Ms ROXON (Minister for Health and Ageing) (12:02 PM) —I move:

The National Health Amendment (Pharmaceutical and Other Benefits—Cost Recovery) Bill 2008 [No. 2] amends the National Health Act 1953 to provide authority for the cost recovery of services provided by the Commonwealth in relation to submissions for the listing, or amendment to a listing, of medicines, vaccines and other products on the Pharmaceutical Benefits Scheme (PBS) and the National Immunisation Program (NIP).

These amendments ensure that applicants, mostly pharmaceutical companies, may be charged fees when they seek services provided by the Commonwealth in relation to the exercise of a power by the minister under section 9B of the act relevant to the designation of a vaccine on the National Immunisation Program or, under a provision in part VII relating to listings or a change to listings for a medicine or other product on the PBS.

The bill has been subject to considerable review by the Senate Community Affairs Committee, which has held two inquiries into the proposed cost recovery measure. Evidence was heard from stakeholders who have a genuine interest in the sustainability and future of the PBS. The result of both inquiries was that the committee recommended that the bill proceed in its current form.

The committee’s first report was issued on 22 August 2008. The inquiry reported on the likely impact of PBS cost recovery measures on access to medicines, its impact on the pharmaceutical industry, new products and innovation and the independence of the Pharmaceutical Benefits Advisory Committee. After careful scrutiny of the evidence presented, the committee recommended that the bill proceed.

However, in spite of this committee recommendation the Senate failed to allow further debate on the bill and negatived the government’s motion to allow the bill to be read a second time.

In a move to allay concerns voiced over the practical operation of PBS cost recovery, the government moved to refer the draft PBS cost recovery regulations to the committee for a second inquiry, this time into the regulations. The draft regulations were considered to ensure that small population patient groups and patients needing access to low-volume medicines would not be disadvantaged by the introduction of PBS cost recovery. 

This was an extraordinary step as it has not been practice for draft regulations to be presented for scrutiny at this stage in the parliamentary process by government. In its second report on 2 October 2008, the committee considered that concerns over ensuring necessary PBS access for small population patient groups and continued availability of low-volume medicines have been adequately addressed in the draft regulations and again recommended the bill proceed.

After due consideration of the committee’s findings and stakeholder input to the committee, and in light of the Senate’s failure to pass the bill, the government has decided to re-present the bill to this House for reconsideration.

The failure of the Senate to allow this bill to progress—including the somewhat ironic opposition to the measure by the coalition, who never withdrew their own PBS cost recovery measure when in government nor told anyone that they had changed their minds—has meant that the government has forgone all revenue expected in 2008-09, around $9.4 million. The government is giving those opposite an opportunity to reconsider their hypocrisy on this measure and their economic irresponsibility, to avoid a similar fate for the anticipated $14 million in annual revenue this measure will raise. 

The bill provides for a commencement date of 1 July 2008. The government has no intention of introducing the cost recovery regime to allow for the retrospective collection of fees.  

It will be the regulations made under the power provided in the bill which will specify the actual date from which cost recovery fees will commence. No fees can be imposed until the regulations are made by the Governor-General. The regulations will be subject to parliamentary scrutiny and disallowance. 

I understand and appreciate that delays in passage of the bill have led to uncertainty in the industry and disrupted ongoing discussions between my department and industry stakeholders. Following passage of the bill, and the clear message to the industry that cost recovery will be coming into operation, I will announce the commencement date after there has been meaningful dialogue with the industry about implementation issues. 

In the Senate, those that sit on the cross-benches have been constructive in their thinking on this bill.  Issues were raised in evidence during both Senate inquiries, such as the potential impact of fees upon access to PBS listed products for small patient population groups, as mentioned before, such as medicines for Aboriginal and Torres Strait Islander communities, and for people needing palliative or paediatric care medicines. The government will ensure that the introduction of cost recovery will not alter the access to or processes around PBS listings for drugs, vaccines or other medicinal products for these groups.

In the model put forward by the government, the independence of the PBAC is guaranteed. The Senate inquiry found, and the government affirms, that the expertise, integrity and sense of propriety that PBAC members bring to their task will not be compromised as a result of the government’s approach to cost recovery. The PBAC will continue to provide expert advice on medicines, independent of government and industry. The arrangements for funding the PBAC directly through the budget will continue and the PBAC will have no role in setting fees and will take no part in discussions with companies over fees.

Opponents may argue that the time is not right for this measure, with the global financial crisis and worldwide pharmaceutical industry restructuring. The government notes that the Australian pharmaceutical industry has been characterised by significant domestic merger and acquisition activity in recent years, and the sector remains relatively healthy. No doubt, this is in part due to the financial certainty of PBS subsidy payments to the companies.

The committee inquiry heard evidence that the proposed cost recovery fees, fees that will recover around $14 million a year from industry, would impose an undue financial burden on industry. This is an industry that the Department of Innovation, Industry, Science and Research cites as having had an annual turnover of over $20 billion in 2007-08, and which spends the annual equivalent of over $64 million in Australia alone on so-called ‘educational events’ for doctors and pharmacists.

Pharmaceutical companies receive much by way of benefits from the Australian taxpayer, once their products are listed on the PBS. It is not unreasonable that they contribute toward maintaining the architecture of the PBS. Achieving a product listing on the PBS provides a high level of commercial certainty to a company in relation to that product’s sales.

As a continuation of consultation on this measure, I will ask my department to meet with stakeholders again to refresh them on the details of this bill and its associated regulations. The government has also asked the department to liaise with industry before finalising an implementation date, as I have already mentioned. I will announce that date as soon as practicable to allow industry time to prepare.

Given that this was a measure of the previous Liberal government in the first place, it is reasonable for us to ask why they continue to oppose it. Is this just another example of opposition for opposition’s sake, or is it just the opposition choosing to once again support big business over the interests of the Australian people?

I will leave the honourable member opposite to answer those questions. What is certain is that this is more evidence of economic irresponsibility from the opposition. In the midst of the worst global economic conditions since the 1930s, the coalition has already happily thrown away yet another $10 million.

If the legislation is not passed in the Senate, over $51.4 million in revenue over four years will be lost—or, more accurately, left in the deep pockets of the pharmaceutical industry.

Debate (on motion by Mr Dutton) adjourned.