergenerational consequences and intergenerational equity dimensions. We know that the Intergenerational report which was delivered by the Treasurer was hardly earth-shattering stuff. Basically it fast-forwarded present spending settings by the Commonwealth government and suggested that, if they remain unchanged in 40 years time, the Commonwealth budget would be unsustainable due to the ageing of the population.

About the only action item that came out of the Intergenerational report was the Treasurer’s and the Howard government’s announcement that it was worried about PBS sustainability, and it was consequently going to increase copayments for pharmaceuticals by 30 per cent. Of course we are all deeply concerned about the Pharmaceutical Benefits Scheme’s sustainability, but there was always the smell of panic and ill thought-through policy about the Treasurer’s reaction to the Intergenerational report and his plans to cut back the PBS.

Certainly in the 2001-02 year, the cost of the PBS had increased by 22 per cent. One can understand that anybody who is worried about fiscal sustainability would have looked at that figure and asked, ‘What’s going on here?’ Clearly that growth rate, if it were to be replicated each and every year, would make the PBS unsustainable over time. But there is an intellectual task here that was apparently left undone by the Howard government, which was to diagnose why the cost of the PBS increased by such an extraordinary amount in the course of one financial year. We know of course that most of this increase—some 10 percentage points higher than the average—was due to the Howard government’s own actions in two specific areas.

Firstly, there was the raising in the 2001-02 year of the income limit for access to the Commonwealth seniors health card by self-funded retirees. The Howard government, by taking that decision, made more people eligible for the concessional PBS arrangement. More patients were paying a lower percentage of the cost of the drugs because they were entitled to the lower copayment and therefore—do the maths—taxpayers were paying more. Secondly, this was the year that the government contributed to PBS costs by acting to list Celebrex at a price 20 per cent higher than that recommended by the Pharmaceutical Benefits Advisory Committee and without negotiating the quality discount also recommended. It then took the government far too long to realise that what it had anticipated would be an expenditure of $54 million a year on Celebrex was actually going to be in the order of $232 million a year. So there was a big jump in PBS expenditure. With a jump of 22 per cent you would be right to be concerned. You would need to get to the bottom of the causes. And then you find that significant causes have been the Howard government’s own actions.

If you then look more broadly at growth rates in the PBS, what we know is that the average annual PBS growth rate has been about 12 per cent, but it is important to recognise that the average figure disguises substantial fluctuations that have always occurred over the life of the PBS. Since June 2002 the cost of the PBS has declined significantly from the 22 per cent high I spoke of. It was 10 per cent in 2002-03, eight per cent in 2003-04 and 10 per cent in 2004-05. Commonwealth expenditure on the PBS for the next few years, from 2004-05 to 2006-07, will be under 10 per cent. It is then estimated to hit the 10 per cent mark again in 2007-08.

We have some scepticism about the budget projections for the growth of the PBS because these estimates do not take into account the impact of major therapeutic groups coming off patent. The current budget estimates suggest that, without the savings measures included in this year’s budget, the cost of the PBS would increase to 15 per cent by the end of these forward estimates. So the government projected a 15 per cent growth rate, used that as an argument to say it needed cutbacks and then said it thought the growth rate was going to be about 10 per cent. But we are concerned about the robustness of these estimates because there are always considerable cost savings on the PBS when major therapeutic groups come off patent and move to being cheaper generics. Those highly anticipatable savings have not been factored into the budget estimates.

None of this is to say that we do not need to be concerned about PBS sustainability. Of course we do. But a competent government would be getting to the bottom of the growth rate, particularly the 22 per cent hike that started this flurry of PBS activity and particularly the push on copayments. And in terms of future estimates, a competent government would be modelling to get the most exact prediction of future costs that it could. The Howard government does not bother to do that. Instead it prefers to put into the budget things that will justify its policies rather than put into the budget things that might be truly accurate because they have been modelled.

Where does this leave us? Of course we had the copayment increase, and the major part of that copayment increase came into effect on 1 January this year. There has been some evidence—it is only early evidence, I concede that—that the increase in the copayment is affecting the access to medicines that people need. We know that in the first six months of 2005 the number of concessional scripts—that is, the number of scripts that are taken out by poorer and older Australians who qualify for the concession—grew by only one per cent and the number of general scripts dropped by five per cent. It may be that that is a result of changed prescribing practices. It may be that that is explained by a sudden outbreak of wellness in our community. But I suspect an element of that is that the increased copayments are having an effect. And if the increased copayments are having an effect then that may mean we are saving a bit of money now, with lower growth rates in scripts for concessional patients than would have been anticipated and a drop in the number of general scripts.

We are saving money now but with a view to having far higher health expenditure in the future, because the sorts of medicines that people are likely to go without if they are under financial pressure and cannot meet the new increased copayments will tend to be those that are about stabilising health conditions. These would be health conditions where you are not necessarily experiencing an immediate feeling of unwellness but where, if you go off the medicine for a long period of time, you will hit a health problem. A clear example of that would be taking a statin—a cholesterol-lowering medication. If you go off your statins because you cannot afford them then you are not going to feel sick on day one. But the cholesterol build-up over time may result in you having a heart attack or some other major health problem that could have been avoided by consistent medication. So we are concerned about that.

The 30 per cent copayment increase is not the only change that the Howard government have made to the PBS about which we are concerned, and it is not the only change that we think was ill thought through. During the federal election campaign, on the Friday of the second to last week of the campaign, the Howard government ran out and announced that they were going to engage in a major cutback to the Pharmaceutical Benefits Scheme—not in the interests of making the Pharmaceutical Benefits Scheme sustainable or in the interests of financing expenditure on the other health areas but because they needed to snaffle a saving somewhere and to send it out of the health portfolio and into another portfolio to pay for some election sweeteners that they wanted to give older Australians.

The government needed to cobble together a savings measure. No doubt, Howard government ministers, staff and others working on the election campaign were instructed by the Prime Minister—and others—along the following lines: ‘I need to find the best part of $1 billion. Someone find me $1 billion.’ A weak and incompetent minister like the Minister for Health and Ageing was unable to resist when the pressure came on, so he was told to cobble together any old policy—it did not matter how incompetent it was—to find some savings for the Prime Minister to send out of health and into other portfolios during the course of the election campaign.

That policy was to cut the cost of generic medicines by 12½ per cent. You could not find a person in the pharmaceutical industry in Australia or a health professional who would agree with this policy. Each and every one of them, if they were asked to come into this place to make a statement about it, would say that it was an ill-advised, ill thought through fiasco. It has been revised several times because it is a fiasco. It has had unintended consequences because the minister for health, who does not understand the PBS, did not understand that if you cut the price of generic medicine then that flows through the therapeutic groups that the PBS has defined and starts to affect the prices that you pay for innovative medicine.

So what is the result of this ongoing fiasco? On the one hand it has meant that we are now in a situation where four medicines attract a special patient contribution because the drug companies have not been willing to supply them for the cut price. These are innovative pharmaceuticals, not generic pharmaceuticals; they have no clinically effective generic substitute. So now if you have advanced lung cancer and you need to get a second-line treatment like Alimpta you are at risk of having to pay a special patient contribution of around $500. That has been one way in which this fiasco has cut in.

The other way in which this fiasco has cut in is that the Minister for Health and Ageing has exempted some medicines—and I am thinking particularly of Lipitor—from the 12½ per cent cutback policy because he did not want to face the political heat of a special patient contribution on such a commonly taken medication. He has managed to punch a hole in the budget bottom line of around $237 million. It takes a rare genius to design a policy which, on the one hand, results in patients paying more and, on the other hand, punches a hole in the budget bottom line. It takes a rare genius to do that but somehow our minister for health has managed that double act. It is a policy of gross incompetence which I suspect will be a revised again and again.

We know that the assault on the PBS did not end with that policy in the recent budget. Calcium has been taken off the PBS. That was a decision made without any expert advice. The minister for health has now sent that decision to the Pharmaceutical Benefits Advisory Committee and they have provided advice. He must not have liked that advice because he has done what he always does when he gets advice that he does not like—he has sent it back for ‘clarification’. We are still waiting to see what comes out of that process. In the meantime, people who take a lot of calcium—whether they take it because they are also taking PBS osteoporosis medication or because they have kidney complaints—are facing an increase in the cost of their calcium if this matter is not resolved. The problems that this government has created in terms of the Pharmaceutical Benefits Scheme just go on and on. This bill represents another two problems.

I will turn to the question of the safety net changes. We have a PBS safety net arrangement for people who are high medication users. You need to be chronically unwell to be using enough scripts to be in the range of hitting the PBS safety net. If you are a person who uses a lot of medication—currently, if you need 52 scripts in a year—you will hit a safety net arrangement where thereafter you can access medicines at grossly reduced costs. So you have paid your PBS copayment for the 52 scripts—you might have paid that at a concession level because you are a concession card holder or paid it at the full rate—but then the safety net comes in and takes care of you. Now, under these changes, that is going to go up progressively so that it is 54 scripts, 56 scripts and so on.

If the Howard government had wanted to change the Pharmaceutical Benefits Scheme safety net arrangements then they should have done the following. On the day in the election campaign that they effectively made a Pharmaceutical Benefits Scheme policy change of some significance—when they announced the 12½ per cent price cutback policy to fund another election policy—to be honest with the electorate the Prime Minister should have held a press conference and said: ‘Understand this, Australians. If you vote for me, I will be cutting back the PBS safety net. If you do not want that done, do not vote for me, because I am going to do it.’

But honesty is not something that we expect from the Howard government—and we never get it. Once again, we did not get it on this occasion. They did not tell the electorate. Seat holders in the Howard government—coalition members—did not walk around their electorates, knock on doors and say: ‘Are you a chronically ill person? Well, understand this: if you vote for me, I am going to come into the House of Representatives and vote to make the PBS safety net threshold harder for you to reach. If you are someone who needs a lot of medications you had better know that, before you walk or drive down to the polling station to exercise your vote.’ They did not say that. It was a gross act of dishonesty and a gross act of hypocrisy, and on that basis we are opposed to it.

Then there is the second bit of this bill—a Howard government special, particularly from the minister, who seems completely unable to think about health issues in detail and in depth; he has an intellectual bypass which means he is unable to do that—where there has been cobbled together this new thing called the ‘20-day rule’. This is supposed to be about a measure that prevents the hoarding of medicine. I understand that it is not desirable, in terms of people who go to the doctor and get multiple scripts, to have all of those scripts filled at the one time and for them to be looking for new scripts and be hoarding medication, particularly if any of that is motivated by trying to hit the PBS safety net threshold at an earlier point in time than they otherwise would. So there is an issue—but this is such a poorly designed proposition to deal with that issue. This is saying that, if you are prescribed a medication and within a 20-day period you go and fill a second prescription for that medication, the amount of the patient copayment that you pay to get the second script filled will not count towards the PBS safety net. If you have already hit the PBS safety net, then by filling that second script the reduced patient copayment that should apply under the PBS safety net will not apply. That is irrespective of why you are filling a second script within 20 days.

We pressed the Department of Health and Ageing on these matters when we took the briefing, and we just got gobbledegook back. I would like the minister for health, when he comes in and sums up in this debate, to tell me why this House or any member in it, including any coalition member sitting in the government ranks—and I hope they understand that this is what they will be voting for, because we will make sure that everybody understands that this is what they did vote for—should be put in this position; why anyone should be put in the following positions, and I have a few examples.

Let us imagine a low-income family that has reached their PBS safety net limit. There might be a member of the family who is chronically unwell—indeed, there might be a number of children who all share the same chronic illness. Let us imagine that one of the children in that family has asthma. Let us say that that child goes to school and does the kind of thing that kids often do: they lose their school bag and somehow they manage to lose their medication. They leave it behind and it is not there when they come back, or it is sports day and they leave their school bag and wander back onto the school bus. I am sure we can all remember times in our childhood when we lost jumpers, shoes, school sports uniforms, pens or books. You can also lose your asthma medication. Let us say that child has lost Ventolin, Seretide or Atrovent—all medications they could be taking. The family will have to replace that. They cannot have an asthmatic child wandering around without medication. Under this legislation, when they go to get the second script filled within a 20-day period, that family will be paying $85.80 to get that medication for their child, instead of $13.80. So we have a low-income family that has hit the PBS safety net threshold. They have an incident where a young kid has left their school bag somewhere and they cannot find their medication. They will be paying $85.80 instead of $13.80—an additional cost of $72. I hope the members on the coalition benches are proud to vote for that when we come to voting for this bill.

Let us take another example: a diabetic patient who might be taking Metformin, Ramapril or Atorvastatin, one of the statin groups. Let us say that they have misplaced their medication. They could have been on holidays and left it where they have holidayed. They could have lost their luggage. Madam Deputy Speaker, I am sure you are someone who has had to confront a loss of luggage, travelling on planes from time to time. These things do happen; it is no-one’s fault. It may be the airline’s fault—sometimes it just happens—and your bag does not come out on the carousel and you do not have your medication. Someone in that position may have filled their script and taken their medicine away with them. It has been lost and they need to replace it within 20 days. They will be hit with an additional $72 payment. That is someone with diabetes who, despite the PBS and all sorts of other government measures, would already experience high out-of-pocket costs day in, day out to manage their diabetes. Once again, I hope the coalition members who will file into this place to vote for this bill are proud of that as a result. I hope they are wandering around their electorates explaining to every diabetic that they have potentially cost them $72 extra if they happen to lose their medication.

I have another example. This week is Mental Health Week. This government has lots of spin on mental health but precious little substance. We know that, even in Mental Health Week, the government has managed to deny appropriate funding to an organisation called depressioNet, which has helped 200,000 Australians and which will close at the end of this week. We all know exactly how low the real commitment of this government is to mental health issues. Indeed, the minister for health does not deign to look after this himself. He believes that dealing with mental health issues is somehow beneath him and has given the matter to his parliamentary secretary. There are obviously many people in our community who have a mental illness, who need medicine for that mental illness and who may be liable to lose or misplace their medicine. Indeed, forgetfulness could well be a side-effect of the mental health condition they are facing.

So let us give an example of someone who has schizophrenia—tragically, too many people in our society do—with all the lifetime effects that having such a major mental health condition implies. That person could be taking Zyprexa. If they lost that medicine they would be required to pay an additional $4.60 to get the medicine. That may sound like a small amount of money to many people. But if someone is schizophrenic it may well be—tragically, is likely to be—that they will not be in the work force. They will be on some form of welfare payment, and they may be in the situation where they lose their medicine frequently. Each time they do, it is an additional $4.60.

So this is the problem of the 20-day rule, and that is even before you get to things like people who live in rural and remote locations who come to town and fill all their scripts at once, not because they are going to take all their medication at once but because it will be a long time before they get back to town again. So they go into the chemist, fill all their scripts, take the medicine back home and take it as they are supposed to take it, but of course they will be caught within this 20-day rule because they have filled the scripts. This really is I think an incredibly cruel policy, a policy that is likely to have its highest impact on elderly patients who have certain shopping cycles and may be confused or insecure about running out of medicines. It is likely to have strong effects on people with chronic conditions who might need extra supplies of medicines in order to have the medicine in more than one location or who may lose their medication. It is going to have strong effects on people who are taking mind-modifying medicines and may be more likely to be confused than the average person.

It is an ill-thought through proposal from a minister whose understanding of health is so shallow that sometimes it takes my breath away. There is an issue here about medication hoarding, I understand that, but this is not the way to fix it, and that is why Labor will be opposing this bill. I will be recommending to members of the coalition backbench that, instead of just wandering in and voting for this in the way they will be instructed to, they actually have a think about it because it is going to have substantial demerits for people in their constituencies. I conclude by moving the second reading amendment which has been circulated in my name and which makes these points. I once again urge coalition members to consider voting for the second reading amendment if they are genuinely motivated by the concerns of their constituents. I move:

That all words after “That” be omitted with a view to substituting the following words:

“whilst not declining to give the bill a second reading, the House condemns the Government for:

(1)   failing to invest in the long term sustainability of the Pharmaceutical Benefits Scheme;

(2)   failing to tell the Australian public at the last election that additional changes to the PBS safety net and patient co-payment were planned in addition to the 21% increase in co-payments and safety nets introduced last January;

(3)   continuing to implement changes to the PBS despite the fact that PBS growth rates have already slowed substantially and despite the fact that these changes will hit the poorest and sickest Australians;

(4)   failing to ensure that the 20 day restriction rule contains sufficient exemptions to cover situations that will arise regularly to require people to get their prescriptions filled inside that timeframe; and

(5)   providing further opportunities for the Minister for Health and Ageing to intervene to limit the availability of medicines on the PBS”.


The DEPUTY SPEAKER (Hon. BK Bishop)—Is the amendment seconded?


Ms King —I second the amendment.