Budget given cautious approval by sector

Scott Morrison

Price disclosure savings to hit reach $20 billion, but no further hits in federal budget, as GPs suffer further blow

Both community pharmacy and the pharmaceutical industry have cautiously welcomed the 2016/17 Federal Budget, delivered last night by Federal Treasurer Scott Morrison.

However, the Budget has been angrily criticised by others in the health sector.

The Medicines Partnership of Australia – an alliance of peak industry associations – said the Budget contained no surprises for the sector, with government investment in the PBS over the forward estimates largely in line with previous forecasts.

PBS expenditure is forecast to increase by 3.4% in nominal terms next financial year due to new and amended listings and growth in the demand for existing listings.

However, in real terms expenditure is expected to decrease marginally over the period 2016-17 to 2019-20 as a result of the application of price disclosure and other PBS reforms. Estimates for the PBS provided in the Budget do not include the potential listing of new medicines or price adjustments to existing listings.

Beyond 2016-17, the growth in overall health expenditure is expected to outpace the growth rate in the PBS, confirming that the PBS is “on a sustainable footing and not a key contributor to health expenditure pressures”, the Pharmacy Guild of Australia says.

The Guild says it “welcomes the fact that the 2016 Budget does not include any further adverse changes to the Pharmaceutical Benefits Scheme affecting community pharmacies”.

“It is vital for the pharmacy sector and pharmacy small business owners that they have a stable remuneration environment to be able to operate their businesses”.

The 6CPA-linked PBS reform package had already delivered huge savings, and had imposed significant pressures on community pharmacy revenues, the Guild said in a statement. Price disclosure savings were tipped to hit $20.6 billion over the five years from 2015-16 to 2019-20.

“The last thing the owners of local pharmacies across Australia and the wider medicines sector needed tonight would have been further policy shifts affecting their bottom lines”.

Medicines Australia seconded the Guild’s sigh of relief, with its chair, Wes Cook saying the Budget “provides predictability in PBS arrangements, improvements to registration processes for new medicines coupled with company tax cuts for business are welcome policies which help to create a more conducive environment to attract investment.”

A number of pharmacy insiders told AJP that the Budget hit to the incomes of medical professionals highlighted the benefit of negotiating a separate community pharmacy agreement, away from the political blowtorch of a pre-election Budget.

The impact this can have is illustrated by GPs suffering a further two year freeze on Medicare rebate increases. By 2020, this will mean nearly seven years since the last increase.

“When is the freeze going to stop?” AMA president Professor Brian Owler asked.

“I mean it is just something that cannot continue. It’s almost seven years, and if you think of how prices, how the value will have changed over those seven years, to have rebates frozen for that period of time, you can only see that there is an undermining of the value, the intrinsic value of the Medicare rebate for patients, whether they’re seeing a GP or whether they’re seeing a specialist”.

The MPA consists of Medicines Australia, the Australian Self Medication Industry, the National Pharmaceutical Services Association, the Pharmacy Guild of Australia, the Pharmaceutical Society of Australia (PSA) and the Generic and Biosimilar Medicines Association.

Click here for more on our budget coverage. For more details on the sector’s response, click here     


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