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Consumer access to pharmaceutical benefits

CHAIR —I welcome representatives of the Department of Health and Ageing. You will all be fully aware of the issues around parliamentary privilege and the protection of witnesses and evidence. As departmental officers you will not be asked to give opinions on matters of policy although this does not preclude questions asking for explanations of policy or factual questions about when and how policies were adopted. We have your submission. I invite you to make an opening statement and then we will go to questions.

Mr Learmonth —Thank you, I will make a statement. You have our submission but I would like to get on the record a number of things in relation to this policy. From our perspective there are significant errors and misunderstandings in the majority of submissions provided to the committee and I would like to take the opportunity to clarify some of those.

I would first note, as I think we have heard, that therapeutic groups—their creation and the pricing policy that underpins them—are not new. They have been used as a pricing policy by various governments since 1997, when the then government created four therapeutic groups. Since that time various governments have used therapeutic groups as a pricing policy to constrain PBS expenditure. There are now 523 brands of medicines in therapeutic groups.

From our perspective there are five key misunderstandings in the submissions. I would like to go through each of them, if I may. They are: firstly, that therapeutic groups require doctors to substitute one medicine for another; secondly, that pharmacists can substitute between drugs within a therapeutic group; thirdly, that patients will have to switch from a drug in a therapeutic group they need because of cost; fourthly, that drugs in a therapeutic group must be identical; and finally, that there was no consultation in the forming of the recent therapeutic groups.

Firstly, the presumption that doctors must prescribe differently because a drug is contained in a therapeutic group is wrong. The placement of a drug in a therapeutic group does not limit the range of drugs that can be described by a clinician to treat their patient. All of the listed drugs in a group are still available for prescription under the PBS, usually at the same cost to the patients—and I will talk more about that in a moment.

Secondly, the idea that pharmacists can substitute between drugs within a therapeutic group is also wrong. Pharmacists cannot substitute one drug in a therapeutic group for another. That is the brand substitution that Professor Sansom referred to. That substitution and that choice can only be done by the prescribing clinician. The requirement recognises that therapeutic groups include similar drugs that are interchangeable in the vast majority of patients and that not all drugs are exactly the same for all patients.

Thirdly, there are incorrect claims that patients will have to switch from a drug in a therapeutic group they need because of cost. In short, therapeutic groups are not designed to, nor do they inadvertently have, any impact on patient access to PBS subsidised drugs. The recently formed groups would not have resulted in any change at all to the cost of drugs for patients. It may, in fact, result in patients paying less in the future because for the past majority of drugs placed in the groups it can result in reductions in the cost to government and patients as subsidies are based on the lowest priced medicine in the group.

Fourthly, some have argued that drugs in a group must be identical. Again, this is a very significant misunderstanding of the intent of therapeutic groups. The inclusion of a drug in a therapeutic group is based on the expert opinion of the PBAC that the drugs in each group are alike and work just as well as one another for the vast majority of people. I think Professor Sansom made this point extensively and I do not propose to add further to that.

Lastly, the suggestion that there was no consultation in forming the groups is simply wrong. We did outline the consultation process in the submission. All affected companies and other interested people had an opportunity to comment on the proposed formation of each of these groups before a decision was made, and the formation of the groups was based on advice from the independent expert, the PBAC.

Therapeutic groups are entirely a pricing measure. The policy is designed to not have an impact on prescribing decisions or patient costs. There is no requirement that a drug in a therapeutic group be prescribed ahead of another, and the placement of a drug in a therapeutic group does not limit the range of drugs that can be prescribed by a clinician to treat their patient. All of the listed drugs are still available under the PBS. A patient may, in a small number of cases, pay a patient co-payment or, rather, a further premium amount, for a drug. I will talk more about that in a moment.

As I said, these recently formed groups would not have resulted in any change. None of the drugs in the four recent therapeutic groups had price premiums applied at the time the groups were disallowed by the Senate. Formation of the groups had no impact whatsoever on the price to be paid by the patients; it only reduced the cost to the taxpayer for supplying those drugs. And this is the common theme for formation of therapeutic groups.

I mentioned brand premiums. There are 523 brands of medicines currently within therapeutic groups. Only six of those 523 have a therapeutic group price premium and they range from $2 to $4.35 a script. If there is a therapeutic group premium on a brand of medicine, a doctor can, in consultation with the patient, consider the appropriate treatment and, if it is determined that another brand of drug is equally suitable, that other drug can be prescribed, which means that there will be no additional cost to the patient.

If there is a drug the doctor wishes to use that does have a therapeutic group premium, there are mechanisms in place to waive this. This is to ensure that patients do not pay a premium if there are clinical reasons for access to a specified medicine. All up, the formation of these groups has had no impact whatsoever on cost of or access to medicines for patients. The only outcome has been that taxpayers pay less and the PBS is more sustainable.

Chair, that was going to be my opening statement but, in light of perhaps some uncertainty and questions on issues around when and how and exactly what decisions were made about this and about the consultation, I would like, if I may, to ask Mr Stuart to quickly outline, end to end, just exactly what happened in order to help the committee and guide the questions.

CHAIR —You might as well because you are going to get asked about that anyway.

Mr Learmonth —I think it is a good starting point just to lay it out end to end.

Mr Stuart —There were five phases in the process that I will outline. The first was recommendation. The PBAC, as Professor Sansom outlined, makes recommendations not decisions, and so a recommendation was received from the PBAC in relation to the various therapeutic groups over the course of March to June 2009.

CHAIR —Can I just interrupt to ask: that was in response to the minister’s request, was it not?

Mr Stuart —In response to the minister’s request, that is correct.

CHAIR —I just wanted to find that out straightaway and get it on the record.

Senator FIERRAVANTI-WELLS —Whilst we are getting that on the record, perhaps you might like to tell us when the minister made the request.

Mr Stuart —We will have to take that on notice; we do not have that. I am talking about our consultation time line.

The MYEFO document, which publicly notified of the intention to form this group, was published on 2 November. Also on 2 November the department wrote to companies involved and to peak industry bodies conveying the intention to form the new groups and seeking comment. I would have to say that at the time some of the companies said, ‘How dare you make a decision without telling us.’ We had some of them come and visit me and I pointed out to them that this was not a conveying of a decision, this was a conveying of an intention, and we were asking them for comment. In other words, consultation started on 2 November. We wrote to the companies and peak bodies very carefully conveying the government’s intention and seeking comment, so that is when the consultation phase started.

We then had letters from companies seeking reasons. On 3 December we wrote a number of letters to companies providing reasons for the PBAC advice. That went from the PBAC secretariat, as you can imagine. Subsequently, on 16 December and up to that point, there were a number of letters which raised clinical issues. The department’s delegate, as the decision maker in this case, thought it wise to seek further advice from the PBAC in relation to the clinical issues raised.

This was actually the first time in forming therapeutic groups that clinical issues had been raised at that stage. So we had a little think about what do we do and we decided of course it was appropriate, in view of the fact that clinical issues were raised, that we seek the PBAC’s further advice in relation to clinical issues. The PBAC then further invited companies to provide to it any other material that they wished to make available. On 8 January the PBAC provided further advice to the department’s delegate in relation to the forming of these therapeutic groups. And it was not until 19 January that the decision was actually made by the department’s delegate to form the therapeutic groups.

So: recommendation, March to June; conveying of intention and beginning of consultation, 2 November; decision on 19 January 2010 by the department’s delegate.

CHAIR —Thank you. Does that conclude your opening statements?

Mr Learmonth —Yes, thank you.

Senator FIERRAVANTI-WELLS —Can I just go back. Obviously, under the legislation the minister must have made the decision to propose to create a therapeutic group and then she went off to the PBAC to seek advice. You cannot tell me when that decision was made? Do you want to take that on notice?

Mr Stuart —Yes, we will have to take that on notice.

Senator FIERRAVANTI-WELLS —Mr Stuart, I would have thought that that would be the first question you would know I would ask.

Mr Stuart —No. I have a whole time line with me. It does not go back quite that far.

Senator FIERRAVANTI-WELLS —So it was a considerable period before March 2009, was it?

Mr Stuart —No. What I have is a time line that is the chronology of events in relation to the making of the therapeutic groups, and it begins with the period that the PBAC gave advice. So I do not have with me, and I will have to take it on notice, the dates on which the PBAC was asked for advice.

Senator FIERRAVANTI-WELLS —If I understand the process, according to section 84AG, about therapeutic groups, the process starts with the minister determining or proposing to make a determination. So the process actually starts in the minister’s camp. The minister is the one that initiates the process. Is that not correct?

Mr Stuart —I believe you are correctly quoting the provision.

Senator FIERRAVANTI-WELLS —Of course I am—I am reading it to you. My question is this. That is what the legislation says, so in your time line you have conveniently omitted the first point of this whole process, which is that if the minister proposes to make a determination under paragraph (1)(a) then she must obtain advice. So surely your time line must start from when the minister proposed to make the determination, which was at some point prior to March 2009.

Mr Stuart —I have agreed to take it on notice and provide you with that information.

Senator RYAN —I asked you to take something else on notice with respect to that, which was: did the minister’s direction to the PBAC arise from a recommendation from the department that preceded the minister’s actual direction to the PBAC? I think this is a legitimate question.

Senator MOORE —I know. I am just thinking of how far we will go back here.

Senator RYAN —I do not want to come back and have the time line dating from the minister’s letter, if it was a letter, and then find out how it got to the minister’s desk. I doubt the minister sat down, picked up the schedule as they still print it and said, ‘I’m going to come up with some therapeutic groups.’

Mr Learmonth —We will provide that information.

Senator RYAN —Thank you.

CHAIR —In other words, it is the back process we want an outline of.

Mr Learmonth —Yes. We will provide that. I think I understand what you are asking. We will try and cover that off.

Senator FIERRAVANTI-WELLS —You heard the evidence from the professor and the questioning of Senator Ryan. It is very clear from what the professor said that the formation of these therapeutic groups seems to be different if it is done in a budget context, as opposed to a non-budget context. That was very clear from the evidence that was given. Why is that the case?

Mr Stuart —As far as I am aware, these groups have always been made in the budget context and I believe that Professor Sansom also said that the process was consistent. As far as I am aware, the groups that were initially made in 1998 were made in a similar way.

Mr Learmonth —Professor Sansom can speak on his behalf but, if I may suggest what I think he was driving at, I think he was using ‘in the budget context’ as code for, ‘The initiation of these things was taken in the context of budget confidentiality,’ which applies not just to the budget per se but obviously also to MYEFO, when the last particular therapeutic groups were announced. I think it is more a reflection on the nature of the process that says that, when government is contemplating a fiscal measure of this nature, it is budget-in-confidence and thus it is not typically discussed outside the advisory arrangements to government until such time as the government, whether in the budget or MYEFO, makes its intent clear. Then there can be a process of consultation. Again, he can speak for himself and you can make judgment, Senator, but I guess I am trying to be helpful and explain what I think he was driving at there.

Senator FIERRAVANTI-WELLS —Did the previous groups that were formed include drugs that were still on patent?

Mr Stuart —The answer is yes, and we well try to find our place.

Senator FIERRAVANTI-WELLS —When you say you will ‘try to find your place’, what do you mean? You will try to find what they are; is that it?

Mr Stuart —Yes.

Senator FIERRAVANTI-WELLS —Were the therapeutic groups that were formed in 2007—and you have those set out in your submission—created as part of the PBS reform process? Is that the case?

Mr Learmonth —I am not sure that it is strictly true to say that they were created as part of the PBS reform process. I think there was some coincidence in timing, but the PBS reform process principally went to the creation of the two separate formularies—the statutory price reductions and price disclosure. I think that was the guts of it, whatever coincidence in timing there might have been.

Senator FIERRAVANTI-WELLS —Why don’t we just have a look at it. Tell me about the PBS reform process. Is it delivering the significant savings to the government and consumers that were envisaged?

Mr Learmonth —In short, yes. There was a report earlier this year tabled in the parliament on the operation of the PBS reforms which provided evidence that the reforms were having the intended effect in so far as they were resulting in savings and a more sustainable PBS. They were in fact resulting on balance in cheaper drugs to consumers. They were not detrimentally affecting patient access and they were, with us, achieving the broad objectives that were set out.

Senator FIERRAVANTI-WELLS —So what are the estimated savings anticipated over the 10 years? I know there have been different estimates, but what is your latest assessment of those reforms over the 10 years? We have heard the figure of $6 billion over 10 years.

Mr Learmonth —Mr Stuart will probably have something more specific but there have been a number of different figures floating around. Some of them are rather larger than others.

Mr Stuart —PricewaterhouseCoopers produced estimates which have been published as an attachment to the minister’s report to parliament. I cannot find the place in the report, but there was a lower and a higher threshold. From memory, it was between $4.5 billion and $6 billion, depending on what assumptions you make about price disclosure.

Senator FIERRAVANTI-WELLS —Suffice it to say that it has been a large process involving the stakeholders in the industry to achieve a very large saving. Everybody signed up to PBS reform. Of course there was a lot of consultation in relation to this with patient organisations, manufacturers, doctors et cetera. That was part of that process.

Mr Stuart —Just before we go on, I have now found my place on page 13 of the report. $3.6 billion to $5.8 billion was the estimate range from PricewaterhouseCoopers.

Senator FIERRAVANTI-WELLS —All right. I was just going to say that, in other words, the PBS reform process got the industry on board. When you look at the formation of therapeutic groups policy post PBS reform, there really has not been much consultation about it, has there?

Mr Learmonth —Therapeutic groups, as we tried to establish, are not new. The policy dates back to 1997. So you would not expect to have consultation around a very long-standing policy that has been applied by various governments since then. You would expect to have consultation focused around the application of that policy to particular circumstances.

Senator FIERRAVANTI-WELLS —What then has been the format of consultation in relation to the formation of therapeutic groups in the past? Have you had a consultation process?

Mr Learmonth —Do you mean the policy or the establishment of particular groups?

Senator FIERRAVANTI-WELLS —The establishment of them.

Senator MOORE —I think both.

Mr Learmonth —Mr Stuart and I were doing aged care reform in 1997. I am not sure we can tell you off the top of our heads about the genesis of therapeutic groups.

Senator MOORE —It is a really important point that these therapeutic groups have been in place for a long time and I am really keen to get information about how they were introduced and the process that happened around that time because they were a budget initiative. I think your submission actually talked about three different implementations of groups over the years. You did put it in your submission. We would like to know exactly what process was put in place by the government and the department to introduce those groups.

Mr Learmonth —Would it help if we provide on notice a history of how the policy first came about and when, and then something around the process of the formation of each of the groups subsequently, particularly focussing on consultation?

Senator MOORE —Yes, so we can see how it was done historically.

Mr Learmonth —We can step back and provide you with a comprehensive picture.

CHAIR —That would be really useful.

Senator FIERRAVANTI-WELLS —I would just like to move on to some of the comments that have been made about interchangeability. Based on the comments provided to this inquiry from healthcare professionals, there appears to be a number of risks associated with patients receiving different medicines, even generic versions of the same medicines. What assurance can the department give that there will be no risk to patients from these new therapeutic groups?

Mr Stuart —One of the key issues about therapeutic groups, as we have stated in our submission and our opening statement, is that they are a pricing measure. Therapeutic groups in no way change a doctor’s authority to prescribe what the doctor believes to be appropriate for the patient. This is separate to brand substitution policy. Brand substitution policy is where two medicines are an identical molecule and it is available to a pharmacist to substitute one product for another. Therapeutic groups are groups formed of medicines that are specifically not the same. In that circumstance there is no capacity for substitution and the doctor is responsible for prescribing the medicine that they feel is the most appropriate for the patient. So there is no risk to the patient from this policy.

Senator RYAN —I appreciate the difference and I appreciate your explanation. When you say they are a pricing measure, what that in reality means is that they are a means to reduce the price paid by the government for subsidies of medicines made available on PBS.

Mr Learmonth —What they do, like any other measure on the PBS, is try to introduce a principled and evidenced way of paying an appropriate amount to ensure the PBS is sustainable. The principle at stake is that taxpayers should basically pay the same amount for the same health outcome. That underpins an awful lot of what the PBAC does in terms of its job. The application of that principle rests on professional, independent and expert advice as to the circumstances.

Senator RYAN —As a taxpayer, I appreciate that approach. But they are introduced and they usually lead to price cuts for a number of products that are grouped together, don’t they?

Mr Learmonth —Yes, they do.

Senator RYAN —So the aim of this process is to actually reduce the price paid by the Commonwealth for, as you describe it, what the PBAC determines are a class of medicines that provide the same health outcome across the population.

Mr Learmonth —Absolutely.

Senator RYAN —I think that is important when we talk about pricing measures. I just wanted to clarify that.

CHAIR —While we are on price, how much would the particular therapeutic groups that we are talking about at the moment save?

Ms McNeill —The three that were disallowed recently would have saved $48.2 million over four years.

CHAIR —That has come up a couple of times today.

Senator FIERRAVANTI-WELLS —The groups that we are talking about, how much is the estimated saving altogether?

Ms McNeill —The three that were disallowed were $48.2 million over four years.

Senator RYAN —You may have to take this on notice as well. I appreciate the PBAC is independent and it makes its decisions based on the evidence before it, as we heard from Professor Sansom. But in any advice to or from the minister in respect to this, I would be interested in knowing whether or not there was a financial target. In the minister’s consideration of a direction to the PBAC to consider the establishment of several therapeutic groups, in advice provided by your department to the minister, was there any target or such similar financial savings objective? Did it form part of your advice to the minister? Because that would then obviously, I would assume, be taken into consideration by the minister in her direction to the PBAC.

Mr Learmonth —The PBAC has never been asked for a financial target.

Senator RYAN —I am not asking that.

Mr Learmonth —It was not asked for a financial target.

Senator RYAN —I am not asking about the PBAC in this case; I am asking about the minister.

Mr Learmonth —I am sorry; I misunderstood.

Senator RYAN —If your department provided any advice to the minister that helped to formulate this direction to the PBAC to consider the creation of therapeutic groups, did any advice that you provided to the minister have a financial savings target or objective—because there may have been 10 or 12 possible alternatives? I am, to be honest, considering if the minister had been given a savings target to achieve out of the department of health and you had been asked by the minister or someone else to say, ‘If you want to save this much money, here are four or five therapeutic groups you could establish.’

Mr Learmonth —You are asking us how we advise the minister, Senator.

Senator RYAN —Sorry?

Mr Learmonth —You are asking how we advise the minister.

Senator RYAN —Advice to the minister is not something that is generally not allowed to be asked and I will chase it up at estimates if I can. As far as I know, and I am new in this place, advice to the minister is not a general claim of immunity from questioning, cabinet documents are.

Mr Learmonth —As a general rule, our advice to the minister would cover most aspects of potential policies and their impacts, financial and otherwise.

Senator RYAN —It is not unreasonable then to conclude that part of the consideration of the minister in a direction to the PBAC may have been a savings target.

Mr Learmonth —Firstly the minister does not direct the PBAC. The minister asked the PBAC for advice. The minister does not ask the PBAC, ‘Find me away of saving X amount of dollars.’

Senator RYAN —I appreciate that. I do not want to convey that. I suppose what I am trying to get to here is the PBAC is serviced by a branch within the department, as I understand it.

Mr Learmonth —The secretariat is within Mr Stuart’s division, yes.

Senator RYAN —I do not want to allege anything here but if the minister had another target, absentia view or that had come out of somewhere that this committee is not allowed to investigate or as you described it ‘budget in confidence’ and there was a savings target that the minister wanted to reach for whatever reason and then the minister requested information from the department, which has access to quite a lot of information about this scheme, and then you provided advice to the minister that said the establishment of these groups—it could be four or five; I do not know how many; it could have been more or fewer—would lead to that particular savings target being achieved. That obviously, to me, is an issue for this inquiry with respect to the creation of therapeutic groups because they arose from a request by the minister for the PBAC to consider these issues.

Mr Learmonth —This is a fiscal measurement. I am not sure what you are trying to establish. This is a fiscal measurement announced by the government in MYEFO with the expectation that a certain amount of money would be saved.

Senator MOORE —Could we get the budget papers from 1998 from your department when they originally announced the budget measure for therapeutic groups.

Mr Learmonth The —I think it was 1997 that it took effect. We will give you whatever history we can come up with.

Senator MOORE —Can we get the budget papers about how it is presented, the proposed savings, over what period and what was the intent of the legislation. It would be very useful.

Mr Learmonth —Except for the fact that government accounting has changed, I think in that time it has been the same process. But yes, we will provide it.

Senator FIERRAVANTI-WELLS —In this particular instance it is interesting to see that the therapeutic groups under discussion really go to drugs which target two of the medical issues increasing the most at the moment. There is no doubt as to the increasing instances of mental health; we have heard the statistics and from Mr Crosbie and others this morning. Then with an ageing population you have got the other group that specifically addresses drugs that are pertinent to an ageing population. Who decided which groups are going to be targeted? Who made that decision? Is that a decision that initiates from Mr Stuart’s area? Somebody woke up one day and decided that we were going to create therapeutic groups that affected antidepressant drugs and drugs that could potentially affect our frail and aged? It is a legitimate question. I would just like to know whose idea was it.

Mr Learmonth —Let me take issue with what I am inferring from your question.

Senator FIERRAVANTI-WELLS —Let me rephrase my question in a more direct manner. Who was responsible for deciding which drugs or which group of drugs were going to be targeted in the PBS?

Mr Learmonth —There are a couple of things. Firstly, whatever the use of the drug and whatever its benefit to whatever segment of society for whatever purpose, this is a pricing mechanism that does not affect the important outcomes that those drugs achieve for those patient groups. They do not affect patient access. They do not affect a prescriber’s ability to prescribe them and clinicians to use them how they see fit, and they do not affect the cost to patients. There is a suggestion there that these are important drugs and therefore should not be the subject of savings mechanisms. These are savings mechanisms that do not affect—

Senator FIERRAVANTI-WELLS —No, can I just clarify the intention of my question—that they are drugs that are increasingly being used in the community and therefore are probably more susceptible to being more used in the community and therefore are a better target if you wanted to undertake savings measures.

Mr Learmonth —I think it is incumbent if you are looking to ensure the sustainability of the pharmaceutical benefits system to ensure that taxpayers are best able to afford the continuing and substantial growth in cost of the pharmaceutical benefits system as new ever more expensive drugs are added to it year on year. It is important to ensure that, where we can, we look to make savings and allow taxpayers to make what share of efficiencies and savings they can from what is already on the PBS to create that head room and make the PBS more sustainable. This is a good way of doing it insofar as it does not affect patient access, it does not affect a clinician’s ability to use which medicine they choose and think is appropriate and it does not affect the price to consumers; nonetheless, it improves sustainability.

Senator FIERRAVANTI-WELLS —They are your assertions but it is very clear that you are the only one saying that at the moment because most of the evidence we have heard all day contradicts what you say. Unless you were not listening this morning and into this afternoon, just about every witness has raised issues that go to patient concerns but you seem to be just dismissing that. You have come along here and said, ‘This is all incorrect.’ You have simply given us a bald statement that it is incorrect. Are you telling us that all the evidence we have heard this morning, particularly from doctors and other medical practitioners, has been totally wrong and you are the only one that is right? I just find your assertions and the evidence we have heard to be in direct contrast to each other—in fact, in direct contradiction.

Mr Learmonth —I think as both we and Professor Sansom were trying to point out, there are a number of misconceptions in areas of understanding in much of the evidence and the submissions that have been provided.

Senator FIERRAVANTI-WELLS —Mr Learmonth, thank you very much, and you are the—

CHAIR —Senator, can you allow Mr Learmonth to finish his comments.

Senator FIERRAVANTI-WELLS —Sorry. I withdraw that comment.

Mr Learmonth —We have attempted to explain, in some detail, why that is indeed the case in relation to access and conditions, rights to prescribe and cost to patients. If there is anything that remains a question we would be happy to go into it in any more depth you would like in order to substantiate our observations in relation to patient access, and condition and choice.

Senator FIERRAVANTI-WELLS —So you are saying that the practitioners we have heard from today are all wrong in their assessment and their concerns, particularly about pricing? We heard some evidence this morning that if a patient comes in to see a doctor and there has been a difference in price and their medication is now more expensive as a consequence of the creation of this therapeutic group, the doctor says: ‘This drug’s cheaper; the PBAC says that I can interchange,’ and swaps the medicine. You do not accept that evidence that has been given today?

Mr Learmonth —In relation to—

Senator FIERRAVANTI-WELLS —Are you saying that no drug that is now going to be put into a therapeutic group will be more expensive—is that the assurance that you are giving this committee?

Mr Learmonth —I can say several things. There are two aspects to that. One is about interchangeability; one is about price premiums, should they exist. In the case of the medicines which are the subject of the recent therapeutic groups, there were no price premiums requested, so it is not an issue.

Senator FIERRAVANTI-WELLS —You do not know that there will not be a price premium.

Mr Learmonth —I am sorry: there were none requested at their creation; it is a matter of fact.

Senator FIERRAVANTI-WELLS —But you do not know what is going to happen. You are making a decision now but you do not know that there will not be an increase in price, do you?

Mr Stuart —No increase in price was requested at the time the instruments were made. The department, at the time that the instruments were disallowed, had completed its price negotiations with the companies. No therapeutic group premium had been asked for. In that case, there would have been no therapeutic group premium applied to these products and not even any need to invoke the government’s special provisions that save any potential effect on patients.

Senator FIERRAVANTI-WELLS —Now we are dealing with drugs that have a patent attached to them. You put them into a therapeutic group. Am I correct in the assumption that the price then comes down for all the drugs in that therapeutic group but the drug that is still on patent may still stay at the price it was at before—unless we misunderstood what the doctors were telling us?

Mr Learmonth —Senator, this is about price to government. If I could just—

Senator FIERRAVANTI-WELLS —No, we are talking about price to the patient. That is what I—

CHAIR —Hang on. We are talking about two different concepts, as I understand it. Can we just clarify the mechanism for pricing. The price that the patient pays is determined on the usual—

Mr Learmonth —Let me try to outline it.

CHAIR —The mechanism for premium—

Mr Learmonth —Patients—

CHAIR —Let me just finish the question. Take Senator Fierravanti-Wells’ question as to whether the one on patent will be more expensive: do you still need to have applied for the premium in order for that to happen?

Mr Learmonth —Whether or not a medicine is on premium does not affect what price the patient pays. The only thing that might affect what a patient pays is whether or not there is a therapeutic group premium. There are on six out of 523 brands. They range from $2 to $4.25 or thereabouts. In this case none were asked for. If they were asked for, the doctor would be able, in consultation with the patient, to prescribe an alternative which would work just as well or, if the prescribing clinician believed that that particular medicine was important to the patient for a clinical reason, that additional therapeutic group premium to the patient could be waived. So the policy in relation to the pricing for the patient is extremely clear.

As to the question of interchangeability and conditions, confidence in that, you have heard from Professor Sansom. If I may, I will just very briefly quote the submission from the President of the Australian Medical Association, Dr Pesce:

… the critical question is whether the respective medications are pharmacologically equivalent and therefore interchangeable at the patient level. The AMA considers that the PBAC has the necessary expertise to consider the relevant evidence and make this determination.

The AMA is confident that the PBAC would have recommended the therapeutic groupings on the basis of the clinical evidence before it. If the companies that are affected by the Government’s measure have new evidence that demonstrates their medications are not interchangeable with similar medications listed on the PBS, the AMA is of the view that this should be submitted to the PBAC for further consideration.

I think that is an expression of confidence in the ability of the PBAC to make appropriate judgments about interchangeability.

Senator MOORE —I have a question that may clarify the issue of guarantees. I know we never offer guarantees in anything, but once the negotiations are concluded with the supplier when the drug is listed and put in the therapeutic group, is there any opportunity after that for the supplier to come in and say, ‘No, we want to change’?

Mr Learmonth —That is a broad question. In the case of what the government pays for medicines, always it happens in small ways through the Pharmaceutical Benefits Pricing Authority, which administers relatively small changes due to cost inputs to a medicine, and it is always open to a company to go back to the PBA, and they do regularly, to request a change in price of some other particular treatment and to present new evidence to support the case.

Senator MOORE —So it was negotiated when these were put up as a proposed group that this was going to be the costing, and it was all agreed and the PBS was going to be the cost, but at some time in the future a supplier of one of the drugs that is in this therapeutic group could come back and say—

Mr Learmonth —They could come back at any point and say, ‘We shouldn’t be in this group, and here is the evidence,’ or ‘Here is a segment for which we should be excluded.’

Senator MOORE —So we can say that, when the groups were put up, there had been costings agreed between the government and the suppliers—

Mr Learmonth —The prices, yes.

Senator MOORE —That was there, the prices had been agreed, but at some time in the future that could that change, with the supplier coming back and asking for a higher price?

Mr Learmonth —They could ask for a higher price. What they would be asking for is exemption from the group in some fashion.

Senator MOORE —Absolutely. But you cannot say, ‘It’s done and dusted and will never change’?

Mr Stuart —There are two mechanisms I should pick apart.

Senator MOORE —That would be good.

Mr Stuart —One, as David Learmonth is saying, is that they can come back to the PBAC at any time with new evidence that their product is superior and therefore come out of the group and obtain a higher price for the product on the basis of its superiority. They can also—and I think this is where your question was perhaps going—come back at any time and ask for a therapeutic group premium at a later stage.

Senator MOORE —They are the two mechanisms that could change the pricing that is known now?

Mr Stuart —That is right, and nothing has changed in relation to that.

Senator FIERRAVANTI-WELLS —Are either of those two decisions reviewable if refused?

Mr Learmonth —I am sorry—which decision? Do you mean the decision on whether or not to allow a therapeutic group premium?

Senator FIERRAVANTI-WELLS —On the two scenarios that Mr Stuart just outlined, is an adverse decision reviewable?

Mr Learmonth —An adverse decision in relation to what?

Mr Stuart —Are you talking about the ordinary process of judicial review?


Mr Stuart —Departmental decisions are reviewable. Recommendations of the PBAC are not reviewable because they are not decisions, they are recommendations.

Senator FIERRAVANTI-WELLS —No, I am asking about the two instances that you just gave. If a company comes back to you and says, ‘I want to opt out of the therapeutic group,’ and you say no, is that decision reviewable?

Mr Stuart —The PBAC would have to recommend that it was a superior product, justifying a higher price, and they would have to provide that recommendation to the minister. That recommendation is not reviewable. Should a public servant make a decision—either yes or no—under delegation, that decision is reviewable.

Senator FIERRAVANTI-WELLS —Thank you.

Senator RYAN —Several years ago, I believe Pfizer had their particular atorvastatin delinked from the other statins. Was that an example of what you were outlining in the first case—that is, the PBAC recommending that it be given its own listing? I remember reading about it, and I am trying to put it in the context of the two decisions you—

Mr Stuart —My understanding of what happened at that time is that the PBAC gave further advice that there was a superior outcome from atorvastatin and therefore it should not be part of a therapeutic group.

Senator RYAN —So that is why it—

Mr Stuart —That is my understanding.

Senator RYAN —You mentioned earlier that a sponsor can outline that their product is different at a certain part of the patient population. One of the submissions we have here with respect to the bisphosphonates talks about a bisphosphonate with a listing on the PBS. I am reading from page 48 of the booklet, which is page 7 of the submission from Sanofi-aventis. It has a listing that the other bisphosphonate does not, and that is for treatment of patients on long-term, high-dose corticosteroids. If that is in a therapeutic group with another product but that product has a listing that the other product does not, how is that taken into account in this process?

Mr Stuart —The only time that that might matter is if there is a therapeutic group premium applied to one product and not the other. In this case no such premium was applied for, so the issue did not arise.

Senator RYAN —If one were applied for, how would it play out then?

Mr Stuart —We are in hypothetical territory now.

Senator RYAN —So this is an example that has not happened before? I thought there might have been a patient population that was different or distinct—

Mr Stuart —It has happened before. There have been recommendations from the PBAC a number of times where there are somewhat differing indications for the particular drugs included in the group. I am unaware of whether that was ever impacted by a therapeutic group premium. Someone might have a look. Only in that case would there potentially be an issue, and then there are still policy levers available to the department to make sure there is no impact on the patient of that therapeutic group premium.

Senator RYAN —And that would be along the lines of a prescriber requesting the authority form Medicare Australia to waive the therapeutic group premium?

Mr Stuart —That is a key policy lever in that case.

Senator RYAN —What other possibilities are there?

Mr Stuart —Should we think that there was a significant patient impact, we could also accept that indication for the purposes of the therapeutic group.

Senator RYAN —Does that mean it gets calculated into all those weighted average costs in some different way? I am not quite sure what you mean by that statement. I appreciate that the calculations of price here are quite complex. I just want to know how a distinct patient population and a listing of one product but not another in a group is taken into account.

Ms McNeill —Let me clarify. The act provides that the minister can determine circumstances in which the Commonwealth is to pay the special patient contribution for the brand of the pharmaceutical item. We have four standard criteria that are in the PBS already. In the circumstances that you have outlined, if that situation had eventuated the government would have had the opportunity to consider the issue of patient access and whether further exemptions from the payment of the premium may have been appropriate in the circumstances.

Senator RYAN —So the only real option is if the company or sponsor puts on a therapeutic group premium. Then there would be an ability for the prescriber to get that waived because the patient fit the exact listing and, therefore, the other product in this bisphosphonate group was not appropriate for them. Is that the way?

Ms McNeill —Are you asking how you get a separate indication?

Senator RYAN —No. There are two listings here for the two bisphosphonates. One of the bisphosphonates has a listing which the other one does not, and it refers to patients on long-term, high-dose corticosteroid. This means that for that group of patients these presumably are not interchangeable products if one is listed for that purpose and the other one is not. I wonder how that is taken into account when the pricing is determined. It is two different varieties of apple, if you will, rather than two granny smith apples; it is not quiet an apple and an orange.

Mr Stuart —To clarify, while one of the drugs is listed for a particular indication for which the other one is not, they are still therapeutically equivalent. The fact that the other one is not listed is simply an outcome of the fact that the company has not applied to be listed for that indication, not that it is unsuitable for that indication.

Senator RYAN —No, but the PBAC, if I am correct, takes the approach: ‘You show me the evidence and then I pay you for it.’ So we could have a wonder drug out there but, in the absence of a submission being made to the PBAC—usually by a sponsor, but it can be made by someone else—and in the absence of the evidence being provided, it does not matter for the purposes of the PBS and for subsidy from the Commonwealth taxpayer. I thought the PBAC’s approach was: when the evidence is there, that is when a product is subsidised or the sponsor company is rewarded. There is not the assumption: ‘We don’t have the evidence but we’ll still give you credit for it’—the bang for your buck that Professor Sansom mentioned. In this case, however, you seem to be saying the opposite: just because it does not have the listing, that does not mean the product does not work in those patients. I agree with you, but it is not being paid for that, is it? The health outcome has not been justified through the PBAC process for that particular patient population.

Mr Stuart —I am not exactly sure about what you mean when you say, ‘It isn’t being paid for that.’ I am just pointing out that the drugs are interchangeable on an individual patient basis and that was the recommendation of the PBAC—

Senator RYAN —So this is something we should chase up with—

Mr Stuart —and the fact that one drug has a particular indication and the other one does not is simply an outcome of one having been applied for by one sponsor and the other not having been applied for by another sponsor.

Senator RYAN —To be correct, Mr Stuart, it is not an indication that one has been applied for. I do not know whether the other company applied for it and did not get it. It is actually an indication of a decision by the PBAC that the evidence exists for that listing, surely. It is not evidence of an application; it is evidence of a PBAC decision. To me that is a logical distinction.

Mr Stuart —We are probably moving increasingly further away from the core subject, but I did want to clarify that the drugs are actually therapeutically equivalent, whether or not the indication has been approved by the PBAC.

Senator RYAN —Mr Stuart, as long as the chair lets me, I will pursue this question.

CHAIR —We have until four o’clock.

Senator RYAN —It is not an indication of an application. It is an indication of a PBAC decision, is it not? There are plenty of applications the PBAC either does not take on face value or rejects. This listing—I just want to clarify this—is a PBAC decision, not an application for listing.

Mr Stuart —I am at risk of getting into Lloyd Sansom’s area of expertise rather than my own.

CHAIR —Could it not be both, Senator? There is a particular drug that I have been following up for constituents and I have been told the sponsor simply has not applied for it.

Senator RYAN —I understand that. That is my point. The yellow book, as it used to be called, is a compendium of decisions by the PBAC. It is not a compendium of applications by sponsors. I would suggest that would be a substantially bigger book because the PBAC makes decisions based on applications—yes, no or maybe. I am happy to move on to the question that Professor Sansom asked me to refer to the department. He indicated the coming publication of the agenda of PBAC meetings was the result of an agreement between either himself and Medicines Australia or the department and Medicines Australia—I cannot quite recall. This was on the agenda for PBAC meetings. Will future consideration of therapeutic groups be on the publicly available agenda for PBAC meetings? He asked me to refer that to you, hence the question.

Mr Stuart —I believe that will depend on the circumstances in which the minister is asking for advice. I believe that the minister is entitled to ask the PBAC for advice on a confidential basis. The establishment of the PBAC certainly allows for that. While there are very significant conventions which have grown up about the public availability of information about the work of the PBAC, the minister is still certainly entitled to ask the PBAC for advice on a confidential basis.

Senator RYAN —So, if the PBAC were, of its own accord—not due to a request from the minister—undertaking some work on therapeutic groups, that would appear on the agenda?

Mr Stuart —We probably have to take that one on notice. It depends a lot on the circumstances.

Senator RYAN —If you are going to take it on notice, I would appreciate some guidance—because I will probably come back to this during the budget estimates—about what the criteria would be for it appearing or not appearing on the agenda. I appreciate the point that the minister is entitled to request confidential advice. However, some guidance would give clarity, were this situation to arise again in, say, two years time. It may save a lot of time. If something had been considered but it had not appeared on the agenda, we could just say, ‘One of these three criteria meant we didn’t know about it beforehand.’

Mr Stuart —I am happy to take that on notice. The head of the PBAC secretariat has left with Professor Sansom; otherwise I might have been able to answer that now.

Senator RYAN —Would it be a cost to the budget to either lift or remove the cabinet threshold for consideration of medicines recommended by the PBAC?

Mr Stuart —I think the primary thing it would do is remove from cabinet scrutiny an additional area of expenditure.

Senator RYAN —You do not think it would cost the—

Mr Learmonth —Senator, you are talking about internal governance arrangements and how the government chooses to make decisions.

Senator RYAN —No, this is a factual question: does the department have a view or is it doing any work on whether or not there would be a cost to lifting or removing the cabinet threshold for consideration of PBAC recommendations?

CHAIR —What has been put to us is, as you must know, raising it from 10 to 20 million and what impact that would have.

Senator RYAN —I am genuinely asking. If someone says there is a cost to the taxpayer out of doing that, then fine, and that is a reason we could take into consideration.

Mr Learmonth —I cannot say we have thought about that particular question. Certainly the process of all the representations on changing the way government makes decisions about funding medicines is a regular topic of discussion with Medicines Australia. The government has chosen to make decisions in the way it does and regards it as good governance internally. The question of cost I cannot say we have ever considered. I would like to think about that, if I may.

Senator RYAN —Sure, and if you have anything on that I would appreciate it, or if the department has undertaken work on the perceived cost of lifting this from 10 to 20 million or to any other number, or to removing it because it specifically relates to the terms of reference of this inquiry.

Senator FIERRAVANTI-WELLS —Evidence was given earlier about a medication given to Medicines Australia by the then opposition—now the government—in relation to reviewing the 10 to 20 per cent threshold. As part of the brief to the incoming government, was that one of the issues that would have been covered?

Mr Learmonth —I could not possibly recall that.

Senator FIERRAVANTI-WELLS —Could you take that on notice and, if there are any documents in relation to that, advise us. I have asked the same question of Medicines Australia. They were going to produce any correspondence or anything they may have from the department or otherwise. I similarly ask you if you could you take that on it.

CHAIR —We need to go to Senator Moore.

Senator FIERRAVANTI-WELLS —If I could ask the department to take one question on notice: you heard earlier the evidence about the definition of ‘interchangeable at an individual patient level’. You may have followed some of the earlier questioning about the lack of legislative definition of that phrase. It is very clear from the legislation that there is no definition of what is interchangeable at an individual patient level.

Mr Stuart —We do not believe that to be the case. We believe that the criterion to be applied in this case is that the experts in the PBAC judge and advise that the drugs are interchangeable on an individual patient basis, that that is the criterion, that it is relatively simple and straightforward and the PBAC has every confidence that there is really no need to make it more complicated.

Mr Learmonth —We will provide a full answer for you on notice, Senator.

Senator FIERRAVANTI-WELLS —It is a rather circuitous legislative power which goes from one provision to another but, I would have thought, given what the professor told us earlier, that it is his interpretation of it. I could not find any legislative definition. He has obviously interpreted what he thinks it is. Is that the definition?

Mr Learmonth —We will provide an answer on notice. One thing I would say is that there is a balance to be struck sometimes in how you regulate and define these things because this is an evolving landscape—the science, the clinical evidence. An awful lot of things evolve and there needs to be some capacity for judgment and expert clinical advice to be applied to circumstances which may arise differently from in the past. There has to be some flexibility in the system. We will do our best to answer your question on notice.

Senator FIERRAVANTI-WELLS —Senator Moore asked you to take a question on notice earlier about the issue in 1997. In particular, could you also outline the provisions that were made by the then government to an education campaign to minimise confusion and risks to patients, which I understand was also done at the time of that introduction. Could you provide us with details, if you have those available.

Mr Learmonth —Do you mean therapeutic groups and not brand substitution?

Senator FIERRAVANTI-WELLS —No, I am talking about therapeutic groups.

CHAIR —When they first came in.

Senator FIERRAVANTI-WELLS —In 1997-98.

Mr Learmonth —I understand that. It just sounded like brand substitution is all.

Senator FIERRAVANTI-WELLS —Also, the first groups that were proposed in 1997 included two groups that were never formed. I think when you go into the history you will find that this Senate, in particular on 4 June, examined and went through some of those processes, particularly involving antidepressant drugs, which revolved around some patient concerns. There was some crucial information on patient risk that was put forward during consultation on the antidepressant therapeutic group in the late 1990s—in particular, evidence that was given by Dr Whiteford. My question to you is: given Dr Whiteford is still in the department and given the evidence that he previously gave, was he at any point a consultant in relation to the therapeutic groups that are now being formed which clearly involve antidepressant drugs as well? Could you take that on notice. His evidence on the last occasion was most helpful in that we did not proceed with those therapeutic groups, so I would be interested to know if he was consulted on this occasion to be equally as helpful to the department in its considerations.

Mr Learmonth —I will certainly do that. Whether he was or was not, I am sure the PBAC availed itself of the appropriate expertise—independent expertise as opposed to departmental employees.

Senator MOORE —I have not got many questions. You are taking on notice for Senator Fierravanti-Wells about the definition and process, but a number of the submissions have baldly stated that they have attempted to get a definition out of the department and have been unable to get a response on that. In your question on notice, can you put some effort into that. It is a very definite claim that has been made by a number of people—that they have not been able to get satisfaction from the department on that.

The other thing that worries me is the amount of evidence we have had today where people were talking about this situation and did not understand the process of the relationship between doctor and patient about the ability to prescribe and seek support. A number of people have indicated that they feared that there would be all kinds of price impacts for patients when under the proposal there was none. That concerns me.

I am picking up Senator Fierravanti-Wells’s comment about education. What is the process for advising practitioners, particularly general practitioners, about how these systems work? Is that coming through the PBAC? Is it coming through the department? Is it coming through Medicare? Where do people go to understand the process to know what drugs are listed, what costing process is used and how a therapeutic group operates, particularly, as I said, while already operating in the system?

Mr Learmonth —The full answer will come, but mostly pricing the PBS is invisible, and that is fine because it does not impact on anything a doctor is prescribing or what patients pay. In the context of this, the therapeutic group premiums would be the circumstance.

Senator MOORE —But a number of doctors did not seem to understand. All the information on the proposed therapeutic group was out March last year. It was all there about how it was going to work. They did not know. Their evidence actually showed that they thought there was going to be an impact on patients at quite a serious level. Some quite serious statements were given in evidence today about the proposed impact on patients in this process. I am just wondering about how the information is shared with general practitioners about how a therapeutic group operates.

Mr Stuart —There are three parts to that reply. Firstly, there are some subtle bendings of accuracy in some of the submissions from people who understand this policy very well.

Senator MOORE —I am certainly going to quote you, Mr Stuart, with your ‘subtle bendings of accuracy’.

Mr Stuart —Also, I think you need to allow for the possibility that there has been some spreading of subtle bending which has not been received in a subtle way by some of those that might have given evidence and that there are those in this space who have some incentive to provide information which may not be entirely accurate.

Senator MOORE —Could there also be a genuine misunderstanding?

Mr Learmonth —We will provide some advice to you on how that works, Senator.

Senator MOORE —That would be useful.

Mr Learmonth —Again, this is not new. I think GPs, by and large, understand it well. They have been dealing with it for more than a decade. As I say, there are 523 brands of medicine already. They know how it works.

Mr Stuart —We can just speak to how the information is provided.

Senator MOORE —How is it put out?

Ms McNeill —If we take, for example, one of the groups that does have a drug with a therapeutic group premium in it—the angios for cardiovascular—every month when the PBS is published there is specific outlining of the authority required that can be applied for by the physician to get the exemption from the therapeutic group premium for the patient. We also have material on our website,, for both clinicians and patients about what therapeutic group premiums are and explaining that there are exemption criteria that can be applied for where it is clinically appropriate to do so.

Senator MOORE —And also the issue of confusion with doctors—and I refer you to the evidence about the dosage and how it would operate and all those kinds of things. My understanding is that with every medication there are clear instructions both in paper form and in email—and, Dr Primrose, this could well be your area—that are very clear about what the dosage amounts are, how they operate, how they interact and all those kinds of things. That is all there for people to understand.

Mr Stuart —The core problem here is that the impression has been created that the doctors need to substitute something for something else. They do not. Under this policy they go on happily prescribing as they have always done, using the same products in the same formulations and at the same strengths as they have always done and referring the patients to the patient information within the boxes of preparations as they always do.

Senator MOORE —And, Dr Primrose, that is all there—part of the process?

Dr Primrose —Yes, there is clear advice regarding dosage in the approved product information for each drug. There is also the summary information in the Australian Medicines Handbook and also in the Australian therapeutic guidelines. So there is no shortage of high-quality advice to guide doctors in dosing. Generally, according to the principles of quality use of medicines, we advise the doctors to start at the lower end of the dose range, have a clear target for therapy in mind and then gradually increase the dose until that target is met provided there is not toxicity encountered in doing that.

Senator MOORE —We had particular evidence that there was one drug which had other aspects—it added vitamin D and things like that. So the difference of each compound is clearly put in the process?

Dr Primrose —Yes, that is right, and the doctor would need to make a decision on whether a maintenance dose of vitamin D and calcium is appropriate or, in fact, whether the patient is vitamin D and/or calcium deficient, in which case they would need to have replenishment of the stores of that vitamin or mineral. So it is not a case of one size fits all.

Senator MOORE —And none of that is impacted by a therapeutic group?

Dr Primrose —No, that is a matter of good clinical judgment and good prescribing.

Senator MOORE —Thank you.

CHAIR —I have one or two questions you may want to take on notice. I will also put on notice that some issues have been raised today and in submissions that probably are not necessarily specifically relevant to the terms of reference but are relevant to other issues in terms of people being able to access pharmaceuticals. So I will just let you know that I will be asking those in estimates, in view of the time.

The specific issue I wanted to talk to you about now is to go back to the time line; perhaps you could explain the time line. As I understood it, between March and June there was the consultation process with the PBAC and then you did not release the intention to form the new TGs until 2 November. What was the time delay? It was from June to November. Why was there significant time delay? Was that a departmental process? Was it a process where the department and the minister consider it?

Mr Learmonth —Whether or not to decide on such an intent and the timing of its announcement is a matter for government decision.

CHAIR —So it was a government decision that they took that time to consider it?

Mr Learmonth —It is a fiscal measure, so typically it would have to come at either the budget or MYEFO. November was MYEFO, wasn’t it?

CHAIR —Yes, you issued it in November.

Mr Learmonth —But that was MYEFO.

CHAIR —Which was the intent, where you started—

Mr Learmonth —That is where the intent and the consequence, the fiscal impact of that, were reflected—in MYEFO. It would have to be. Because it was a fiscal measure it would be either budget or MYEFO.

CHAIR —When you are seeking comment from the MYEFO process, how does that get to consumers, for example? Are they included in that process, or is it just the pharmaceutical companies?

Mr Stuart —I am not sure I completely understand—

CHAIR —How does the broader community know? Is that a process where you seek input from consumers as well?

Mr Stuart —No, the MYEFO is a government budgetary announcement—in effect, in this case, a statement of intention. Consultation was with affected companies.

CHAIR —That is my question. So it is only with affected companies and not with consumers?

Mr Stuart —Peak industry bodies in this case were also consulted.

CHAIR —So it was peak industry bodies and the companies involved but no consumers?

Mr Stuart —That’s right.

CHAIR —And the consumers first knew—besides the process through PABC, and we know the confidential process around that—on 19 January. Is that right?

Mr Stuart —No, on 2 November the MYEFO was published. It is a publicly available document.

CHAIR —But there is no formal consultation as part of that with consumers?

Mr Stuart —No.

CHAIR —They could write to you and say, ‘We do not like it,’ or, ‘We love it,’ or whatever, but they are not part of a formal process?

Mr Stuart —There is a consumer representative with the PBAC, and so they would have been part of that process, but in this case the overwhelming impact here is for the taxpayer and the company and so we consulted further with the companies and the company representatives.

CHAIR —I understand what you are saying about the overwhelming impact; however, a lot of consumers were here today saying, ‘It potentially has an overwhelming impact on us too.’ So that is my point—were they part of the process? I know that there is a consumer on PBAC; we have been through that. We have also been through the fact that that person is bound by a high degree of confidentiality.

Mr Learmonth —I think what we have been trying to make clear, though, is that the only impact of this is on the price we pay to companies.

CHAIR —I understand what you are trying to say. The point is that there are a whole lot of people out there who get a different message and have obviously got a different message.

Mr Learmonth —But not necessarily an accurate message.

CHAIR —The point is that in any consultation process that is when you enable people to get an accurate message.

Mr Learmonth —Sure.

CHAIR —Okay, I have taken us over three minutes. Thank you very much. You have taken on board plenty of homework. If we could get that as soon as you are able, that would be appreciated.

Mr Learmonth —We certainly will.

CHAIR —Thank you.

Committee adjourned at 4.03 pm