Opening Address to Consumers Health Forum PBS Summit

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PDF printable version of Opening Address to Consumers Health Forum PBS Summit (PDF 23 KB)

29 April 2011

Introduction

Thank you for inviting me to address this special forum on the Government’s recent decision regarding Pharmaceutical Benefits Scheme listings, and the wider future of the Scheme.

I also appreciate the Consumers Health Forum’s flexibility in moving the timing and location of this event so I would be able to attend.

I see this as an opportunity for me to explain the Government’s position on the PBS – but more importantly, it’s a chance for me to directly hear your concerns and suggested solutions.

Government’s listing decision

My central message today is that Government recognises and values the role of PBAC in recommending new PBS listings to Government.

We understand the intense scrutiny PBAC subjects each new drug that comes before it. We know that its assessment process for each drug’s clinical and cost effectiveness is one of the most rigorous in the world.

We would not act to compromise PBAC’s integrity or the independence it needs to do its job properly.
But in respecting PBAC’s role, we must also recognise where that role ends and where Government’s role begins.

While PBAC’s enduring success is reflected in the fact successive Governments have rarely had to differ from its recommendations, ultimately it is and always has been Government’s responsibility to decide whether to list a new drug, taking into account other priorities across the health portfolio and fiscal circumstances across government.

This is PBAC’s very strength – by limiting its own investigations to the drug in question, it can concentrate on the merits or otherwise of that particular drug, not wider competing priorities.

But just because PBAC doesn’t consider these other priorities does not mean that nobody else should. In fact, I would argue governments would be remiss if they don’t.

PBAC is not tasked to chose whether taxpayers should fund a particular medicine, or a palliative care program, or a screening test or more mental health services.

Similarly, it isn’t asked to consider the merits of spending additional money in health as compared to other portfolios. We would never expect PBAC to make a call on whether we should transfer money from Indigenous affairs or from social housing to fund new drugs on the PBS.

But the Government doesn’t have this luxury. Budgets must add up and choices must be made.

One good example of competing priorities has been in the press recently – whether the Government will allocate ongoing funding for the Bowel Cancer Screening Program, a program that terminates on 1 July this year unless further new funding is found. To simply continue this life saving screening would cost $137 million.

Can anyone here today argue that the Government cannot even consider this funding instead of a particular drug listing?

We know, absolutely, this type of program saves lives. Fewer than 40% of bowel cancers are detected early, but in 2008 there were 120 bowel cancer cases detected through the Program, along with 334 suspected cancers and more than 5,000 potentially precancerous conditions.

Yet despite clear and long-standing research and a sound evidence base, government took years to fund an initial Bowel Cancer screening program – this at the same time the PBS costs were growing at an average 9% a year over the last decade.

Now, as the Program funding expires, Government faces a difficult choice – can we continue it? Do we sacrifice this program to cover adding new drugs to the PBS?

These questions are not ones for PBAC – but, quite rightly, decisions for Government. And I truly struggle to understand how people fail to recognise that these difficult choices have to be made by Governments. And all choices in health are similarly difficult because most of our spending in this area has the potential to fundamentally affect people’s lives.

And when working with finite resources and in the current fiscal circumstances, these are the sorts of difficult decisions that Government has to make across all portfolios every day.

PBS listings always have the inside running because of the strong process they go through with PBAC – but that doesn’t mean we must always choose them.

Ultimately, just because a drug is proven to be clinically and cost-effective, doesn’t mean it’s the most urgent or pressing way to spend finite taxpayer money.

Of course we should not ‘politicise’ the listing process – but retaining and exercising Cabinet’s decision-making role does not do this. We don’t act to change or alter or hide PBAC decisions. In fact, we’ve made them more public than any government before.

But neither can Government absent itself from determining how large quantities of taxpayers’ money should be spent.

Instead, in considering all health priorities – including those of PBS – we use our judgment as a Cabinet. We take the expert advice of the Department of Health and the Chief Medical Officer, as well as from central agencies, when making these decisions, but ultimately, they are our decisions.

Much like Government, peak health groups like the Consumer Health Forum and AMA must necessarily take broader view on needs and requirements across the health service spectrum.

That’s why I welcome this opportunity to hear from you – both CHF member organisations and executive – about how we can best preserve and protect the integrity of PBAC, while still allowing Government to fulfill its decision-making role.

Government commitment to consider listings

I also want to mention, although it’s been somewhat lost in the wash, that at the same time I announced the deferral of seven drugs on the PBS I also confirmed the listing of seven drugs and vaccines on the PBS and National Immunisation Program.

That’s important because it shows that even in difficult fiscal circumstances this Government is willing to consider proposed listings within required timeframes, and to list new drugs that come with a substantial cost.

We’ve made it clear that these deferrals are temporary, and will be reconsidered when circumstances permit. Immediately following the deferral announcement I sought Medicines Australia’s input on the fairest, simplest way to structure the deferral and reconsideration process.

I’m keen to work with Medicines Australia as representing manufacturers directly affected by deferrals, but I also extend the invitation to the CHF and its membership. The sooner we can agree on a deferral timeframe and process, the more certainty manufacturers will have.

Keeping the PBS sustainable for the future

A sustainable PBS is the key to keeping medicines affordable and accessible for all Australians.

The cost of the PBS has continued to grow over the past ten years, averaging growth of about 9% a year, and it’s estimated it will cost about $9 billion this financial year. This growth rate is higher than 6% annual increase for general hospital and medical services, and of course much higher than the CPI.

I’ve noticed recent media reports citing a purported drop in PBS spending growth, to below CPI.

I don’t consider these figures are an accurate reflection of actual spending. The Government monitors PBS growth using the Medicare's 'date of supply' data set, which is the most stable data set to monitor actual PBS growth.

This stable data set shows that at the end-December 2010 PBS expenditure growth was six percent, considerably above inflation.

I welcome industry’s close liaison with the Departments of Finance and Treasury to accurately measure current and projected spending on the PBS, as long as this work is based on reasonable timeframes, full PBS costs and stable data sets.

But a fiscally responsible Government cannot simply continue to increase funding for one program at the expense of other pressing health needs, in the hope of a reduction in costs at some point in the future. We must deal with the fiscal circumstances and health priorities we face now, as well as assessing future growth patterns.

Conclusion

This Government has a proud record of delivering better health services for all Australians.

In 2008, we boosted hospital funding by $20 billion – a 50% increase.

Through the national health agreement, there is another $20 billion on offer – and, most importantly, certainty and stability for the states in knowing the Commonwealth will fund 50 per cent of the growth in efficient hospital prices from July 2017.

We’ve also invested over $2.4 billion in health workforce measures. That’s helping us to train over 1000 nurses each year, double the number of GPs in training and, we’ve seen the Commonwealth’s specialist training program expand from just 51 when Mr. Abbott was Health Minister, to 518 this year.

Plus, we’ve made a record $872.1 million investment in preventative health.

And I could go on.

We didn’t make any of these investment decisions in isolation. We consulted widely, with a range of experts.

We will continue to do this into the future for all of our health investments – including the PBS.

The decision to defer drugs from listing on the PBS was not taken lightly.

But I ask that you view the decision through the prism of a Government that has always put Australians’ health needs first, across the spectrum of preventative health, primary and acute care, and pharmaceutical support.