Mr SYMON (Deakin) (31st May 2012 12:50): I speak in support of the National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2012. This bill supports the government’s price disclosure program, announced on 1 April this year, and it is the government’s price disclosure policy that is helping to keep the PBS sustainable by reducing the price of medicines. Price disclosure applies to products on the PBS that have more than one brand and it applies when there is a generic version available. It is designed to ensure that the government is able to capture the savings associated with the introduction of generic medicines as a result of patent expiry. Generic medicines have the same active agreement as the original patented version but are usually cheaper, as there is greater competition for the market.
These amendments, and the price disclosure program in general, are being introduced by the government to correct the inconsistencies between what the medicines are worth when they come off the production line and what they sell for in pharmacies. Before the introduction of price disclosure, program costs were much higher. When a medicine’s patent expired, the government was still reimbursing pharmacists at the same rate as before the patent expired, and this was occurring even though generic brands could be produced at less expense. The amendments in the bill remove the concept of an approved price to pharmacists as the level at which pricing agreements were made and replace it with an approved ex-manufacturer price—the price that is set at the beginning of the process. Currently there are many provisions and functions in the act that rely on approved price to pharmacists. They will work equally well or better using ex-manufacturer prices.
Under the 2010 reforms agreed with Medicines Australia, this government brought forward the achievement of these savings through the expansion of the reach of price disclosure and by shortening the time period in which the price reductions are achieved. The effect of these changes is that, as of 1 April this year, 75 medicines have become cheaper for the government and we are now on track to achieve $1.9 billion in savings through this policy. For those of us who are consumers rather than manufacturers or pharmacists, this has led to a drop in price from 1 April this year for all these medicines due to the price disclosure program.
This drop in price of many commonly used medicines is great news to people in my electorate and, of course, many other electorates around Australia too. I do talk about my electorate of Deakin because we have a higher percentage of people over the age of 65 than average and, as many members in this House know, as people age they tend to more often need prescription medicines whilst often having to get by on a lesser income due to the change from work to retirement on a pension or an income stream. As we all know, the PBS is a Commonwealth government scheme that provides Australians with access to subsidised medicines, and the PBS helps to make medicines affordable for all Australians by limiting the amount that people pay towards the cost of their medicines under the PBS.
That said, the PBS does not come cheaply; it comes in at a cost of an estimated $9.7 billion for the current financial year. Since the introduction of the price disclosure program, the cost of medications for treating many common medical conditions ranging from blood pressure and high cholesterol to depression and anxiety has been reduced. There has also been a cost reduction for a number of common antibiotics. Under the introduction of the price disclosure program, people who required medicines under the PBS paid a copayment amount that ranged from $5.80 for Health Care Card holders to $35.40 for those not eligible for a Health Care Card. The operation of the price disclosure program brings a direct benefit to the consumer, who now saves money whenever the price of an item falls below the copayment amount or where an item already under the copayment amount becomes cheaper. There are many examples of these benefits. I will mention a few of these, so that we can look at this from the view of the consumer—of the people who are on those medications.
I would like to start with a medicine that is in high demand in Australia: Simvastatin, a commonly used cholesterol-lowering drug. Again, many people of a certain age know all the problems that come with visiting the doctor and finding out that they have a problem such as a high cholesterol level and that they need to do something about it. Patients such as that who previously paid the general copayment amount of $35.40 for a month’s supply of Simvastatin 40-milligram tablets will now pay $22.68, a saving of over $12 every month. Patients will also save money on some medications already below the copayment. For example, the price paid by the patient for the 20-milligram rather than the 40-milligram version of the tablet of Simvastatin will be reduced from $31.87 to $17.72, saving the patient over $14 a month. Similarly, patients will save up to $9.22 for Pantoprazole, which is another common medication taken for reflux and ulcers. There will also be savings of up to $2.57 for Perindopril, which is for high blood pressure and heart disease, and up to $1.89 for Metformin, which is used to treat type 2 diabetes.
From the types of medications I have just identified that are commonly used, it has to be said that they are not luxuries; for many people, they are necessities. They actually cannot get by in their day-to-day life without them. They are—as I said—essential for conditions such as diabetes, epilepsy, heart disease and high cholesterol. But there are also the many less serious conditions that affect many of us from time to time. Again, people that require those medications may also benefit from these changes. By reducing the cost of essential medications, this government is helping Australians live their lives to the full, without having to worry about the expense of the drugs that help them to do so.
The current act requires the setting and maintaining of prices for PBS medicines be expressed at different levels for different purposes. This method has proven inefficient and complex, and up till now, the end price of these subsidised medicines have been calculated on an approved price to the pharmacist. The main amendments in this bill remove the approved price to pharmacists and replace it with an approved ex-manufacturer price as the core PBS price in the act. Through these measures, the government aims to increase the efficiency and transparency of the pricing of the PBS. These amendments will ensure that sustainability of the PBS, as well as deliver the best value for money to Australians in need of prescription medicines.
The government identified that in the case where patents on drugs had expired that too much was being paid, and consumers were paying too much for their medicines. With savings of $1.9 billion, as I have said, over five years, this bill will help Australian taxpayers to get the best value for their health dollar. And even better, these savings help enable the listing of new medicines, such as those to treat such serious conditions as rheumatoid arthritis, myeloid leukemia, pulmonary arterial hypertension and renal failure.
Every Australian should have access to affordable medicines, and these amendments will not only ensure the sustainability of the Pharmaceutical Benefits Scheme but will streamline the way in which the prices of the PBS medicines are set. I commend the bill to the House.