Senator CORMANN (4:46 PM) —Before question time, I was reflecting on how the views of the Minister for Health and Ageing, Nicola Roxon, had changed from before the election, when she was the opposition spokesperson on health, to now, when she is the minister. Before the election, she was opposed to and could not see any justification for a system of cost recovery for PBS listings, in fact raising the prospect of the risk that cost recovery would pose to the independence of the PBAC. Cost recovery, as I was saying before question time, has been implemented successfully in the TGA process, which has been able to maintain its independence, but of course the TGA and the PBAC have very different roles. The TGA decides whether a drug or a medical device can be marketed in Australia, whereas the PBAC advises the minister on which drugs should be approved for a public subsidy.

The Productivity Commission has made the point that cost recovery arrangements should only be introduced to improve efficiency and should not be implemented where they are inconsistent with policy objectives. Whilst cost recovery may improve efficiency, if it leads to higher drug prices and delays PBS listings it would be inconsistent with the objectives of the PBS, which are to provide timely and affordable access to pharmaceuticals.

The industry has pointed out quite vigorously a number of concerns. The first of those is that this is a global first. It is indeed unprecedented around the world that cost recovery principles, in terms of the listing process of pharmaceuticals, be implemented in this fashion. The measures do not adhere to the principles of cost recovery from the industry’s point of view, in that there is no service to the seller. Recovery is being made for a purchaser’s function and could, from the industry’s point of view, take the cost of listing to over $1 million. That presents a risk to patients across Australia in getting access to new medicines which might not be listed in Australia as a result of what the government is proposing through the National Health Amendment (Pharmaceutical and Other Benefits—Cost Recovery) Bill 2008 [No. 2]. It could well impact on small patient population groups. The real risk is that some companies may decide that it is not worth listing some drugs for those groups.

Finally, there is a real concern that this measure will deter innovation and investment in the Australian pharmaceutical industry because it is in fact a tax. It should be acknowledged as such, and there is no proper comparison to the TGA process, where payment is made for registration. The government is reintroducing this measure at a time when the industry is already dealing with a substantial four-year reform process, which was initiated in 2007. It comes at a time when the budget is already imposing a further $175 million in price cuts on the industry, and, of course, it comes at a time of a significant global economic downturn.

The minister’s views on this have changed, as I have noted. Rather than agreeing with the proposition that she put before the election that this measure would threaten the independence of the PBS, she is now actively pursuing it on behalf of the Rudd government. I do note that the Chairman of the PBAC suggested that there were no concerns about cost recovery impacting on the recommendations or independence of the PBAC.

The PBS does give Australia one of the best pharmaceutical delivery systems in the world. It gives Australians access to the best available medicines that are safe and of the highest quality. We fully support the charter of the PBS to provide timely and affordable access to subsidised medications for the Australian community. We are very concerned about the impact of the measures in this legislation. We understand that the government have given indications to the Greens that they will agree to an amendment that the Greens will move later. We will also support that amendment by the Greens to have a review of the impact of these cost recovery measures. If that amendment is passed by the Senate, as it seems that it will be, the opposition will be supporting this legislation. However, we continue to have very grave concerns about the impacts that it is likely to have into the future.