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Wednesday, 17 November 2010
Page: 1445

Senator ADAMS (12:37 PM) —In the few moments that I have I would like to say that the coalition supports the intent of the memorandum of understanding. The coalition does not stand in the way of the savings in the proposal but believes savings can be achieved via far more equitable negotiation of the MOU. During the Senate inquiry there were many concerns about the government’s failure to adequately consult all parties with material interest in the sector, particularly the Generic Medicines Industry Association, the National Pharmaceutical Services Association and the Consumer Health Forum.

I will state how the National Pharmaceutical Services Association felt about the consultation process. Unfortunately, as Senate inquiries go on, consultation seems to be a very difficult issue for this government. We find that a number of policies are adopted and the cry is that nobody consulted the industry beforehand. The National Pharmaceutical Services Association made the following comments with respect to consultation: at no stage was the organisation privy to or consulted on the proposed PBS reforms agreed to in the MOU with Medicines Australia; NPSA was not able to negotiate transition arrangements to ensure that supply is maintained under the new arrangements; NPSA would have sought to discuss the need for transition funding if it had been given the opportunity; if consulted, NPSA would also have sought to make recommendations with respect to how to ensure that supply is maintained when the price changes are effected; it is unclear whether the savings in wholesale margin funding are included in either the guild or the Medicines Australia savings; and, if the savings from the wholesale margin have not been taken into account when calculating the $1.9 billion of savings under the Medicines Australia MOU, then any adjustment mechanism in favour of the wholesalers would not impact on the total savings.

The minority report by coalition senators listed some recommendations. The first recommendation was:

The MOU negotiated between the Commonwealth and Medicines Australia be set aside—

until we can come up with some other way of having the other organisations included in the consultation. The second recommendation was:

The Commonwealth undertake a fresh set of negotiations to develop a new MOU which will secure the identified $1.9 billion cost savings in a more equitable manner.

The third recommendation was:

All parties possessing a material interest in the outcome of the proposed reforms or whose material interests are affected by the reforms be involved in the negotiations, including the members of the GMIA, the Pharmacy Guild of Australia and the National Pharmaceutical Services Association.

The fourth recommendation was:

The National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2010 be amended in light of the contents of the new MOU and be represented to the Parliament in amended form for reconsideration and approval or alternatively, that the Government withdraw the National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2010 and a new Bill be introduced.

Those were the recommendations after hearing the evidence and reading the submissions.

Generic medicines drive competition and cost savings for consumers and the government. It is claimed that the government’s proposal may compromise access to affordable, high-quality medicines in the long term. Significant price cuts without volume drivers under this measure may detrimentally affect the viability of the sector which drives PBS savings for government. These issues could have been avoided through better consultation and actual negotiation with all stakeholders. Evidence suggests that additional savings can be achieved in consultation with all key stakeholders and should be fully explored by the government.

The coalition successfully implemented a 10-year reform plan for the PBS in 2007 which will deliver far greater savings than anticipated. The government’s own report, The impact of PBS reform, shows that the coalition’s reforms will deliver savings of up to $5.8 billion over the 10-year implementation period compared to the estimated $3 billion. Whilst the coalition are not in a position to support the bill given the outstanding issues, we do support the intent of the MOU and believe that more savings can be achieved through better consultation. The coalition stands ready to support the measures which achieve this end. The coalition calls on the government to delay consideration of the bill and renegotiate savings proposed under the MOU with all stakeholders.