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Wednesday, 17 November 2010
Page: 1542

Senator FEENEY (Parliamentary Secretary for Defence) (6:41 PM) —I note that I am continuing remarks on the National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2010 that were commenced by Senator Sherry earlier today. The government’s reforms will ensure that Australian taxpayers should benefit from this discounting and the lower prices that result from it. The reforms will result in no extra costs for patients. In fact, patients will benefit from price reductions where the price of a medicine falls below the general co-payment amount. The direct saving to consumers from these new measures is independently estimated to be, on average, close to $3 per prescription for general patients.

The opposition’s threat to block or significantly delay $1.9 billion in PBS savings is another example of the Liberals’ irresponsible budget management. Right now, taxpayers are paying inflated prices for many medicines. These reforms will stop this waste and help support the funding of new and innovative life-saving medicines. But the Liberals’ threat to block this landmark measure has put in jeopardy the ongoing sustainability of the PBS. The opposition are effectively keeping taxpayers’ costs for medicines artificially high, threatening the listing of new and innovative life-saving drugs being added to the PBS. This is just another example of how Tony Abbott’s Liberals are economically irresponsible and do not have any serious credentials in reforming our Australian health system.

During the debate some senators raised the issue of consultation with industry on these reforms. The government negotiated collaboratively and closely with the pharmaceutical industry to develop these reforms. Both Medicines Australia, which represents about 50 companies, and the Generic Medicines Industry Association, the GMiA, which represents some five companies, were involved in discussions with the government and were asked to provide proposals to enhance the sustainability of the PBS. Discussions with Medicines Australia proved to be very fruitful, and the matters agreed between Medicines Australia and the government were ultimately given expression in a memorandum of understanding. On multiple occasions the GMiA was able to discuss options for reform to the PBS with the government, including with the minister in her office and with senior officials of the Department of Health and Ageing. GMiA had a good hearing, and the government has valued the exchange of views. However, GMiA’s key proposal to the government in these discussions was that patients should be made to pay some $5 more for off-patent medicines made by originator companies compared to the cost for the same drugs made by generics companies. This proposal would have resulted in concessional patients paying nearly twice as much as they currently do for some off-patent medicines. The government could not support this proposal.

I note that the position of the generics industry on these reforms is in fact very similar to the position they took on the original 2007 PBS reforms, which were introduced under the former, Howard government. At that time, the then Minister for Health and Ageing, Tony Abbott, had this to say on the matter, on 16 November 2006:

… the Generics Medicine Industry Association is not, as I understand it, especially happy with these changes. It believes that these changes will make it harder for them to maintain market share by removing the scope for them to offer discounts to pharmacists.

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… I point out that 70 per cent of the Australian generics market is occupied by companies which are not members of the Generic Medicines Industry Association, they are in fact members of Medicines Australia. They are the manufacturers and marketers of innovative patented drugs as well as of off-patented drugs.

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… by removing the gross discounts from the system, we should ensure that domestic generic manufacturers are less at risk from predatory newcomers such as some of the Indian generic drug manufacturers.

Those were the words of Tony Abbott in 2006, but the opposition are now indicating that they will block the sensible extension of the 2007 PBS reforms which, in government, they introduced. I think it demonstrates the gross economic irresponsibility of the opposition that they are prepared to wreck $1.9 billion of savings for taxpayers, despite having supported precisely these types of changes when they were in government.

In summary, the government’s bill provides value for money for taxpayers while also providing stability and certainty for the pharmaceutical industry.

Debate (on motion by Senator Feeney) adjourned.