Senator ALLISON (9:32 PM) —I rise to speak on the National Health Amendment (Pharmaceutical Benefits— Budget Measures) Bill 2002 [No. 2]. Democrats firmly reject the notion of asking the sick to bear the burden of government spending, particularly where government overspends relate to detention and expulsion of refugees, increased spending on war related activities and measures to curb individual freedoms in the name of security. The Australian Democrats rejected the first bill at second reading in the Senate in June and we intend to do so again. The policy of copayments to curb costs is simplistic and a lazy way of containing government costs into the future.

At the time the first bill was introduced, the government knew that the health department had estimated that at least half of the savings would come from concession holders—that is, people on low incomes and pensions, many of whom are very high users of medicines. We believe that imposing this extra cost on patients is totally unacceptable. It demonstrates that this government has focused on the bottom line at the expense of the fundamental tenet of a fair society—that all people in a wealthy nation, such as ours, should have affordable access to medical care and pharmaceuticals. Australia's pharmaceutical scheme has been the envy of many nations around the world because of its cost-effectiveness criteria for the listing of drugs for PBS subsidy and the bulk purchasing done by the Commonwealth on our behalf. This has meant that as a nation we spend proportionately less of our wealth on medicines than comparable countries.

Having said this, I believe that there are three questions we, as a community, should be asking and that we should be involved in the decision making. Firstly, how much are we prepared as a nation to spend on health, including medicines? Secondly, if there is waste in the Pharmaceutical Benefits Scheme, can we address it or do we need to restructure the system? Thirdly, do we have the right balance of government resources in terms of how much we spend on pharmaceuticals, rather than directing our resources towards preventative and commonsense remedies?

Looking at the first question: what do we need to decide as a community is the proportion of our wealth that we are prepared to spend to maintain or increase our health status? It is true that we spend proportionately more on health now. According to the Australian Institute of Health and Welfare, health expenditure as a proportion of GDP almost doubled over the last four decades, from 4.3 per cent of GDP in 1960-61 to 8.4 per cent of GDP in 1997-98. At 2000-01, that figure was 8.5 per cent of GDP. In dollar terms at 1997-98 prices, health expenditure grew from $7.3 billion in 1960-61 to $47 billion in 1997-98. This was a real average annual increase of five per cent. Taking into account the increasing population, this means that health expenditure has increased in real terms by an average of 3.6 per cent per person per year.

In numerous international studies, Australia is measured as having a comparatively healthy population. We live longer, we have low infant mortality and our morbidity rates are lower than other nations. We have access to high quality acute care and medical practitioners who are international experts. At the same time, our living standards have continued to increase as measured by GDP growth per capita. So, as a nation, we have more money to spend and we are spending more of it, proportionately, on health. Given the high priority we place on health, the Australian community may consider this is a perfectly sensible way to spend extra money. On the other hand, this so-called `small government', which has the reputation of being the biggest spender of all Australian governments, would prefer to see as yet undisclosed numbers of millions of dollars spent on a war effort that clearly the Australian population does not want.

I note in passing that the government has already revised upwards its Defence budget for $108 million beyond that specified in last May's budget. Did the government intend for sick Australians to pay for the war effort through the increased pharmaceutical copayment is a question, I think, we need to ask. Turning again to pharmaceuticals, by the government's own reckoning, average year-on-year increases since the early 1960s have been consistently around 12 per cent per year in constant dollars—that is, despite all the scaremongering we have heard about cost blow-outs, the reality is that our Pharmaceutical Benefits Scheme has, from 1976-77 to 2001-02, never increased annually in constant dollars by more than 12 per cent.

In the last financial year, July 2001 to June 2002, the annual increase was only 8.8 per cent—hardly the unsustainable levels predicted by the Minister for Health and Ageing in May 2002. So what is the panic? The government's rhetoric does not match the reality. Some simple research into the facts exposes their unsustainability argument as a sham and, until this government can explain to the community why having access to a universally affordable system of pharmaceuticals is a bad thing, the Australian Democrats will not support any measures to increase costs to consumers beyond the CPI.

However, there are certainly other areas that the government can target to improve the efficiency of the PBS. The key area that the Democrats believe the government should focus their attention on is the issue of inappropriate prescribing. Leakage occurs where a drug is listed and subsidised on the basis of its effect for specified illnesses but then gets prescribed much more widely. It is one of the key sources of inefficiency in the pharmaceutical system. This can occur through prescribing the Mercedes-Benz when a Holden would do, and overprescribing generally.

The reason for the unexpectedly high expenditure in 2000-01 was the listing of Celebrex. Doctors were prescribing this very expensive drug to every patient with muscle or joint pain. As Professor Stephen Duckett has stated, policy options to address this issue are best targeted at those with the most power and influence. Ordinary people seeking help from their doctor do not know the difference between getting Celebrex and other drugs—the doctor makes that decision. They in turn are influenced by the pharmaceutical industry, which persuade the government and others to list their product. They also influence the medical profession to prescribe the drug, and that means their brand. The other powerful body is of course the regulator, which accepts drugs for subsidies and regulates their use.

The Democrats believe that changes need to be made to the system to stop the waste that is occurring now. The government has to get serious about tackling this by encouraging manufacturers to embrace a self-regulatory code of conduct, changes to doctors' software and offering doctors monetary incentives to change behaviour. These methods represent a softly-softly approach. This is in sharp contrast to the harsh treatment they were prepared to mete out to the consumers of medicines. If the government really believes that there is a sustainability problem, it could start by challenging both manufacturers and the medical profession.

A simple first start to the problem of leakage would be to ban the supply of drug samples from the pharmaceutical industries to doctors. A major study undertaken jointly by the University of Sydney and the Australian Institute of Health and Welfare clearly shows the relationship between the use of drug samples and the high Celebrex prescription rates in 2000-01. The BEACH data, as it is known, found that the most commonly provided sample pack provided by doctors in 2000-01 was Celebrex. Projecting the data nationally the report estimates some seven million patient consultations nationally would have resulted in a GP providing a Celebrex sample. Just think about the impact of this advertising by doctors for the Mercedes-Benz of non-steroidal anti-inflammatories. According to the report, this new drug was quickly substituted for older drugs for a range of conditions. Just imagine—patients after experiencing the Mercedes-Benz came back for more of the same. They would have said that Celebrex was great and the doctor, wanting to provide the best treatment for patients, would prescribe it—and the taxpayer ends up funding expensive drugs when maybe a Panadol would do. Significantly, the report said:

in other words, the National Prescribing Service 2001—

That is on page 108 of the General Practice Activity in Australia, series No. 8.

The most recent report of General Practice Activity in Australia, series No. 10, is even more explicit. It traces the introduction of a similar drug, Vioxx, in early 2001. It shows that although Vioxx was only listed for the last three months of the year, it was the 11th most frequently prescribed drug and the second most frequently supplied as a sample pack. Clearly, doctors are being used by manufacturers to get patients to switch brands.

The new industry code of conduct, which the government has decided will take the place of legislation, is also soft on samples. It justifies the use as it `familiarises the doctor with the product'. This is clearly nonsense and why we have a whole array of supports in place for doctors to find out about new developments in medications. If the government wants to stop the problem of leakage that has been estimated as possibly costing a billion dollars a year, then banning pharmaceutical samples represents a good first step.

Secondly, price signals and market mechanisms should be more appropriately targeted to manufacturers and distributors rather than consumers. The government has told us that Australia has a much lower use of generic medicines than other comparable countries. Why is this so? I can see little reason for a complex set of listings of generic drugs listed differently on the PBS because they are different brands and packaged in different doses. We think it is time the government considered other proposals. The government could, on advice from the Pharmaceutical Benefits Advisory Committee and the Pharmaceutical Benefits Pricing Authority, dictate what drugs they want and put them out for competitive tender. The successful tenderer would provide the generic medicines as specified by the government for a period of time, but other brands would not be considered in that period for PBS subsidisation. In other words, the government should get serious about using its monopolistic power.

No doubt we will hear tired old arguments about choice and how manufacturers will pull out of Australia. The evidence to date is that they do not pull out: there are sufficient profit margins even in our lean PBS system to keep manufacturers and pharmaceutical companies interested. Using tenders with one generic provider would, besides introducing greater efficiencies, allay the concerns of doctors who currently fail to prescribe a cheaper generic for fear of confusing the patient with different brands. We believe there are other mechanisms that could be considered to tackle problems of overprescribing and sustainability generally. Any creative solution will require considering the most appropriate way of addressing it.

The government has got it wrong in sending price signals to consumers who are dependent on their doctor's assessment of their needs. I believe that price signals and the market will work best with manufacturers, and that clinical accountability lies best with the profession. It is difficult to understand why the government has brought this bill back again—perhaps it is bereft of ideas. Regardless, we will not support this because it is poor policy.

Finally, we need to ask: have we got the balance right in terms of our reliance on pharmaceuticals versus a more balanced approach to health? I believe the answer is no. When constituents have written to me about this bill listing the enormous array of pharmaceuticals they rely on daily, I am struck by the poverty of their lives not only in financial terms but also their lack of enjoyable activities and community support. There is sufficient research in the medical and social sciences literature to demonstrate that social networks, hobbies, some simple remedies and a good diet can often take the place of medicines because they are, of themselves, improving health.

Yet, despite the overwhelming evidence on the cost-effectiveness of preventive health, a report released by the Australian Institute of Health and Welfare in December last year showed that less than two per cent of all governments' health expenditure was spent on public health. The federal government's contribution was a paltry $500 million. Contrast this contribution with the $2.3 billion presently used to subsidise private health insurance. Professor Deeble has recently demonstrated—with empirical evidence—the lack of value that this insurance rebate adds to our health system. Evidence based medicine may be this government's catchcry, but I say: let's have some evidence based policy. Cut costs from an unsustainable private health insurance rebate of $2.3 billion and let's put some resources into preventive health measures and pharmaceutical reform, and we might achieve a better balance.