See the attached file for a copy of The Australian Financial Review’s front page article ‘Gillard caves in over drug subsidies’, featuring Senator Ryan.
AFR18.08.11_Gillard caves in over drug subsidies
The federal government is set to back down on its controversial decision to restrict subsidies of new medicines after a damning inquiry and concerted opposition from an unlikely alliance.
A policy reversal would add to budget pressures because the government had expected to save $100 million over four years by deferring some additions to the pharmaceutical benefits scheme.
The decision to restrict subsidies by deferring some new listings prompted a campaign by consumers, the pharmaceutical industry and the medical community that led to Parliament’s referring the administration of the PBS to the Senate Finance and Public Administration References Committee.
The committee’s majority report yesterday slammed the deferrals and other changes to the PBS listing process after Greens senator Richard Di Natale sided with opposition members. The chair of the committee, Liberal senator Scott Ryan, said: “This report outlines one of the greatest debacles in the commonwealth health system for many, many years.”
The report called for withdrawals of the cabinet decision on February 25 to defer PBS listings.
It also called for the government to reinstate the $10 million rule that means listings recommended by the pharmaceutical advisory benefits committee that will cost the government less that $10 million need not go to cabinet for approval. Since February, all recommendations for new listings have gone to cabinet.
Labor senator and committee deputy chair Helen Polley said evidence taken during the inquiry did not support the finding deferrals represented a major change in policy or would have a serious detrimental effect on the PBS. But at a meeting last week, Prime Minister Julia Gillard told the Consumer Health Forum and pharmaceutical industry representatives she was aware of the high levels of concern about the issue and wanted to find a resolution by the end of September.
A source close to the negotiations said the public outcry had convinced the government to make concessions in terms of what drugs would be available on the PBS.
Since February, Health Minister Nicola Roxon and Finance Minster Penny Wong have argued that the delayed listings and increased cabinet oversight were necessary to restrict the cost of the PBS – estimated to be $9 billion in 2010-11.
Tabling the Report, Senator Ryan spoke of the overwhelming response to the inquiry, particularly from patient groups. Some were directly affected by deferrals; many others worried about the lack of certainty caused by what they saw as a departure from the PBS listing process.
Many submissions were from members of the Consumer Health Forum, an umbrella group representing diverse associations of patients.
After meeting Ms Gillard, forum chief executive Carol Bennett told members the Prime Minister had indicated she wanted to resolve the issue by the end of next month.
Medicines Australia members were told that MA chief executive Brendan Shaw would work with Ms Gillard’s office to identify a solution.
The forum letter said Ms Gillard “accepted the significant level of concern created by the cabinet decision. She particularly acknowledged the views of the many health consumer groups and individual health consumers who had expressed concern”.
Ms Bennett said there was not much room for compromise as the forum worked with industry and the PM’s to find the promised resolution. “There is almost unanimous agreement that the government should retract its position and reinstate the previous policy,” she said.
“We will be going into meetings in the next couple of weeks to resolve this matter with the position the government should accept the recommendations made by its expert committee, the PBAC.”
A spokesperson for Ms Roxon said Labor had listed 500 new medicines or brands on the PBS, at a cost of $4 billion over four years. “The government has deferred a small number of PBAC recommendations due to difficult fiscal circumstances and these will be reconsidered once circumstances allow,” the spokesperson said.
Dr Shaw said the Finance and Public Administration References Committee was sending the government a clear signal that cabinet should not interfere with the process of listing new PBS medicines.
Ms Gillard last night described the PBS as one of the cornerstones of the health system and said primary care would be improved under her agreement with the states and territories to pur billions of dollars into the system.
“We haven’t just gone through months and years of painful reform to achieve some aesthetically pleasing new bureaucratic structures.” She told the annual dinner of the Australian Medical Association.
But in a setback for Ms Gillard, independent MP Rob Oakeshott voted against 29 Labor amendments to a bill to create a National Health Performance Authority, a key measure in the health reforms.
Mr Oakeshott said Labor’s changes “seriously compromised” the original intent, including plans for local health district networks.