Bills Digest no. 130 2007–08
National Health Amendment (Pharmaceutical Benefits Scheme) Bill
2008
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
National
Health Amendment (Pharmaceutical Benefits Scheme) Bill 2008
Date introduced: 29
May 2008
House: House
of Representatives
Portfolio: Health
and Ageing
Commencement:
Schedule 1, 3 and 4 - on Royal Assent
Schedule 2 - the
day after Royal Assent
Links:
The relevant
links to the Bill, Explanatory Memorandum and second reading speech
can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills
have been passed they can be found at ComLaw, which is at http://www.comlaw.gov.au/.
The National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2008
(the Bill) aims to:
- widen the criteria used to determine that brands of pharmaceutical
items may be co-marketed, and also to allow the Minister to determine
that co-marketed brands stop being co-marketed
- enable those otherwise eligible to access the Pharmaceutical Benefits
Scheme (the PBS), to do so while working outside Australia as officers
of the Commonwealth, or of a State or Territory (and also for their
accompanying spouses and dependent children)
- provide legally married and de facto couples living apart due to
illness or infirmity the same access to PBS safety net arrangements
as couples living together
- remove provisions for the gazettal of determinations made in relation
to pharmaceutical benefits that may be prescribed by participating dental
practitioners and authorised optometrists, and
- make minor technical amendments aimed at improving the operation of
the PBS.
These changes will be achieved through relevant amendments to Part VII
of the National Health Act 1953 (the Act).
The PBS is a Commonwealth Government program
that has operated for approximately 60 years.[1] It aims to provide Australian residents[2]
with affordable access to a range of medicines, whereby the Commonwealth
Government subsidises the costs of those medicines.[3] Consumers get the benefit of this subsidy when
getting prescriptions for medicine filled under the PBS at pharmacies.[4]
Australia has Reciprocal Health Care Agreements with certain other countries,
such as the United Kingdom, Ireland, New Zealand, Malta, Italy and Sweden.
People from those countries who visit Australia can also access the PBS.[5]
From 1 January 2008, a general patient pays up to $31.30 and a recipient
of a pension or benefit with a concession card pays $5.00 for most medicines
listed with the PBS.[6]
These payments are called ‘patient co-payments’, which are revised annually
in line with the Consumer Price Index.[7]
Commonwealth Government expenditure on the PBS for 2008-09 is expected
to be $8,908, with a projected increase to $9,247 in 2009-10.[8]
For comprehensive historical information on the PBS, see the Bills Digest
for the National Health Amendment (Pharmaceutical Benefits Scheme) Bill
2007.[9]
The Bill was introduced into the House of Representatives by the Hon.
Nicola Roxon MP, Minister for Health and Ageing, on 29 May 2008.
The previous Government announced a PBS reform package in November 2006.[10]
According to the Government at the time, the aim of the reforms was:
to protect patients from higher out of pocket costs,
get better value from market competition among brands of generic (off-patent)
medicines and recognise the importance of world-class life-enhancing
drugs to patients.
The fundamentals of the PBS will not change. Patients
will continue to meet only the standard co-payments and in some cases
will also pay less. The main changes will be in the way that the Government
prices medicines that are operating in a competitive market. These medicines
will take a series of price drops, and eventually will move to a system
where the price they are actually being sold in the market will reflect
the price that the Government pays.[11]
Ultimately, the previous Government had sought to ensure the economic
sustainability of the PBS, which had been a particular source of concern
for several Governments.[12]
In the Health and Ageing portfolio, as in other portfolios, costs of programs
and improving access to those programs are competing objectives.
The current Bill proposes further amendments, the aims of which are consistent
with the stated aims of that reform package (please refer to the ‘Purpose’
section of the Digest above).
The Bill has been reviewed by the Senate Standing Committee for the Scrutiny
of Bills (the Committee) but the Committee did not comment on it.[13]
At the time of writing, the position of significant interest groups is
not known.
There is no information in the Explanatory Memorandum nor in the Second
Reading Speech for the Bill on whether the Government has consulted with
significant interest groups regarding the proposed amendments in the Bill.
The Government states that amendments proposed in Schedules 1 and 4 have
no financial implications.[14]
However, the Government states that the expected financial implications
for Schedules 2 and 3 are approximately as follows:
- Schedule 2 (pharmaceutical benefits to government officers working
outside Australia) – annual cost of $0.3 million, and
- Schedule 3 (pharmaceutical benefits extending to couples who live
apart due to illness or infirmity) – annual cost of $1.1 million.[15]
Items 1-5 propose to amend section 84AE of the Act, in
an effort to expand the criteria used in determining whether brands of
pharmaceutical items are co-marketed.[16]
Generally, section 84AE of the Act allows two or more brands of a pharmaceutical
item to be treated as the same brand if:
- the regulations prescribe the brands as being co-marketed brands of
that item, or
- the Minister determines that the brands are co-marketed brands of
that item if the brands satisfy certain criteria pursuant to subsection
84AE(3).
Item 1 proposes to substitute paragraphs 84AE(2)(a) and
(b) of the Act, with respect to the meaning of ‘co-marketed brands’.
Under proposed subsection 84AE(3B) in item 5 of Schedule
1 of the Bill (see below), the Minister would have discretionary power
to determine that all brands that are prescribed by the regulations as
being co-marketed brands of a pharmaceutical item, cease being so if certain
factors are satisfied.
The effect of the proposed amendment in item 1 is that the Minister’s
discretionary power proposed in item 5 may in fact override the
regulations that prescribe brands as being co-marketed brands of a pharmaceutical
item.
According to the Government, this proposed amendment would allow for
greater flexibility in accommodating the necessary changes to be made
when new brands of medicines are listed on the PBS.[17]
Items 2-4 propose to amend subsection 84AE(3) by replacing
paragraph 84AE(3)(c); inserting new paragraphs 84AE(3)(d) and (e);
and repealing subsection 84AE(3)note in the Act.
Subsection 84AE(3) of the Act provides for ministerial determination
with respect to co-marketed brands of pharmaceutical items.
In particular, the proposed amendments in items 2-4 specify that
co-marketed brands could be co-marketed brands of more than one pharmaceutical
item with the same drug as long as all of the pharmaceutical items have
exactly the same co-marketed brands.
Item 5 proposes to insert new subsections 84AE(3A) and
(3B) into the Act.
Proposed subsection 84AE(3A) would give the Minister discretionary
power to vary or revoke a determination made pursuant to subsection 84AE(3)
that two or more brands of a pharmaceutical item are co-marketed brands
if certain criteria are satisfied. This power to revoke or vary such determinations
would be made by legislative instrument.[18] The criteria for revoking or varying such determinations reflect
recognition that situations change over time and in some cases, co-marketed
brands may no longer meet the criteria listed in proposed paragraphs
84AE(3)(c)-(e) of the Act (as discussed above).
Proposed subsection 84AE(3B) would give the Minister discretionary
power to determine that co-marketed brands prescribed as such by the regulations
cease to be co-marketed brands if certain criteria are satisfied. Again,
this proposed provision reflects recognition that situations change over
time and in some cases, co-marketed brands may no longer meet the criteria
listed in proposed paragraphs 84AE(3)(c)-(e) of the Act. Under
this proposed amendment, the Minister’s determination could override the
regulations (see also item 1 above).
Item 6 proposes that amendments proposed in Schedule 1 above
would apply prospectively, in relation to ministerial determinations made:
- on or after the date of Royal Assent, and
- in relation to brands that, before or after that date, are listed
or co-marketed brands of a pharmaceutical item.
It would be helpful to know what are the Government’s and the pharmaceutical
industry’s opinions regarding the impact (if any) of the proposed co-marketing
amendments on the pharmaceutical industry.
Items 1-15 propose to amend provisions in the Act relating to
pharmaceutical benefits entitlements and export restrictions on pharmaceutical
items.
As stated in the Explanatory Memorandum,[19] the proposed amendments in Schedule 2 of the
Bill would enable people already entitled to pharmaceutical benefits in
Australia, to access those benefits while working overseas as Commonwealth,
State or Territory officers (government officers) as defined. The proposed
amendments would also enable the accompanying spouses and dependant children
of those government officers to access pharmaceutical benefits.
Notably, ‘spouse’ is defined in section 84B of the Act as:
(a) a person who is legally married to, and is not
living, on a permanent basis, separately and apart from, that person;
and
(b) a de facto spouse of that person.
‘De facto spouse’ is defined in section 4 of the Act as:
a person who is living with another person of the
opposite sex on a bona fide domestic basis although not legally
married to that other person.
Therefore, by definition, the proposed amendments would not apply to
same sex couples.
However, it is noted that the Government’s 2007 National
Platform states that it:
supports legislative and administrative action by
all Australian governments to eliminate discrimination, including systemic
discrimination, on the grounds of race, colour, sex, religion, age,
sexuality, gender identity, disability, genetic makeup, political or
other opinion, national or social origin, property, birth or other status.[20]
…
Where necessary, Labor will take special measures
designed to achieve equality and eliminate the effects of both historic
and contemporary discrimination.[21]
In particular, the Government has stated that:
Labor believes that people are entitled to respect,
dignity and the opportunity to participate in society and receive the
protection of the law regardless of their sexuality or gender identity.
Labor supports the enactment of legislation prohibiting discrimination
on the grounds of a person's sexuality or gender identity and will audit
Commonwealth legislation to amend provisions that unfairly discriminate
against any person on the grounds of sexuality or gender identity.[22]
The definitions of ‘spouse’ and ‘de facto spouse’ in the Act and the
proposed amendments in Schedule 2 of the Bill appear to contradict the
Government’s pre-election statements.
Items 1 and 2 propose to amend section 84B and paragraph
87(2)(c) of the Act relating to safety net concession and pharmaceutical
benefits entitlement cards issued to people who are either legally married
or are in de facto relationships within the meaning of the Act (see above).
Under the Act, a family can combine certain PBS charges toward a joint
safety net threshold and once that threshold is reached, all members of
that family benefit from reduced PBS charges for the rest of that calendar
year.[23] However, couples
who live apart because of illness or infirmity are treated as if they
live separately on a permanent basis; they are not considered to be spouses
or de facto spouses under the Act and do not benefit from having a family
safety net threshold. Consequently, they have to pay more in terms of
PBS contributions before they reach their individual safety net thresholds.
The proposed amendments in Schedule 3 of the Bill would allow couples
who live apart because of illness or infirmity to continue to be considered
as family for the purposes of entitlement to safety net concession and
pharmaceutical benefits entitlement cards. In other words, such couples
would no longer be considered as living separately on a permanent basis.
Item 3 ‘applies the amended definition of spouse for annual safety
net entitlement periods commencing from 1 January of each year from 2009
onwards’.[24]
Please refer to the above comments regarding definitions of ‘spouse’
and ‘de facto spouse’ in the Act and exclusion of same sex couples.
Items 1-3 propose to amend the definitions of ‘combination item
has a drug’ and ‘pharmaceutical item has a drug’ in accordance with proposed
amendments in Schedule 1 of the Bill relating to co-marketed items.
In addition, items 4 and 5 propose to amend subsections
88(1A) and 88(1C) of the Act.
Subsection 88(1A) and 88(1C) in the Act refer to the Minister’s determinations
specifying the pharmaceutical benefits for which participating dental
practitioners and authorised optometrists may write prescriptions.
The proposed amendments would replace the requirement to publish the
Minister’s determination in the Government Gazette with the requirement
that the Minister’s determination be made by legislative instrument. The
Government submits that publication in the Government Gazette would
be unnecessary because the legislative instruments proposed by these amendments
must be registered in the Federal Register of Legislative Instruments
(FRLI).[25]
Item 6 proposes that items 4 and 5 of Schedule
4 above would apply prospectively, to determinations made on or after
the date of Royal Assent.
Concluding
comments
In general, the proposed amendments
in this Bill would result in greater access to and affordability of the
PBS for people otherwise entitled to use it. The proposed amendments are
intended to allow for greater flexibility and efficiency of the PBS.
However, two important issues remain
to be addressed:
- what effect, if any, would the proposed co-marketing provisions have
on the pharmaceutical industry, and
- the conflict between the Government’s pre-election commitment regarding
same sex couples and the amendments proposed in the Bill.
[1]. See Department of Health
and Ageing, ‘About the PBS’, http://www.health.gov.au/internet/main/publishing.nsf/Content/health-pbs-general-aboutus.htm-copy2,
accessed on 3 June 2008. The PBS operates under Part VII of the Act, as
well as the National Health (Pharmaceutical Benefits) Regulations 1960
made under the Act.
Sharon Scully
12 June 2008
Bills Digest Service
Parliamentary Library
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