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Tuesday, 27 February 2001
Page: 24543


Ms MACKLIN (8:57 PM) —The Appropriation Bill (No. 3) 2000-2001 allocates additional expenditure to the Department of Health and Aged Care, and in particular—and this is what I want to focus on tonight—additional money for one particular drug under the Pharmaceutical Benefits Scheme. It provides an additional $36.8 million just for this financial year for the arthritis drug Celebrex. This is unfortunately way short of what the final costs for this new medicine will be to the Australian taxpayer. Tonight, I want to go through the story of how Celebrex came to be listed on the Pharmaceutical Benefits Scheme and of the implications for our Pharmaceutical Benefits Scheme and for the budget.

The matter is of very serious concern. The original budget estimates for Celebrex were $217 million over four years. In the five months since Celebrex has been on the Pharmaceutical Benefits Scheme, it has cost Australians a staggering $92 million. On rough estimates, there is going to be a $600 million budget blow-out over the next four years—equivalent to the amount of money the Commonwealth government has short-changed our public hospitals. It is a budget blow-out that the Australian taxpayer should not be paying.

Let us look at how this budget blow-out came to be from the self-proclaimed great economic managers that we have on the other side. If the Minister for Health and Aged Care had only taken the advice of his independent Pharmaceutical Benefits Advisory Committee and listed the drug at a cost-effective price, with a price volume agreement, there would be much more significant controls over how much Celebrex is costing the federal budget. But, of course, that is not what occurred. Australians are, in fact, very fortunate to have one of the best subsidised medicine schemes in the world. Medicines are affordable in Australia because of our Pharmaceutical Benefits Scheme. Unlike people in the United States, Australians do not have to go without food or heating or other necessities of life in order to afford critical medicines. In fact, tonight on the 7.30 Report, we saw a very clear picture of what that means in the United States: 13 million elderly Americans have no health insurance cover for their prescription medicines. The 7.30 Report also showed a number of those Americans going across the border to Canada to get access to affordable medicine; otherwise they just were not going to be able to get the medicines they needed for their health.

As I say, the scheme that we have in Australia does deliver all of us a fantastic program that makes sure that we can afford our prescription medicines; but, unfortunately, it is under threat from this government. It is under threat from budget blow-outs, such as the one we are seeing tonight from the drug Celebrex, that will, if we continue to have decisions like this, threaten the ongoing viability of our Pharmaceutical Benefits Scheme; budget blow-outs will weaken the reputation of our cost-effective scheme. It is also under threat because this minister for health appointed an industry lobbyist to the Pharmaceutical Benefits Advisory Committee and then so many experienced members resigned in protest. It is under threat particularly because it is clear—as a result of the decision that I will outline now on Celebrex— that this minister for health, Dr Wooldridge, exposed himself to be bullied by the pharmaceutical companies into paying a higher price for this new drug Celebrex.

The government has set a very dangerous precedent by listing Celebrex on the PBS at a price higher than that considered cost effective by the previous Pharmaceutical Benefits Advisory Committee. We have very serious concerns about the way in which this minister for health, Dr Wooldridge, listed Celebrex on the Pharmaceutical Benefits Scheme. For the first time ever, the minister for health ignored the pricing conditions recommended by the Pharmaceutical Benefits Advisory Committee for a drug. The Pharmaceutical Benefits Advisory Committee recommended that Celebrex be listed at $1 a day, with a price volume agreement. Instead, the Howard government set the price for this drug at $1.17 a day and with no cap on the number of scripts issued at the higher price. The minister blames the Pharmaceutical Benefits Pricing Authority for this result; but I should say again that this is the first time the Pharmaceutical Benefits Pricing Authority also has not agreed with the PBAC's price recommendations. It is the first time a minister for health has approved a drug for listing on the PBS at a higher price and with less stringent conditions than those recommended by its expert committee, the PBAC. Under the National Health Act, the PBAC is required to take into account economic factors, including the cost effectiveness of a drug, before it can recommend listing on the PBS.

The Pharmaceutical Benefits Pricing Authority and the minister have now set a very new precedent. They have effectively downgraded the role of the PBAC by not taking the advice that it is legally required to give. They did not take the advice that was provided by the PBAC about the price at which Celebrex should be listed. And you have to ask the question: why did the minister ignore this advice? Why did he decide to list the drug at a higher price and without any price volume caps? The minister's answer to the parliament was that, if the government had not paid the higher price without a price volume agreement, ` the drug would never have been listed'. What he is effectively saying is that he has been bullied by the pharmaceutical companies Pfizer and Pharmacia into accepting a price for a drug that was not cost effective. He is the first minister for health to have buckled under this industry pressure. He buckled under pressure from what is now known as his favourite pharmaceutical company, Pfizer. The parliament knows all about this minister's close relationship with Pfizer. We have had quite a lot of questions and discussion about it right here. He, of course, has been seen to be talking up their drugs, and they then pay for advertisements for him in the Economist magazine. Around the place he is becoming known as the `minister for Pfizer'. The minister's actions, of course, fundamentally undermine the Australian pharmaceutical benefits approval process.

The PBAC found that, compared with current therapy, the advantages of Celebrex in terms of safety and efficacy were only valid at a lower price. Once again I say to the House that the minister ignored that advice and listed the drug anyway at a higher price—one that the industry demanded. As if this was not bad enough, the pharmaceutical company came along, argued for a higher price, and the minister caved in to it. The company is also responsible for providing data to the PBAC that estimates the volume that it expects to sell over the coming year and into the future. What happened in the case of Celebrex is that the companies concerned, Pfizer and Pharmacia, seemed to have drastically underestimated the amount of Celebrex that was going to be bought by Australians. We can certainly see that in this budget blow-out. Unfortunately, from what I hear, this is a common tactic amongst the pharmaceutical companies—underestimate the demand so that the cost of the drug will not frighten the horses. But, by the time it gets out of control, by the time it is out there in the market and people are having it prescribed, it takes some time for the Pharmaceutical Benefits Pricing Authority and the Drug Utilisation Subcommittee to review the whole pricing issue.

These committees usually only review once a year—it takes time for the process to run its course—so the companies get access to a higher price based on these soft figures before they are called to account. We should have known about this and we should have had the companies concerned present to the committee the United States data which demonstrated that, in the United States as well, there was a huge uptake of Celebrex. We should have had that information available to us. That data would have then been able to be used to prevent this massive blow-out to the Australian budget.

We also find recently that there has been some new information received on the efficacy and safety of Celebrex. There has been a review of clinical trials by the advisory council to the United States Food and Drug Administration that has concluded that Celebrex shows:

... no clinically meaningful safety advantage in upper (gastrointestinal) safety ...

and did not cause fewer stomach related side effects than cheaper products. This, once again, is contrary to Dr Wooldridge's public comments at the time he announced that Celebrex would be listed on the PBS. He described the decision as:

... the biggest single decision that has been taken in the 52 year history of the pharmaceutical benefits scheme ...

He went on to say that the drug represented a `major breakthrough' that relieved symptoms of arthritis without the gastric irritation caused by traditional drugs.

The conclusions of the FDA review, which were released in the United States on 7 February this year, show that Australian taxpayers are paying $33 per prescription for a drug that has now been shown to have efficacy and safety similar to current therapies which cost between $9 and $15—so, $33 compared to drugs of similar safety and efficacy that we could have got for somewhere between $9 and $15. The results certainly should teach this minister for health two important lessons: one, to stop appeasing the pharmaceutical industry by heaping praise on new products and, more importantly—and this really goes to the heart of the issue before us—to take the advice of the Pharmaceutical Benefits Advisory Committee.

We are now paying a very high price because this minister ignored the advice of the PBAC about the price at which Celebrex should be listed. It will cost as much in its first year as it was budgeted to cost over four years and, as a result, the government is facing a $600 million cost blow-out. There certainly are many arthritis sufferers who are using Celebrex, but these people do need to be confident that the government is listening to expert advisers, rather than making decisions that just line the pockets of drug companies.

Just tonight on the ABC news there was a report that the National Prescribing Service are so concerned about this drug that they have launched a new inquiry. They are concerned about this drug from two points of view: firstly, the increase in the number of adverse events—that is, the number of people that are having bad effects from Celebrex; and, secondly, they are very concerned about the aggressive marketing that has been undertaken for this drug that has led to this very significant blow-out in cost.

All this information has come out and was published in the Age newspaper following the government's appointment of an industry representative to the PBAC. Of course, if the PBAC is not able to carry out its responsibilities and the industry is able to dictate to the government which medicines are listed on the PBS and at what price, then the great concern that Australians have is that the budget for our Pharmaceutical Benefits Scheme will blow out further, providing this government with an excuse to restrict access to the PBS or increase prices to consumers. That really is the most serious concern that comes from this blow-out and from ignoring and downgrading the advice of the PBAC.

We have just been sent a copy of a confidential minute that was sent to the Minister for Health and Aged Care last December just when he was considering the changes to the membership of the PBAC. The minute outlines how, in fact, the minister should have managed the transition from the old committee to the new committee. It recommends, for example, that, because of, as they say in the minute:

... the litigious atmosphere which has recently emerged from sections of the pharmaceutical industry ... It is of concern that an inexperienced chair and an uncertain committee could be intimidated by this situation into recommending the listing of some drugs which would not normally be regarded as cost effective. The fiscal implications of even one such decision could be substantial.

That is, obviously, a very grave concern. It goes on to say:

... as many existing members should be reappointed as possible. If any fewer than eight members (including the chair) carry over into next year, it is our judgment that the new PBAC will find it very difficult to fulfill its function.

Well, they have not got anything like eight members from the last committee—only two of the old committee members stayed on, and they are the most inexperienced members: both have had less than 12 months experience on this very complex committee. In fact, we now have 10 new members on this committee making decisions about which of our medicines are going to be listed as subsidised medicines. Only two members from the old committee are still there, and those are the ones with the least experience of all. Many of the other members, of course, refused to serve on the committee, because the minister insisted on putting an industry lobbyist onto this very important decision making committee.

So we have this very experienced committee—and I just go back to the minute which came from the whole of the old Pharmaceutical Benefits Advisory Committee—sending a confidential minute to the Minister for Health and Aged Care warning him that, if any fewer than eight members were to continue on the committee, it would expose the PBAC and, more importantly, the government and our Pharmaceutical Benefits Scheme to very serious risk. The most serious risk is that some drugs which are not cost effective will be listed because of the pressure that the pharmaceutical companies could bring to bear on the new committee.

This minute also refers to the extremely important role that the staff play in advising the committee and it recommends the importance of maintaining the key officials in their posts. I see in the most recent edition of the Medical Observer that, alongside this huge shake-up in the PBAC, there has also been a major shake-up of the prescription medicine bureaucracy. So not only have we seen the resignation of most of the people from the PBAC; we have also seen a very big shake-up of the people who are responsible in the bureaucracy as well. That means that the whole Pharmaceutical Benefits Scheme is put in a very dangerous situation.

This scheme is a critical part of Australia's universal health care system, and certainly we on this side of politics, the Labor side, will continue to fight against the government's changes. We do not support an industry lobbyist being on the PBAC. As far as we are concerned, the independence of the PBAC is critical to making sure that Australia's world leading process for determining which medicines are subsidised remains independent of industry interference. It is absolutely vital that we do not go down the American path and see medicines become unaffordable. We want to make sure that this outstanding scheme, the Pharmaceutical Benefits Scheme, and the independence of the Pharmaceutical Benefits Advisory Committee are guaranteed. Certainly that will be the case under a future Labor government. We are very worried that the blow-out in the cost of this drug, Celebrex, means that under this government we will see medicines removed from the PBS to bring this scheme under control and, even more worryingly, that the price to consumers of medicines under the PBS will be increased by this government to pay for this appalling cost blow-out. We are going to have to wait some time before the independence of the PBAC is returned, but that will certainly be a Labor commitment at the next election.