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.
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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.