Bills Digest No.
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Social Policy Section
Purpose of the Bill
Policy position of non-government
Position of major interest groups
Statement of Compatibility with Human
Key issues and provisions
Date introduced: 11
House: House of
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
When Bills have been passed and have received Royal Assent,
they become Acts, which can be found at the Federal Register of Legislation
All hyperlinks in this Bills Digest are correct as
at October 2019.
The purpose of the National Health Amendment (Safety Net
Thresholds) Bill 2019 (the Bill) is to amend the National Health Act
1953 (the Act) to reduce the dollar value of the Pharmaceutical
Benefits Scheme (PBS) Safety Net thresholds.
The PBS provides subsidised access to necessary medicines
for Australians. Most of the medicines listed on the PBS are prescribed by
doctors, dispensed by pharmacists and used by patients at home.
Expenditure on the PBS is uncapped, and may increase as
new medicines are added and demand grows.
Australian Government expenditure on the pharmaceutical benefits and services
sub-function (which is largely comprised of PBS expenditure) was $13.3 billion
co-payments and Safety Nets
Patients pay a co-payment of $6.50 (for concession card
holders) or up to $40.30 (for general patients) towards the cost of each PBS
medicine, with the Australian Government paying any remaining cost. Since 1
January 2016, pharmacists have been permitted to offer consumers a discount of
up to $1.00 on each PBS co-payment, as long as the pharmacist absorbs the cost
of the discount.
The PBS Safety Net scheme protects individuals or families
who need a large number of PBS medicines in one year from
excessive out-of-pocket costs. Individuals and families who spend an
amount equal to their Safety Net threshold on co-payments in a calendar year
receive further prescriptions for that year for free (concession card holders)
or for the concessional co-payment of $6.50 (general patients). The 2019 PBS
Safety Net thresholds are $390.00 for concession card holders and $1,550.70 for
The co-payment and Safety Net threshold amounts are
indexed on 1 January each year in line with the Consumer Price Index (CPI).
In 2017–18, 39.8 million PBS scripts were dispensed to
individuals and families who had already reached their PBS Safety Net threshold
for the year (consisting of 37.1 million concessional Safety Net scripts and
2.6 million general Safety Net scripts).
During the 2019 federal election campaign, the Coalition
Government promised to reduce the amount of the Safety Net thresholds ‘by 12
scripts for pensioners and concession card holders and the equivalent of 2
scripts for non-concession card holders’ from 1 January 2020, at a cost of $308
This would ‘cut the cost of life changing prescription medicines for over 1.4
million Australians with chronic conditions who require multiple medicines’.
The Australian Labor Party (ALP) promised to ‘adopt this
$308 million proposal’ to reduce the Safety Net thresholds.
Standing Committee for the Selection of Bills
The Senate Standing Committee for
Selection of Bills determined that the Bill should not be referred to a
committee for inquiry.
Standing Committee for the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills
had no comment on the Bill.
position of non-government parties/independents
As noted above, the ALP indicated during the 2019 federal
election campaign that they would support the proposal to reduce the Safety Net
During debate on another Bill in September 2019, ALP MPs
Mike Freelander and Emma McBride both reiterated Labor’s support for the
proposal, but also noted that reducing the general patient Safety Net by around
one hundred dollars would not make a large difference in terms of medicine
At the time of writing, no comments by other
non-government parties or independents specifically relating to the Bill had
major interest groups
At the time of writing, no comments by key pharmaceutical
industry, pharmacy, medical or consumer stakeholders specifically relating to
the Bill had been identified.
The reduction in PBS Safety Net thresholds is expected to
cost the Australian Government $335.1 million over four years to 2022–23.
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible because it does not raise any
human rights issues, and because it will have a beneficial impact on human
rights through reduced out-of-pocket costs and improved access to PBS medicines.
Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights had no
comment on the Bill.
A general patient is entitled to apply for a Safety Net concession
card when they and/or their family have spent at least the amount of the general
patient Safety Net on PBS co-payments in a calendar year.
A concession card holder is entitled to apply for a Safety Net entitlement
card when they and/or their family have spent at least the amount of the
concessional Safety Net on PBS co-payments in a calendar year.
A Safety Net concession card holder will only be charged
the concessional co-payment (currently $6.50) for PBS prescriptions for the
rest of the calendar year. A Safety Net entitlement card holder will receive
PBS prescriptions free of charge for the rest of the calendar year.
The concessional beneficiary safety net is
currently defined in section 99F of the Act as the amount of the concessional
beneficiary charge (commonly known as the concessional co-payment)
multiplied by 60.
Item 1 of Schedule 1 amends the definition
of the concessional beneficiary safety net to be 48 times the concessional
beneficiary charge. This means that that concessional beneficiary
safety net is estimated to be $316.80 from 1 January 2020.
The general patient safety net is currently
defined in section 99F of the Act as ‘the amount that was the general patient
safety net immediately before 31 December 2009’, and which has since been
subject to annual indexation under section 99G of the Act.
Item 2 of Schedule 1 changes the definition
of the general patient safety net to the ‘amount of $1,486.80’.
This amount would normally be indexed on 1 January each
year under section 99G of the Act. However, item 3 of Schedule 1
inserts proposed subsection 99G(1A) which provides that the general
patient safety net is not to be indexed on 1 January 2020 (the day the
The Bill reduces the PBS Safety Net thresholds from $1,550.70
to $1,486.80 for general patients, and from $390.00 to around $316.80 for
concession card holders. This would reduce out-of-pocket costs for individuals
and families who need a large number of PBS medicines in one
The reduction in Safety Net thresholds was a
Coalition election promise which the ALP also promised to adopt. The Bill has
not attracted significant stakeholder comment and appears unlikely to be
of Health (DoH), ‘About the
PBS’, The Pharmaceutical Benefits Scheme (PBS) website, last updated 1 July
Frydenberg (Treasurer) and M Cormann (Minister for Finance), Final
budget outcome 2018–19, p. 79.
‘About the PBS’, op.
and prescriptions twelve months to 30 June 2018, PBS Information
Management Section, Pricing and PBS Policy Branch, DoH, Canberra, 2018, p. 2.
Morrison (Prime Minister) and G Hunt (Minister for Health), A
strong economy provides millions of Australians cheaper and free medicine,
joint media release, 2 May 2019; This implies that the concessional Safety Net
threshold would be reduced by twelve times the value of the concessional
co-payment, or around $78.00, and the general Safety Net threshold would be
reduced by two times the value of the general co-payment, or around $80.60.
King (Shadow Minister for Health and Medicare), Labor
to adopt PBS changes, media release, 2 May 2019.
Standing Committee for Selection of Bills, Report,
5, 2019, The Senate, Canberra, 12 September 2019.
Standing Committee for the Scrutiny of Bills, Scrutiny digest,
6, 2019, The Senate, 18 September 2019, p. 23.
reading speech: National Health Amendment (Pharmaceutical Benefits) Bill 2019’,
House of Representatives, Debates, 11 September 2019, p. 78; E McBride,
reading speech: National Health Amendment (Pharmaceutical Benefits) Bill 2019’,
House of Representatives, Debates, 11 September 2019, p. 83.
Memorandum, National Health Amendment (Safety Net Thresholds) Bill 2019, p.
Statement of Compatibility with Human Rights can be found at page 2 of the
Explanatory Memorandum to the Bill.
Joint Committee on Human Rights, Human
rights scrutiny report, 5, 2019, 17 September 2019, p. 16.
. National Health Act
1953, subsection 84C(1AA).
section 87. See also DoH, ‘Section
1 - Explanatory Notes: 5. The Safety Net Scheme’, PBS website, last updated
9 January 2019.
exact amount of the proposed concessional beneficiary safety net
is not known. This is because indexation will not be applied to the concessional
beneficiary charge until 1 January 2020. Explanatory
Memorandum, op. cit., p. 4.
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