WARNING:
This Digest is prepared for debate. It reflects the legislation as
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This Digest was available from 28 November 1996
CONTENTS
National Health (Budget Measures) Amendment Bill
1996
Date Introduced: 9 October 1996
House: House of Representatives
Portfolio: Health and Family Services
Commencement: 1 January 1997
To increase patient contributions under the Pharmaceutical
Benefits Scheme, restrict access to subsidised drugs to Australian
residents and a restricted range of members of overseas missions,
and to make minor changes to the indexation of various patient
contributions.
The Pharmaceutical Benefits Scheme (PBS) provides subsidises for
listed pharmaceuticals. The amount of the subsidy varies depending
on the cost of the pharmaceutical and the status of the person
receiving the pharmaceutical. The general rate of charge for
benefits is $15 (this amount is subject to indexation and is
currently $17.40), although if a person is eligible for
concessional benefits their contribution will be $2.50 (this amount
is also subject to indexation and is currently $2.70). The lower
charge applies where the person to whom the benefit is supplied
holds a concession card (see below) or is a concessional
beneficiary. The main categories of 'concessional beneficiary' are
pensioners, unemployed, holders of seniors health cards under the
Social Security Act 1991 or the Veterans' Entitlements
Act 1986 (the card is available to low income earners),
recipients of the youth training allowance and those in receipt of
a service pension.
The PBS contains safety nets for both general patients and those
in receipt of concessional benefits. For general patients, the
concession card is available where their expenditure in a year on
pharmaceuticals exceeds the threshold, which is currently $600 and,
as noted above, where the threshold is exceeded the patient will be
required to pay $2.70 per prescription (the reduced general
contribution). For those already in receipt of concessional
benefits, they will be eligible for an entitlement card when their
yearly expenditure on pharmaceuticals exceeds 52 times the
concessional payment (ie. currently $140.40). The entitlement card
will enable holders to receive further pharmaceuticals during the
year for free.
Expenditure under PBS is largely committed to concessionary
beneficiaries. For example, expenditure under PBS in 1995-96
amounted to $473 million under the general category and $1772
million for concessional beneficiaries. Estimates for 1996-97 are
that these amounts will be $477.6 million and $1943.2 million; for
1997-98: $508.8 million and $2097.1 million; and for 1998-99:
$576.6 million and $2317.5 million.
The PBS uses a number of techniques to reduce the cost of the
scheme. The Minimum Pricing Policy provides that where more than
one source of a drug is available, the price payable for the drug
will be the lowest available to the Commonwealth. Suppliers of
other brands of drugs will be able to set a higher price, but the
difference between the lowest price and that for the other brand
drug is payable by the customer. As at 30 June 1996, there were 162
items with a brand premium, with the average premium being $1.44.
Premiums range from $0.20 to $9.25. Since 1 December 1994,
pharmacists have been able to dispense generic brands of brands
rather than the one prescribed by a medical practitioner where the
drugs are equivalent. Since September 1994, the rate of generic
drugs dispensed has increased from 10.3% to 22.11% in April 1996.
Another method used to decrease the cost of PBS is the requirement
for patients to make a contribution where the Commonwealth and the
drug supplier cannot reach agreement about the price of a drug.
There are currently only four products subject to a patient
contribution.(1) In addition to the above policies, the
Commonwealth also relies on its market power to secure advantageous
prices from suppliers.
The Industry Commission (IC) has recently reported on the
pharmaceutical industry and the PBS. Major recommendations of the
IC and the governments responses related to:
- that the PBS listing procedures be reviewed as a matter of
urgency. The government rejected this recommendation on the basis
that the administrative aspects of PBS had recently been reviewed
and that an efficiency audit of PBS is scheduled for 1996-97;
and
- that the government undertake a review of PBS policy in order
to strike a better balance between the interests of taxpayers,
consumers and industry. The government's response was that such a
review was not necessary at this time due to the deliberations of
the Council of Australian Governments and the National Commission
of Audit.(2)
It was announced in the 1996-97 Budget that consumer charges
under PBS would be increased by 20%(3) with the general
contribution rate rising to $20, the concessional rate increasing
to $3.20 and the concessional safety net increasing to $166.40. The
general safety net threshold will not be increased above $600 by
this Bill, but this amount will be subject to indexation from 1
January 1997. The explanatory memorandum to the Bill estimates that
the total savings from the measures contained in the Bill will be
$74.2 million in 1996-97; $155 million in 1997-98; $176.1 million
in 1998-99; and $203.4 million in 1999-2000. (The explanatory
memorandum gives a breakdown of the savings in relation to the
measures contained in the Bill.)
Schedule 1 of the Bill will amend a number of provisions of the
National Health Act 1953 (the Principal Act) that contain
references to the general, reduced general and concessional
contribution rates. The amendments will increase the general
contribution to $20 and the reduced general and concessional
contributions to $3.20.
Schedule 2 of the Bill deals with the indexation of
contributions under the Principal Act. The main changes contained
in the Schedule are:
- the general patient charge will be indexed on 1 January rather
than 1 August each year. Other charges are currently subject to
indexation on 1 January; and
- the general, concessional and general patient reduced charges
will not be subject to indexation on 1 January 1997.
Schedule 3 will amend various sections of the Principal Act
which define those eligible to receive drugs under PBS. The
definitions will be amended to require such people to be eligible
people within the meaning of the Health Insurance Act 1973
(ie. Australian residents or an eligible overseas representative -
ie. the head and staff of overseas missions and their families who,
under an agreement between Australia and the other country, is to
be treated as an Australian resident).
- Pharmaceutical Benefits Pricing Authority, 1995-96 Annual
Report, pp. 6 - 9.
- Minister for Industry, Science and Tourism, Press Release, 10
September 1996.
- 1996-97 Budget Paper No. 1, p. 3-101.
Chris Field Ph. 06 277 2439
13 November 1996
Bills Digest Service
Parliamentary Research Service
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ISSN 1323-9032
© Commonwealth of Australia 1996
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Published by the Department of the Parliamentary Library,
1996.
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Last updated: 14 November 1996
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