NATIONAL HEALTH AMENDMENT (PHARMACEUTICAL AND OTHER BENEFITS—COST RECOVERY) BILL 2008

I rise in support of the National Health Amendment (Pharmaceutical and Other Benefits—Cost Recovery) Bill 2008. This bill amends the National Health Act 1953 and provides authority for the Commonwealth to recover costs for the listing of medicines, vaccines and other products or services on the Pharmaceutical Benefits Scheme and the designation of vaccines to the National Immunisation Program. The Pharmaceutical Benefits Scheme is very important to the people of Australia. Along with Medicare and public hospitals, it forms a cornerstone of our public health system. We should recall that the Pharmaceutical Benefits Scheme itself was one of the great social reforms of the Chifley government when it was established in 1948.

I rise in support of the National Health Amendment (Pharmaceutical and Other Benefits—Cost Recovery) Bill 2008. This bill amends the National Health Act 1953 and provides authority for the Commonwealth to recover costs for the listing of medicines, vaccines and other products or services on the Pharmaceutical Benefits Scheme and the designation of vaccines to the National Immunisation Program. The Pharmaceutical Benefits Scheme is very important to the people of Australia. Along with Medicare and public hospitals, it forms a cornerstone of our public health system. We should recall that the Pharmaceutical Benefits Scheme itself was one of the great social reforms of the Chifley government when it was established in 1948.

When we have visitors to this country from overseas and when Australians are overseas themselves we often hear comments from people from other countries about the importance of the Pharmaceutical Benefits Scheme and the benefits that it provides in every sense to the people of Australia. This scheme is the envy of many countries across the world in the way in which it is able to provide for the health of Australians. It is a scheme that seeks to do so at the lowest possible cost to government and to consumers. It is by subsidising the cost of medicines that we ensure that all Australians have access to the medicines they need. It is a scheme which recognises that the ability to live one’s life with access to essential medicines is, for very many people, crucial to the quality of the life that they are able to lead.

The Pharmaceutical Benefits Scheme is, in a real sense, a key part of our social safety net. It is a key part because it provides protection for Australians very often at the time of greatest need in their lives. For those with a long-term need for medication, those with chronic diseases, the existence of the scheme means that they are relieved of significant costs and permitted to enjoy a quality of life that they would otherwise not be able to. For those who suffer from acute illnesses, the Pharmaceutical Benefits Scheme ensures that, during times of serious illness, they are protected from extreme costs that might otherwise be visited on them.

This bill will provide power for the making of regulations—subject, of course, to parliamentary scrutiny—for the recovery of costs in the Pharmaceutical Benefits Scheme. It is broad in scope in the regulation-making power that it confers in allowing for regulations to cover: the administration processes surrounding the making of submissions; the prescribing of fees; the timing and manner of payment of fees; penalties and refusals to provide services for late and nonpayment; exemptions from fees and the waiver, remission and refund of fees; and the review of administrative decisions made in relation to cost recovery. Of course, it is very important that there be such a review process to challenge, or at least provide the opportunity to challenge, administrative decisions.

The benefits of the Pharmaceutical Benefits Scheme listing for pharmaceutical companies start with the fact that, subject to regulatory approval, companies would be free to market their goods without PBAC or NIP listing. For pharmaceutical companies, the decision to list is a commercial decision. They generally seek to list in recognition of the commercial benefits that will arise from listing in the scheme. Listing provides a high level of commercial certainty for pharmaceutical companies. It is worth bearing in mind the overall cost of this scheme. To give some indication: in 2006-07, the top 20 pharmaceutical companies shared a total of $4.46 billion from the Commonwealth via the PBS subsidy.

Cost recovery, which is the system that is here proposed, is a system that is in use in many areas of Commonwealth administration. We know from a situation that arises in my former professional area, the court system, that it is well recognised that it is appropriate, particularly for the commercial litigation area, to seek to recover the cost to the public system of providing the service that is utilised by commercial enterprises in having their litigation and disputes resolved through the public system. The Therapeutic Goods Administration has a cost recovery process and it has found, as have other areas of Commonwealth administration which use cost recovery processes, that there has not been any loss of independence bound up in using a cost recovery process.

What is proposed here for the Pharmaceutical Benefits Scheme will certainly not undermine the independence of the Pharmaceutical Benefits Advisory Committee, nor will it jeopardise the integrity of the listing process. PBAC will not be dependent on pharmaceutical industry funding, and what is proposed will not change the process of having medicines made available under the PBS or the NIP. The government will continue to provide direct funding for all Pharmaceutical Benefits Advisory Committee activities, PBAC will have no role in the setting or collecting of fees, and any revenue collected will be paid into consolidated revenue. It is important to note that the fees are not taxation and certainly will not affect Australians who rely on the Pharmaceutical Benefits Scheme.

There will be benefits to government and, through that, to the community, in that the PBAC process is a costly process. Taxpayers currently bear the costs of listing, despite there being very substantial commercial benefits for companies who are seeking listing. There will be substantial revenue raised through the use of this cost recovery system. It is anticipated that, in the first year of operation, this will be in the order of some $9 million, rising to about $14 million in the following year.

It is a simple system designed to ensure that those who are in a position to gain financial benefit from listing will cover the costs that are currently borne by the taxpayers. I commend the bill to the House.