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News Release
08 November 2010
Patients’ access to life saving, prescription medicines under threat
Patients’ access to life saving, prescription medicines is under threat, if a controversial Bill is passed by
the Parliament.
The National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2010 gives effect to a new
policy that will cut the Government’s funding of the Pharmaceutical Benefits Scheme (PBS) by $1.9
billion.
Full page advertisements in metropolitan newspapers today highlight the serious and damaging impacts
of the new policy, ahead of a Senate Committee of Inquiry hearing on the Bill tomorrow.
“In a desperate and short-sighted bid to try to balance its budget, the Government is trying to rush
through the Parliament damaging policy that will change and disrupt supply of life saving, prescription
medicines. Patients may not get the medicines they need,” Chairman of the Generic Medicines Industry
Association (GMiA), Dr Martin Cross, said.
“The new policy is poorly thought through and was developed without consultation with impacted
industry stakeholders who could have identified the serious problems the Bill creates for Australians,” he
said.
Likely stock shortages
The new policy imposes a series of price change points on more than 1600 products. Each price
change point is likely to result in shortages of medicines at pharmacies. The Government has not
advised the pharmaceutical industry, pharmacists or patients how this situation will be managed.
Supply chain disruptions
Manufacturers will be forced to examine their ability to continue to supply products with unrealistically
low prices. If they choose to no longer supply a medicine, there is no guarantee that other suppliers will
fill the void. If manufacturing moves off shore, the supply chain will be lengthened and become less
responsive to immediate local problems. Again, the Government has not advised the pharmaceutical
industry, pharmacists or patients how this situation will be managed.
Removing Australia’s capability to respond quickly in the event of a pandemic or other national
disaster
A local manufacturing capability is a valuable resource that ensures Australia can respond quickly to
serious and urgent issues affecting the population’s health. The new policy will damage the
manufacturing capability and could threaten the nation’s ability to look after its citizens in times of
disaster.
Damage to Australia’s leading manufactured goods export industry
Medicines are Australia’s leading manufactured goods export industry. Bringing in more than $4 billion a
year in revenue to the nation, it is a bigger export industry than cars, wine and IT. The Bill will damage
the industry as companies will move their manufacturing off shore to places like China and India where
manufacturing costs are lower. Local jobs and opportunities will disappear from Australia.
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“The Bill is so flawed because it arose out of highly irregular and inappropriate Government processes
that resulted in a protectionist deal negotiated in secret between the Government and the peak body for
the large branded companies, Medicines Australia, Dr Cross said.
The PBS provides necessary medicines that contribute greatly to the health and well-being of the
nation, at a cost the community, taxpayers and the Government can afford.
The PBS was subjected to a major, ten-year reform process in 2007 that ensures it remains
sustainable. The 2007 reform was anticipated to save the Government $3 billion. Three years into the
ten-year reform, three, independent analyses – including the Government’s own - show the savings will
be double that. Most likely the total savings will be even higher than that. Already the 2007 reform has
cost a large number of jobs and some companies have been forced to close down R&D and
manufacturing plants.
“The Bill is altogether unnecessary because the PBS does not need “fixing”. It provides good value for
money, the cost is not out of control and it is sustainable because of the 2007 reform. Australia’s
expenditure on medicines as a proportion of GDP is low by international standards - in the bottom third
of OECD countries,” Dr Cross said.
“The Government needs to understand the trajectory of the 2007 reform to know the total savings that
will be generated over ten years, before it can decide whether further savings are needed now.
“If, after understanding fully the impact of the 2007 reform, further savings are required, good
governance would dictate that all industry stakeholders should be consulted, especially those most
impacted by a new policy. Wider, more considered consultation will result in more and better policy
proposals for effecting savings.
“The new policy layers more change on a system still in the throes of reform and is like building on a
foundation of wet cement.
“It is not clear what the new policy is trying to “fix”, except the Government’s budget deficit. That is the
only explanation for the Government’s rush to push the Bill through the Parliament, despite the flaws
being repeatedly drawn to the Government’s attention.
“The Pharmaceutical Benefits Scheme (PBS) is arguably the world’s best pharmaceutical re-
imbursement system. It must not be jeopardised through inappropriate, ill-considered and rushed
reform. To do so is to play Russian roulette with a national treasure.
“This is a cynical cash grab that Australia cannot afford. The Senate Committee should reject this
flawed Bill and demand further, detailed scrutiny of the need for a new policy, including consultation with
all industry stakeholders,” Dr Cross said.
The Generic Medicines Industry Association (GMiA) is the national association representing companies
that manufacture, supply and export generic medicines. The generic medicines sector is a high value-
add sector delivering significant benefits to the Australian public by way of affordable medicines and
high skilled jobs.
Contact: Kate Lynch CEO 0432 500 308
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