Dissenting Report By Coalition Senators
National Health Amendment (Pharmaceutical
and Other Benefits
Cost Recovery) Bill 2008
Introduction
Coalition Senators make the
following comments in relation to the majority report to reinforce issues of
concern to the committee that we feel are not adequately reflected in the
majority report.
Failure to produce Regulations
Coalition senators concur with
the comments made in the majority report in paragraphs 1.14 to 1.17.
The committee was prevented from effectively
scrutinising the effects of this legislation without access to the draft
regulations that provide the operational mechanics of the measure.
Likewise witnesses appearing
before the committee expressed concerns regarding the operation of the
regulations. There had been no drafts of regulations provided during industry
consultations
When questioned during hearings
witnesses were not able to indicate an effective understanding of the operation
of the measure.
Royal Australasian College of
Physicians -
Senator COLBECK –...Have you seen any regulations
or a draft of regulations which are appended to the bill and are really what
makes it work?
Prof Carney – No.
Senator COLBECK – So effectively all you have got
at the moment is a bill that says, 'We are going to make regulations and this
is how it is going to operate.'
Prof Carney – Yes. I do not have a feel for
the detail. To me, if you can see what the potential problems are you can build
a system with checks and balance...[1]
Pharmacy Guild of Australia -
Senator COLBECK – Have you had any consultations
or seen any draft regulations that relate to this measure?
Mr Dowling – No, and that is one of our
primary concerns. We appreciate the exemptions that are mentioned in the paper,
but we would certainly like to see the criteria around those regulations so we
can be confident that our concerns will be addressed by them.[2]
Palliative Care Australia -
Senator BOYCE—I have one last question. I am not entirely
sure about this—perhaps you can tell me if you are. Are you confident about the
stage at which you would be aware of whether there would be cost recovery
regarding a specific submission? I realise that there are definitions of an
orphan drug now; I understand that that definition may yet change. Are you
confident that you would know in a timely way whether a submission would be
charged or not for assessment by the PBAC?
Mr Shaw—Not under the information that we have available
to us now. The problem that Professor Ravenscroft referred to is that there is
so much discretion left to the delegate, to the department, in this. It is not
going to be transparent and clear up-front, in a
sense.[3]
Likewise members of the committee
were restricted in the questions that they could ask due to a lack of knowledge
of the content and operation of the regulations. With respect to the Minister’s
statement regarding parliamentary scrutiny of the regulations (paragraph 1.18
of majority report). Coalition Senators note that the scrutiny of the
parliament is effectively restricted to acceptance or rejection of the
regulations. The parliament has limited power to alter regulations except in a
specific range of criteria.[4]
Coalition Senators note that a
request was taken on notice by the Department for the provision of draft regulations,
however as of the date of tabling there had been no response or indication that
information may be provided to the committee.
Access to Low-Volume
Products and Indications
Of particular concern to Coalition
Senators were medications used in paediatric, palliative and Indigenous care
where a high proportion of medications are used “off label”.
In its submission to the
committee the Department of Health and Ageing provided information relating to
the treatment of “orphan drugs” as classified by the TGA, however there was
considerable evidence provided to the committee in submissions and in evidence
during the inquiry regarding the effect of the measure on medicines used
"off label".
Witnesses from the Royal Australasian
College of Physicians and Palliative Care Australia, provided information to
the committee that medicines used in the treatment of three major groups were
often used "off label":
Royal Australasian College of
Physicians –
Prof Carney- ...I would think that the majority of
medications being used in children would not have good data on their use,
certainly at the time when the medication was approved. Most of that has really
been off label.
Prof. Carney - One of the troubles of new
medication is that there are often populations where it has not been trialled.
We presume that when a medication comes out it works in the indigenous
population the same as everyone else. The industry tries to have new products
tested in various countries, and you might get a few Indigenous people who might
be involved in one of those trials, but I do not think you could get meaningful
information. We just presume that it works for them the same as it does in a
Caucasian.[5]
Palliative Care Australia –
Prof. Ravenscroft—The drugs often do exist.
Here is the nub: the clinical studies that have been done on the drugs have not
been for palliative care purposes. What has to happen is that the data needs to
be generated for those drugs. The department of health has funded multicentre
trials, which are ongoing at the moment, to gather that data. So we are going
to get some more data. But what will actually happen is that those drugs, when
there is sufficient data, will go to the TGA and will cop a cost-recovery
fee—and I am not yet sure who is going to pay that because the data is being
collected by groups of palliative care physicians. Then when they go to PBAC
they will cop another cost-recovery system. What we are saying is that these
costs are going to kill these drugs.
Senator BOYCE—We have had a number of witnesses who are
quite confident that the legislation in its final form will allow sufficient
flexibility to accommodate orphan drugs, extensions of indicators into small volume
markets and so forth. What are your comments on that?
Prof. Ravenscroft—My personal comment is
that to leave this open for the bureaucracy to make these decisions may end up
producing a result that is less than satisfactory for the patients who need
these drugs. I think it would be much better if an exclusion was made in the
legislation for palliative care patients who need these drugs.
Senator COLBECK—We heard this morning that most of
the drugs used in paediatric care were used off label. What proportion of drugs
used in palliative care would be used in a similar way?
Prof. Ravenscroft—Very perceptive, Senator.
I do not have the actual figure, but the figure was quite large.
Senator COLBECK—Would it be fair to say, again,
most?
Prof. Ravenscroft—I would say probably half, but the
advent of the PBAC’s palliative care section in the PBS book has made a huge
difference because it has actually given us some drugs for longer periods than
are usually available for people who do not have palliative care indications.
So that has been a really positive thing, and it has given us the opportunity
also to advertise to doctors that that section is available. Over the last four
years there has been a great leap in the understanding of the PBAC about
palliative care drugs and their willingness to help with their better
recognition, and they have really been most cooperative in looking at drugs
with us to see if we could find data that was adequate for their purposes. I
think this legislation really counters that a fair bit.[6]
Coalition Senators appreciate the
work of PBAC in its efforts to support the listing of medications and
indications used in the spheres of paediatrics and palliative care through the
formation of Medicines Advisory Groups
The point of raising these
applications in this form is to emphasise that there is considerable work currently
underway, at the instigation of the PBAC, that may potentially trigger the
payment of fees.
Again the lack of regulations has
made it difficult for the committee to gain a real understanding of the
financial effect in this process
Consultation
Coalition Senators do not
consider it reasonable to assert that there was merely a seamless process of
consultation that has occurred for this measure from its initial announcement
by the previous government in 2005 to the decision of new government elected in
2007 to proceed.
Not only has there been a new
government elected with different policies, there have been a number of events
that occurred during the intervening period, including a major renegotiation of
prices paid for products supplied under the PBS that provides a projected
saving of $3 billion to government over 10 years.
Since November 2007 there has
been no policy indication from the new government as to their policy intentions
on cost recovery for listing on the PBS.
This is confirmed in evidence
given to the committee by Medicines Australia:
Senator COLBECK – I want to go back to the
original consultation process. We have heard during evidence today that there
was an initial proposal that was announced in 2005-06 with respect to a possible
measure of this nature, followed by a consultation paper, I think. Have you had
any consultations other than that consultation process with the department,
this side of the election?
Mr Chalmers – The answer is no. We were
aware of the initial proposal, which was much wider than just cost recovery in
our industry. That was in the 2005-06 budget. In 2007 there was a paper
presented to us inviting comments on alternative models for payment of the fee,
but there was no consultation about the appropriateness of cost recovery. Our
industry provided a response in terms of potential fee structures, but at no
point was there broader investigations, such as there is now, of the appropriateness
of this measure.
I also note that, having lodged that submission well over a year
ago, nothing further was heard from the government, although the current
minister for health did place on the record in the House of Representatives her
view that this measure would at the very least not be appropriate.[7]
In fact this comment is the only
indication that industry has had from the government as to its position on this
initiative which was made during debate on the National Health Amendment (Pharmaceutical
Benefits Scheme) Bill 2007 when the now minister said as shadow minister on
31 May 2007
The PBAC needs to be independent of government and of industry,
and we cannot see the justification for this move to the cost recovery model. I
have asked the government to reconsider this approach given the risk to the
independence of the PBAC, or even to consider if cost sharing, perhaps between
the government and industry, being the major stakeholders in the PBAC, would be
more appropriate. I note the AMA has recently backed this call to ensure that
independence is maintained.[8]
It is not unreasonable for
industry to expect that this would be the position of the new Government.
Cost Recovery
Coalition Senators note that
industry groups have raised significant concerns that the cost recovery
measures will cause delays, reduce incentives and may run contrary to the Australian
Government Cost Recovery Guidelines as outlined in the majority report at
paragraphs 1.73 – 1.76 and 1.78 – 1.80.
Item 15 of the Cost Recovery
Guidelines stipulate:
Agencies with
significant CR arrangements should ensure that they undertake appropriate
stakeholder consultation, including with relevant departments.
It is the view of Coalition Senators
that the Government has not met this element of the cost recovery guidelines.
Further to this point, Medicines Australia
noted in its supplementary submission that the cost recovery measures appeared
to run counter to the Australian Cost Recovery Guidelines as they:
- are NOT cost-effective – they do not increase “cost-awareness” in
the responsible agency as all moneys go into consolidated revenue; and
importantly they are not accompanied by any proposals and/or performance
targets to ensure improvement in the efficiency or timeliness of the PBS
listing process;
- are inconsistent with the intent of Government [National
Medicines] Policy, which is to facilitate timely access to the medicines
that Australians need, at a cost individuals and the community can afford – the
PBS is essentially a government procurement program;
- will unduly stifle competition and industry innovation principally
by the exacerbation of existing ‘free rider’ effects;
- disregard the public good characteristics of the PBS listing
process;
- disregard the significant spillover benefits to the broader
community of the PBS listing process, and
- fail to acknowledge other policy reasons for funding it, in
particular that the PBS is an integral part of Australia’s tax-payer funded,
universal health system.[9]
Medicines Australia has submitted
in its supplementary submissions that the Department of Health and Ageing frequently
cited the Productivity Commission guidelines rather than the Australian
Government Cost Recovery Guidelines and has suggested that an assessment of
the proposed arrangements in accordance with the Australian
Government Cost Recovery Guidelines should be undertaken.
The only public policy statement
of the Government prior to the budget announcement (which did not support the
implementation of cost recovery) also places the measure at odds with the
guidelines.
Concerns were also raised that
the proposed system of exemptions to cost recovery measures on submissions
would not adequately deal with the types of delays cost recovery would cause.
Medicines Australia submitted in its supplementary submission that exemptions
granted for listing for low-volume drugs or indication expansions would be
passed on to other non-exempt submissions, thus hiding the disincentive from
the public. It is noted in the majority report in paras 1.50-1.52 that the
exemptions would be contained in the regulations and the absence of the
regulations has meant adequate scrutiny of the proposal and the exemptions has
not been possible.
Conclusion
Coalition Senators do not believe
that the government has allowed sufficient consultation or scrutiny of this
measure to support passage of the legislation. Accordingly Coalition Senators recommend
that the Senate not support this bill at this time.
Senator Gary Humphries Senator
Judith Adams
Deputy Chair
Senator Sue Boyce Senator
the Hon Richard Colbeck
Senator Scott Ryan
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