Posted 31/08/2021 by Rebecca Storen, Leah Ferris and Melanie Conn
The National Health Amendment (COVID-19) Bill 2021 (the Bill) was introduced in the House of Representatives on 26 August 2021. The Bill will allow the Minister for Health to enter into agreements and authorise payments for the provision of COVID-19 vaccines (including boosters), treatments for COVID-19 and related consumables. This Flagpost will discuss the Bill, followed by some of the key funding arrangements to date for securing COVID-19 vaccines for domestic use, and COVID-19 treatments.
The Bill
The purpose of the Bill is to amend the National Health Act 1953 (the Act) to include a specific power for the Minister to enter into arrangements and make payments in relation to procuring COVID-19 vaccines, COVID-19 treatments and related goods and services.
Section 137 of the Act provides that payments for the purposes of the Act (except for payments relating to the supply of pharmaceutical benefits, expenditure of a capital nature and expenditure in respect of administrative expenses) are to be made out of the Consolidated Revenue Fund, and creates a standing appropriation for that purpose.
Proposed section 132G will provide the Minister with a power to provide or arrange for the provision of COVID-19 vaccines (including boosters), treatment for COVID-19 and related consumables. This gives the Minister a spending power which relies on the standing appropriation in subsection 137(1) of the Act. The Explanatory Memorandum suggests the focus is on conferring a spending power related to procurement of vaccines and treatments, however the Bill does not specify that provision of vaccines or treatments is necessarily constrained to procurement.
Proposed subsection 132G(2) clarifies that the new power in section 132G would allow the Minister to make payments for vaccines, treatments or consumables under existing arrangements that were entered into prior to the commencement of this section. Proposed subsection 132G(3) provides that the Minister will only have this new spending power until 30 June 2022.
The effect of proposed section 132G is that the Government will no longer be required to use the Advance to the Finance Minister (AFM) process or routine federal budget process to identify and finance spending on COVID-19 vaccines and treatments. Under the proposed arrangements, the Minister will have the power under the Act to authorise such payments by way of standing appropriations.
COVID-19 vaccines
The Australian Government currently has five agreements to procure COVID-19 vaccines.
The funding for COVID-19 vaccines has been provided through an AFM provision and specific budget measures, with some of the key measures briefly discussed below (some of these measures provide for both procurement and vaccine rollout activities).
2020–21 Budget
The COVID-19 Response Package – Access to COVID-19 Vaccines and Consumables measure included $1.7 billion over two years from 2020–21 for over 84.8 million doses of two potential vaccine candidates: one being developed by Oxford University and another from the University of Queensland. The measure also provided $24.7 million to purchase needles, syringes and sharps disposal containers as well as ensuring supply and storage within the National Medical Stockpile (p. 1-11). Additional information on the COVID-19 public health measures from this Budget are available from the Parliamentary Library’s Budget Review series.
2020–21 Mid-Year Economic and Fiscal Outlook
The 2020–21 MYEFO provided an additional $1.5 billion to support the rollout of the COVID-19 Vaccine and Treatment Strategy (released in August 2020) and included funding for advance purchase agreements to acquire the Pfizer and Novavax vaccines and extend the existing agreement with the University of Oxford/AstraZeneca (following the results of early clinical trials, the agreement for the vaccine candidate from the University of Queensland did not proceed). In addition, $75 million was provided to support the COVID-19 Vaccination Program, which included funding for tracking and monitoring systems, a national communication campaign and program administration (p. 6).
Advance to the Finance Minister
In September 2020, Advance to the Finance Minister Determination (No. 3 of 2020-21) provided $808.8 million to the Department of Health for the purpose of ‘supply and production of COVID-19 vaccines’ (p. 36–7).
2021–22 Budget
The 2021–22 Budget included the COVID-19 Response Package – Vaccine Purchases and Rollout measure of $1.9 billion over five years from 2020–21. As noted in the budget papers, this measure builds on the MYEFO measure and partial funding had already been provided for by the Government. In addition, the cost of advance purchase agreements for the Pfizer vaccine and provisions to purchase additional vaccines is not reported due to being commercial-in-confidence (p. 108). For additional information on the COVID-19 health measures from this Budget, please see the Parliamentary Library’s Budget Review series.
COVID-19 treatments
Australian Government funding towards treatments for COVID-19 has been provided through various mechanisms, with key components outlined below.
Treatment provided by the public health system
Treatments for COVID-19 provided by public health units and public hospitals fall within the responsibilities of state and territory governments, as system managers.
The Commonwealth contributes to the costs incurred by state and territory health systems in treating COVID-19 through the National Partnership on COVID-19 Response, which was agreed in March 2020 by the then Council of Australian Governments (COAG). This agreement sets out a 50:50 shared funding arrangement between the Commonwealth and the state and territory governments (the States) to ‘ensure the capacity of our health system to effectively assess, diagnose and treat people with coronavirus…’ (COAG Communique, p. 1).
The agreement provides for hospital services payments and state public health payments to be made monthly based on estimated activity, and reconciled quarterly. Given the payments are demand driven, each Budget update provides information on the costs incurred to date and forward estimates. The Budget papers do not provide a breakdown of payments for particular purposes such as treatments.
The 2021-22 Budget shows that the estimated total payments under the agreement were nearly $2.6 billion in 2020–21, with $410.9 million estimated for 2021–22 (pp. 19–20). Note this does not take account of the more recent COVID-19 outbreaks.
National Medical Stockpile
Australia’s strategic reserve of supplies for national health emergencies, the National Medical Stockpile, includes (amongst other items) medicines and medical equipment.
While details about the contents of the Stockpile are not made public, from time to time the Government has indicated it has made purchases for the Stockpile related to the treatment of COVID-19. For example, earlier this month the Minister for Health stated that there were supplies of the novel monoclonal antibody treatment sotrovimab ready to be deployed through the Stockpile. In August 2020, the Government announced it had reached agreement for domestic manufacture of ventilators to be delivered to the Stockpile.
In its audit of COVID-19 procurements and deployments under the National Medical Stockpile, the Australian National Audit Office noted that between 3 March and 1 May 2020, $3.2 billion in funding was provided to the Department of Health to procure medical supplies for the National Medical Stockpile. The Department of Health drew against five Advances to the Finance Minister in 2019–20, funding from the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 and authority from the Prime Minister (pp. 15-16).
In September 2020, Advance to the Finance Minister Determination (No. 4 of 2020-21) provided $384.1 million to the Department of Health for the purpose of ‘purchase of PPE and other essential medical supplies and equipment for the National Medical Stockpile’ (p. 37).