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Wednesday, 18 June 2014
Page: 6401

Mr DUTTON (DicksonMinister for Health and Minister for Sport) (09:30): I move:

That this bill be now read a second time.

The National Health Amendment (Pharmaceutical Benefits) Bill 2014 implements the decision announced in the 2014-15 budget to increase patient co-payments and safety net thresholds for the Pharmaceutical Benefits Scheme (PBS) and the Repatriation Pharmaceutical Benefits Scheme (RPBS).

It is another example of this government's work to protect the best interests of Australians in making the decisions necessary to improve Australia's budget position into the future.

The PBS and RPBS are key components of our health services and are a major investment in the health of Australians. In the ten years to 2012-13, the cost of the PBS has increased by 80 per cent. At a current cost of around $9 billion per year, and with annual growth over the longer term expected to be between four and five per cent, these schemes will not be sustainable without responsible management.

Why the Changes A re Need ed—PBS Costs and New Listings

Australia's health system is demand driven. The pressure to provide access to more services, more medicines and more expensive technologies is always increasing.

There is a continual pipeline of complex and expensive new medicines delivering more targeted and more personalised treatments. Since coming to government, the coalition has listed or expanded the listings of some 181 medicines on the PBS. Medicines are being listed twice as fast as under the former Labor government.

The additional cost of advances in treatment, together with the ongoing cost of medicines for chronic conditions, means expenditure for our health system is growing faster than government and taxpayers can sustain.

If the PBS is to grow in a sustainable way, we need a whole-of-community approach and we all need to contribute—something successive governments have recognised since co-payments for the PBS were first introduced in 1960.

Earlier this year, this government approved new listings for medicines with an expected cost to the PBS of $436 million. These listings include treatments for breast cancer, melanoma and multiple sclerosis, some of which cost tens of thousands of dollars per patient.

At its March 2014 meeting, the Pharmaceutical Benefits Advisory Committee (PBAC) recommended a further $550 million in new listings. In July this year, the PBAC will consider applications for new PBS listings worth up to a further $3.6 billion. Funding for new listings is not factored into the forward estimates. It is new money that this government must find every four months to provide access to those medicines, something we have committed to do.

But we cannot do that and contain spending without more help, a greater contribution from all Australians who benefit from the PBS.

The changes proposed in the bill are expected to contribute savings to the government for the PBS and RPBS of around $1.3 billion over four years. They will provide a check on the rate of growth in PBS expenditure. Importantly, they do not cut funding for the PBS.

We still expect that the PBS will grow, but more sustainably, from $9.2 billion in 2013-4 to $10.2 billion annually in 2017-18.

Changes to Co-payments—General Patients

Under the changes commencing 1 January 2015, there will be a one-off increase in patient co-payment amounts for pharmaceutical benefits prescriptions. This increase will apply in addition to the usual annual consumer price index (CPI) adjustment which occurs on 1 January each year.

The co-payment for general patients, which is currently $36.90, will increase by $5 in addition to CPI. On average, general patients use two PBS subsidised prescriptions per year. So, for an average user, the additional cost from 2015 would be $10 per year.

Under Co- p aymen t General Patient Prescriptions

The increase in the general co-payment will not affect the cost to consumers for many commonly used medicines. Because the co-payment amount is the maximum that a person needs to pay under the PBS, when the price of a prescription is less than the co-payment, the consumer pays the lesser amount.

Medicines priced at less than the general co-payment already account for more than 40 per cent of PBS listings, and over 70 per cent of general patient PBS prescriptions. By the time the co-payment changes come into effect, more than 55 per cent of listings are expected to be below the general co-payment amount. These include listings for medicines used to treat high blood pressure, high cholesterol, type 2 diabetes, gastric ulceration, and skin conditions. As competition in the market continues to bring prices down, those reductions are reflected in the prices paid by consumers, as well as by the government.

Changes to co-payments— concessional

For individuals and families who access pharmaceutical benefits at the concessional level, including veterans and their dependants under the RPBS, the co-payment, which is currently $6, will increase by 80c in addition to the CPI.

People with concessional benefits use, on average, 17 prescriptions each year. So under these new arrangements, they will pay an extra $13.60 per year for their subsidised medicines.

The government is asking concessional patients to contribute an extra 80c for prescriptions which cost on average $43.50. It will also be only an extra 80c for medicines such as the cancer treatments, everolimus and dabrafenib that cost over $5,500 and $8,700 per prescription respectively.

Along with the co-payment changes, there will be parallel changes in PBS safety nets.

Safety net arrangements help to protect people who require a lot of medicines from high out-of-pocket costs. For all users of the PBS and RPBS, once the safety net threshold is reached, the co-payment amount is reduced for prescriptions required for the rest of the calendar year. For general patients, the co-payment reduces to the concessional amount, and for concessional patients, the co-payment is reduced to zero.

Changes to safety nets— general

Under the proposed changes, the general safety net, which is currently $1,421.20, will increase by 10 per cent of the safety net plus annual CPI indexation on 1 January each year from 2015 until 2018. From 1 January 2019, only annual CPI indexation will apply.

General patients who are high medicine users will pay around $145.30 more in 2015 before reaching the new safety net threshold—and thereafter will only pay the concessional co-payment to access subsidised medicines for the remainder of the calendar year.

Changes to safety nets— concessional

The concessional safety net, which is currently equivalent to co-payments for 60 prescriptions, or $360, will increase by two prescriptions on 1 January each year from 2015 to 2018. The resulting concessional safety net thresholds will be 62 prescriptions in 2015; 64 in 2016; 66 in 2017; and 68 in 2018.

Concessional patients who are high medicine users will pay around $61.80 more in 2015 before reaching the new safety net threshold—and thereafter will receive all their PBS and RPBS subsidised medicines for free for the remainder of the calendar year.

Operation of safety nets— and family example

Importantly, the same general or concessional safety net applies to individuals, couples and families. The safety net can be tallied separately for an individual or combined where the cost of medicines for couples or family members needs to be met from the same household budget.

For example, in 2015, a low-income family of two adults and two children, who hold a concession card and obtain 72 prescriptions per year between them, will pay $61.80 more than in 2014 before they reach the safety net threshold. But, once they reach the safety net, they will get the rest of their PBS prescriptions for that calendar year for free—that is 10 scripts for free—whether it be the $43.50 medicine, or the $5,500 medicine, or the $8,700 medicine, it will be provided to them at no cost.

Changes to concessional co ntributions for closing the gap

The changes in the bill will also apply for patient contributions charged at the concessional rate for the closing the gap PBS co-payment measure. Under the closing the gap arrangements, eligible Aboriginal and Torres Strait Islander consumers, who would otherwise pay the general co-payment for PBS prescriptions, pay at the concessional rate. Eligible concessional patients receive their PBS medicines for free.

Patient contributions as one elem ent of effective PBS management

The government has inherited an enormous debt from the former Labor government and is determined to ensure that health services are sustainable, are used efficiently, and are available for future generations.

The PBS model requires that medicines undergo evidence based assessment of clinical and cost effectiveness, be listed only on the recommendation of our expert advisory committee, and be subject to comparative and competitive pricing.

Good management of the scheme also relies on the innovative products supplied by a strong medicines industry, and the quality care provided by Australia's wide network of community pharmacies.

Since 1960, successive governments have continued to recognise that patient contributions are part of responsible management of the PBS. Indeed it was a Labor government that introduced a $2.50 patient contribution for pensioners in 1991 and a Labor government that increased the co-payment for general payments by 100 per cent from $5 to $10 in 1985.

It has been fair in the past, and it is fair now, to slightly increase the cost for consumers, given the increase in the cost of the PBS over the last 10 to 15 years and the number of very expensive drugs which will be listed in the future.

Conclusion—Savings for new listings and t he medical research future fund

Demand for the PBS will continue to grow, and we want to list medicines quickly. The expense of the latest treatments is a major cost driver for the PBS. Recent PBS listings include medicines with a cost per patient per year of up to $110,000 for the treatment of melanoma; around $38,000 for advanced breast cancer; $27,000 for prostate cancer; and up to $17,000 for macular degeneration. As more high-cost medicines are listed, and more patients require access to these treatments, the cost to taxpayers will increase.

By asking consumers to share in that cost, we can build a sustainable PBS that can continue to make otherwise prohibitively expensive treatments affordable for all Australians.

Importantly, this measure will also help to support future development of the types of innovative medicines people are seeking today. We will always be looking to prevent and treat illness and manage conditions that challenge us now.

And our medical researchers have led the way, from Howard Florey to Sir Gustav Nossal and from Fiona Stanley to Ian Frazer. Australians have, through research and innovation, saved millions of lives, not just here but around the world.

Savings will contribute to the $20 billion capital protected Medical Research Future Fund. When fully mature, it will add $1 billion to the resources available for medical research each and every year for generations to come. The fund will provide more opportunities for world-class Australian researchers to undertake basic and applied research and to test their results in clinical trials in this country. This investment is a huge step forward for Australia and will bring considerable health and economic benefits to our nation.

The changes in this bill will strengthen the PBS while preserving all the features that make it such a valued part of Australia's health system.

Debate adjourned.