Additional Comments by Senator Rachel Siewert
Senate Community Affairs Committee Inquiry
National Health Amendment (Pharmaceutical Benefits
Scheme) Bill 2010
The Government signed a Memorandum of Understanding (MoU) with
Medicines Australia in 2010 designed to ensure ‘a stable environment for
business are continued access to new medicines for all Australians’. Measures
announced in the 2010 Budget predicted to give the Government $1.9 billion of
savings over five years, with savings largely achieved through the imposition of
price cuts across F2 (off-patent meds) and the extension of price disclosure
arrangements to all products listed on F2. The MoU
with Medicines Australia also included a guarantee that the Government would
not seek to impose any further price savings on the pharmaceutical industry
before 30 June 2014 or introduce any measure which favours the dispensing of
generic medicines, thereby possibly precluding further measures which could
deliver additional savings to the Government.
The
Greens are aware that this is a complex piece of legislation. Australia pays
among the lowest prices for new medicines in the OECD, yet generic prices have
been high by international standards. The Greens have had concerns that the
savings from the original PBS reform measure (estimated to be $580 million over
four years) have been revised down to $103 million. We remain concerned that budget assumptions aren't available to the public. With this
in mind the Greens believe reporting of all costs from the PBS to the taxpayer
should be tabled before Parliament.
One of the difficulties that presented itself throughout the
inquiry was the credence of stakeholder claims to the proportion of the F2 (off
patent) market they represented. Medicines Australia claim they represent 60%
of the cost
to government of the F2 sector. GMiA say they represent 75% of the volume of
this sector. This is clearly an argument over market share and the Greens are
concerned about what this will mean for availability of medicines, impact on
price to the government and ultimately the effect this will have for consumers.
The
Bill addresses three matters contained in the MOU: statutory price reductions (by
international standards price reductions are low in this country), price
disclosure and under co-payment data. While savings
are welcomed the Greens have concerns about the sustainability of these reforms
- the UK introduced a series of price cuts in 2005 and an evaluation in
2007 suggested that the effects of the price cut
could be reduced overtime. It still isn't clear whether the savings are
temporary or long term.
Legislation is also silent about how the under co-payment data
will be used. There should be an annual report to Parliament on the price of
under co-payment products, including average price and min-max range. The PBS
reforms are supposed to deliver savings to consumers but this is (currently)
unable to be measured. More importantly, as under co-payment drugs don’t
qualify for the safety net – it may adversely affect consumers in some
instances.
The Greens are also concerned that there is no dispute resolution
or audit process as part of the price disclosure arrangements
The Greens believe the delay between notification of price
reduction and the date that it will take effect is unnecessary. For
example, the price reductions that will be calculated from the price disclosure
cycle commencing on 1 October 2010 will not take effect until 1 April 2012.
Given the inherent dynamic nature of markets, it is unlikely that the price
disclosed in October 2010 will be an accurate reflection of the market price in
April 2012, almost two years after the price was disclosed.
Arbitrary
price cuts may unfairly penalise drugs, which are already cost-effective or
have already been subject to discounting. (The impact
of further cuts to already low priced drugs was noted in submissions to the
Senate Inquiry into Consumer Access to Pharmaceutical Benefits.)
The Greens believe the Government should conduct a study on the
affordability of prescription medication and access to medicines. This should
also include use of generic medicines. This is the first time the government has access to
under co-payment data, something the Greens welcome in this legislation. At the
very least it should be reported in the same way the ‘Expenditure and
prescription to 30 June’ series that is published on an annual basis by
government. Concerns about medicine priced below the co-payment are twofold.
First, pricing is at the discretion of the pharmacist and there is no incentive
for the pharmacist to offer the savings to the consumer, apart from
altruism. The second is that the costs for under
co-payment scripts are borne entirely by the consumer and only the dollar
amount will be recorded against the safety net. This may disadvantage people
with chronic illness who do not qualify for a health care card.
The Greens believe an annual report should be tabled to Parliament
on price reductions, and implementation. Finally, the Greens believe the 23 per
cent price reduction should be explicitly linked with the minimum savings of
$1.9billion over four years.
Senator Rachel Siewert
Australian Greens
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