PBS medication to cost no more than $25 under Labor re-election pitch

ABC NEWS (Australia)

Let's get more now on our top story the bipartisan support for the pharmaceutical benefits scheme as it faces an attack from huge US drug companies.

Transcript

00:00It was started way back in the late 40s, in the wake of the Second World War, as part

00:06of building up Australia's modern welfare state.

00:10And it's grown a lot since then.

00:12But the goals at inception and today remain the same.

00:15It's about a universal healthcare system that means that medicines and other treatments

00:20are affordable to everyone, regardless of whether you can pay for them.

00:25So it's a really a cornerstone of the system we have today.

00:29Was it a bit of a world first at the time?

00:31I'm surprised it started so long ago.

00:34And has it expanded much beyond that original idea today, or is that still at the heart

00:39of it?

00:40Well, it did come before a lot of the other aspects of the health system we know and love

00:45today, like Medicare, many decades before.

00:47But it was a time around the world after the war when countries like England and others

00:52were starting to build out their national public health systems.

00:56So I don't know if it was a world first, but it was definitely a really important early

01:01part of the health system that was built out through the rest of the 20th century.

01:06And yes, it has changed a lot.

01:07It started out just being for pensioners.

01:09It's been expanded to cover all Australians.

01:13Initially it didn't have co-payments, today it has.

01:17And some of the changes are the massive scope of the scheme now.

01:20So it now covers well over 900 medicines, 200 million scripts a year are subsidised

01:27by government through the PBS.

01:29And between government and consumers, we're spending about $20 billion on the scheme.

01:34And in recent years, we've seen changes.

01:36So back in the latter part of the 20th century, you saw safety nets introduced to cap the

01:41cumulative costs for people who spend a lot on medicines through the year.

01:46And at the last election, both major parties committed to reduce the co-payments.

01:50And we've seen the government just commit to do that in the current pre-election period

01:56to bring the maximum cost down to $25.

02:00So we have seen expansion and breadth and bigger subsidies to continue to make the growing

02:06number of medicines we need more affordable.

02:09And so how much is that overall subsidy going to increase with that government announcement

02:14today and backed by the opposition?

02:17I understand it's in the order of hundreds of millions of dollars over the next four

02:22years, bringing the price down to $25.

02:26It's a substantial amount.

02:28OK, so how does it reflect on Australia that we have this, this pharmaceutical benefit

02:33scheme as part of our government support for people?

02:38Well, it really reflects that commitment to a universal health care system, one that

02:42everyone can access.

02:44And what's been very heartening, I guess, in the last day or so is to hear that really

02:49strong bipartisan support for this important plank of our health system, despite it

02:54coming under attack from representatives of US pharmaceutical companies.

02:59OK, so what is the basis of US companies being frustrated with it if they're still

03:05getting paid for their product through this?

03:07Well, in the PBS, the government represents millions of consumers and buyers on their

03:14behalf. So it's using a lot of market power to try and bargain hard against drug companies

03:19to get the best price for a big market that it controls.

03:23And their complaint is that this means lower prices for them.

03:27And they claim that this reduces the incentive to invest in developing new innovative

03:33drugs. Now, I don't think that's a very strong argument.

03:35Most countries around the world have a scheme somewhat like this, where the government

03:41negotiates on behalf of its citizens.

03:43And in fact, some other countries have tougher systems than Australia and extract lower

03:47prices from drug companies.

03:49And of course, drug companies, when they develop new drugs, they are protected by

03:54copyright. They get a monopoly through a patent and that creates a strong incentive to

03:59innovate. And of course, we know that many of these companies have very high profits.

04:03So I think the argument that the pharmaceutical benefit scheme is discriminating against

04:08any country is untrue.

04:10It treats all countries the same and that it is reducing innovation, I think, also is a

04:15weak argument. But we clearly see it extracting a good deal in most cases for

04:21Australians. And I'd argue it could even go further.

04:23So taking that into account, are you a bit curious as to why it sounds like Australia is

04:27being singled out on this?

04:29I'm not sure what the rationale is.

04:30I know this isn't the first time that US drug companies have raised this 20 years ago

04:36when Australia was negotiating a free trade agreement with the US.

04:40The same similar claims were made.

04:43And you can understand why these companies would make this claim through their lobbyists

04:47because, of course, they want to maximise their profits for shareholders.

04:51So they're very free to make these claims.

04:53But it's really good to see that robust bias.

04:56And so do you expect some kind of retaliation from the US and if so, what?

05:02To be honest, I'm not sure that this has even made its way from lobbying from an industry

05:08to being a US government policy or a strong position.

05:12I hope it doesn't go that way.

05:14And I certainly hope there aren't any retaliatory tariffs.

05:18But I'm not sure that this is going to be the end of the road for Australia.

05:21Go that way. And I certainly hope there aren't any retaliatory tariffs.

05:26But this is such an important part of the system, which so many people rely on to make

05:31sure they can get the medicine that they need.

05:34I don't think it should be a bargaining chip in these negotiations.

05:37And so from a moral and ethical point of view, what do you think of this push by a US big

05:42pharma? I mean, look, they are very free to make their claims and make their case as they

05:49see it. I don't think it stands up to scrutiny and it's certainly not a new

05:54argument. We've heard it, as I said, for decades and governments of many

05:58different persuasions through the years have not agreed with that case. I hope

06:02that continues. So look, I don't think the case makes a lot of sense. I think

06:06it's clearly self-interested. They're free to make the argument. Let's hope

06:10Australia doesn't listen.

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