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Thursday, 14 May 1970

Dr FORBES (Barker) (Minister for Health) - The honourable member for Oxley (Mr Hayden) asked a number of questions which I will attempt to answer. First of all, he referred to the relationship between the determination of prices under section 22 of the Commonwealth Serum Laboratories Act and the functions of the Commonwealth Serum Laboratories Commission under section 19. Under section 22 the Minister for Health determines the prices for products supplied to the Commonwealth. Such prices are determined after consultation with the Commission and having regard to a reasonable cost to the Laboratories in regard to such products. I make the point that In my experience that is a pretty frequent occurrence in the life of the Minister. Not only does it relate to the determination of prices of new products such as rubella vaccine handled by the Laboratories, which is the purpose of this Act, but there is constant revision of prices for existing products which the Laboratories are providing to the Commonwealth to see that the prices paid for them by the Commonwealth are appropriate in today's circumstances.

But I stress that this is determined in consultation with the Laboratories, and anybody who knows our ex-colleague, Frank Davis, w ill know that he is not the sort of person who as Chairman of the Commonwealth Serum Laboratories Commission would do anything but drive a pretty hard bargain in the interests of his conception of what responsibility the organisation he heads should hold. But the point I want to make is that usually the Laboratories make no loss on this at all. They get a reasonable price to cover their cost for handling these products on behalf of the Commonwealth. In cases where reserve stocks are held by the Laboratories under the provisions of section 19 or research is carried out into non-prescribed products, the Commission is entitled to be reimbursed under section 38 for whichever is least: The loss in relation to reserve stocks, research in relation to non-prescribed products, or the overall loss of the Laboratories. I do not consider that this is an unreasonable approach. In relation to rubella vaccine, it is envisaged that sufficient stocks will be held only to meet requirements for immunisation campaigns and accordingly no determination in relation to the holdings of reserve stocks is envisaged in that case.

Section 21, which was also referred to by the honourable member, refers to the following of a commercial policy in relation to prescribed products under section 19 (a) of the Act. This policy does not extend to non-prescribed product research or reserve stocks held under section 19 (b) and, as indicated earlier, provision is made for a Commonwealth payment to the Commission in a loss situation. The honourable member referred to a number of other matters covering the capitalisation of the Commission and so on which he had taken from comments made by the Public Accounts Committee and comments made by both the Treasury and my Department to the Public Accounts Committee. All I can say in answering him in respect of (hose questions is that the sorts of considerations raised by the Public Accounts Committee have been under consideration by my Department for some time and are currently being considered by the Government. I am not in a position to say what, if any, changes the Government might make in respect of them until such time as that is completed. With respect to the latter part of the honourable gentleman's remark, with which he openly admitted that he did not expect me to agree, he said that it would be the function of the Labor Party when it came to office to use the Commonwealth Serum Laboratories to drive the private drug firms in Australia out of business. He is quite right; I do not agree with him. I would like to correct a misstatement that he made in respect of the policy applied by the Government to the Commonwealth Serum Laboratories and their commercial activities. No percentage limitation is imposed on the output of the Commonwealth Serum Laboratories in relation to those of other pharmaceutical companies.

Mr Hayden - It is in the House record that the Government restricts it to 2% of the market.

Dr FORBES - I am saying that no percentage limitation is imposed by the Government on the output of the Commonwealth Serum Laboratories in relation to those of other pharmaceutical companies. From recollection, that figure does represent about . the proportion of the market that the Commonwealth Serum Laboratories have. I am at a loss to understand the honourable gentleman's economics when he talks of a situation in which 24 drug firms in Australia have 50% of the market. He speaks of that as a cartel situation. It is a long time since I did any formal economic training, but that was certainly not the state of affairs which was described to me in those days as a cartel situation. I believe the drug industry in Australia to be highly competitive.

When the honourable member for Oxley spoke of the intention of the Labor Party when it comes into office to extend the activities of the Commonwealth Serum Laboratories in the commercial field with the objective of driving prices down, he did say that he would not do this if it could be proved that cheaper prices for drugs were not achieved. The only way in which I can envisage that that could be proved would be by undertaking the operation and seeing whether it is or is not. There is going to be an enormous waste of the taxpayers' money in attempting to prove what I believe any fairminded person - somebody not prejudiced in advance by these considerations - would know to be the ultimate result. The Commonwealth Serum Laboratories have an essential function in the public health field in Australia but expansion beyond the production of biological products is a matter which the Government is not prepared to consider at this stage. The Government does not believe that it would be in the interests of either the pharmaceutical benefits scheme or anything else in relation to the supply of drugs in Australia.

Mr HAYDEN(Oxley) - I claim to have been misrepresented on 2 scores. First of all, I did not say that the Labor Party would set about destroying the private drug companies. I merely said that we would compete against them and we believed that we would out-compete them. The other thing that the Minister said that was not correct - although he may be right - was that there is no restriction on the Commonwealth Serum Laboratories. On 10th December 1965 the Minister for National Development (Mr Swartz) - I do not know what portfolio he administered then - said, as has been said by other Ministers in this House-

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