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Thursday, 20 September 2007
Page: 39

Senator ELLISON (Minister for Human Services) (11:30 AM) —I present a revised explanatory memorandum relating to the bill and move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—


The Health Legislation Amendment Bill 2007 will amend the Private Health Insurance Act 2007 and the National Health Act 1953. 

The amendments to the Private Health Insurance Act 2007 are technical in nature and remedy some unintended consequences.  Currently, a broad offence provision may have the unintended effect of penalising insurers who are offering some types of insurance products.  For example, accident or disability insurance offered by a general insurer, or insurance cover such as overseas students’ health cover offered by private health insurers.  To ensure that no one is unfairly affected, the bill will narrow this offence provision so that it only covers complying health insurance products that are subject to the private health insurance rebate.  The narrowing of this offence provision will be retrospective to 1 April 2007 when the Act commenced.

The Act currently provides that all the operational rules of a private health insurer are subject to improper discrimination requirements.  However, it was only intended that these requirements apply to the core business of private health insurers—complying health insurance products.  The bill will provide that the improper discrimination requirements only apply to complying health insurance products.

Private health insurers can offer insurance cover to overseas visitors.  The Act currently allows private health insurers to offer this cover as part of their core health insurance business.  From 1 July 2008, overseas visitors’ health cover is to become a general insurance product, and as such will able to be offered by both private health and general insurers.  In the period from 1 April 2007 to 30 June 2008, these overseas visitors’ health products are subject to other requirements usually only intended to apply to the core business of private health insurers—the offering of complying health insurance products.  A transitional provision in this bill provides that private health insurers offering overseas visitors’ health cover will not be subject to the requirements of complying health insurance products.  This amendment is proposed so that overseas visitors’ health cover does not have to be offered as a complying health insurance product and there is no offence for not offering this insurance in such a form.

The Government’s original intention was to make the Australian Prudential Regulation Authority (APRA) and the Private Health Insurance Administration Council (the Council) the regulators for health related business, including overseas visitors’ cover, when operated through a health benefits fund from July 2008.  After consultation with APRA and the Council, the Government now has decided that, from July 2008, all health related business operated through a health benefits fund will be regulated solely by the Council.  All business operated by private health insurers outside the health benefits fund will be regulated as general insurance business by APRA.  This parallel approach will remove any confusion and unduly costly and onerous compliance burdens on the relatively few health insurers who now offer the service, while not stopping potential new providers from entering the market.

There are special provisions in the Act for overseas students’ health cover.  These provisions are to encourage private health insurers to enter into a deed with the Commonwealth to ensure that there are sufficient offerings of insurance to overseas students (and some other specified temporary visa holders).  Since the Act commenced on 1 April 2007, insurers offering overseas students’ and specified temporary visa holders’ health cover have been subject to the Australian Prudential Regulatory Authority and Financial Services Reform Act 2001 requirements.  To allow time for the proposed new regulatory approach whereby overseas students’ health cover, as health related business operated through a health benefits fund is regulated by the Council the bill provides a period of grace until 1 July 2008. 

The Act includes provisions which relate to the disclosure of interests by the Council.  These provisions in their current form are so restrictive that they prohibit participation in discussion and decision making by individual Council members who are insured by a particular health insurer when that insurer’s affairs are being considered by the Council.  The legislation will now allow that where a member does disclose a pecuniary interest the Minister or the other Council members may determine that the member can still take part in discussions and decisions.

The amendments to the National Health Act 1953 relate to the Pharmaceutical Benefits Scheme.  On 1 August 2007, legislation came into effect which implemented a very significant package of reforms to the Pharmaceutical Benefits Scheme.  These reforms put in place structural changes to the pricing of medicines that enable the Australian community to achieve better value from medicines that are already listed on the Pharmaceutical Benefits Scheme, while delivering long term savings to support future listings of cost-effective medicines.

This Bill will correct an unintended narrowing of subsection 103(2A) that occurred during the drafting process of the National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2007.  The consequence of this is that pharmacists are now unable to substitute between brands of different pharmaceutical items that are flagged as equivalent in the Pharmaceutical Benefit Scheme Schedule, a practice that was provided for prior to the amendments.  Narrowing this provision was not the intention of the Pharmaceutical Benefit Scheme reform legislation.  The Bill also makes a number of consequential amendments to the Act as a result of the correction of that provision.

In considering the Pharmaceutical Benefits Scheme amendments in this Bill, I want to clarify the process which underpins the ‘a’ flagging of a pharmaceutical benefit in the PBS to show that it can be substituted for another equivalent pharmaceutical benefit or benefits. The practice for determining equivalence is that a sponsor has submitted evidence to the Therapeutic Goods Administration that a medicine has demonstrated bioequivalence or therapeutic equivalence against another medicine.  The Therapeutic Goods Administration may also conclude bioequivalence between two medicines on the basis of the route of administration and the formulations of the products concerned.  Bioequivalent and therapeutically equivalent medicines can be expected to produce the same clinical effects and to have the same safety.  This is a technical assessment.  It is the Government’s intention that this practice will continue in effecting the provisions outlined in the Bill.

Debate (on motion by Senator Ellison) adjourned.

Ordered that the resumption of the debate be made an order of the day for a later hour.