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Dr Kerryn Phelps, AMA President, and Dr Ken Harvey, with Phillip Adams, Radio National 'Late Night Live'

COMPERE: Now to this week's Budget, and we now realise that it's not a good idea to get sick because you'll be paying a lot more for prescriptions after 1st August. Co-payments for concession card holders such as pensioners and senior health card holders will rise by a buck to $4.60. Co-payments for others will rise from $6.20. Yep. To $28.60. Now, clearly the cost of PBS is escalating, but there's no persuasive evidence, I think, that simply increasing the cost of prescriptions will solve the problem.

The Government estimates that the high cost of medicine will - well, more of a user pays contribution to that cost - will reap 1.1 billion over four years, which isn't much when you consider Peter Costello's intergenerational prophecies that the PBS will grow to around 60 billion over the next 40 years.

So what measures besides bandaid ones need to be implemented to restrain PBS costs? If, in fact, that should be our collective decision?

Now, to talk about this we have on the phone from Melbourne Dr Ken Harvey, and I've already told you that some of Ken's credentials are senior lecturer in the School of Public Health at Latrobe, Board Member of Therapeutic Guidelines Ltd and, for tonight's purposes most importantly, a counsellor of the Australian Consumers Association. And on the dog and bone from Canberra is Dr Kerryn Phelps. And, as you all know, Kerryn is the President of the Australian Medical Association. And I welcome both of you to Late Night Live.

Let me, first of all, ask a simple question to you, Ken. A na ve sort of left-wing question. Isn't much of the problem simply that the pharmaceutical companies charge like wounded bulls for their little pills?

HARVEY: Well, I think that's perhaps very true in the United States, Phillip. But not so true in Australia where the monopoly power or bargaining power of the Pharmaceutical Benefits Scheme has actually got drug prices to be about 160% less than the USA. You know, about 50% less than the United Kingdom.

COMPERE: The question was a Dorothy Dixer because I knew you were going to say that. But it is a great triumph, isn't it, for Australia that we've managed to do a much better deal?

HARVEY: Yes, and I think the other thing that needs to be said about the prices is that for new innovative pharmaceuticals our prices are nearer the American margin, so we do pay our way with innovation. And my dear friend, Alan Evans of the Australian Pharmaceutical Manufacturers Association, is often concerned that Australians aren't paying their way with research and development. And, in fact, that's not true. We do pay our way with genuine new advances. Where we screw the companies is on ……, which makes him quite close to the pharmaceutical industry. And there have been worries expressed on this program that government and the pharmaceutical industry are too cosy. But there seems to me that the pharmaceutical industry won't like this new policy much either. It might curtail some of the profits.

HARVEY: Well, they've actually offered to get out there. And the Government has accepted their help in trying to educate doctors about PBS restrictions, which I found somewhat amusing, I must confess. We've done studies, or certainly some of post-graduate students, have done studies on tape recording, consenting doctors and drug reps, to look at what is the quality of the information and how well, how educative that is compared to the promotional messages.

Again, as you would imagine, the reps tend to accentuate the positive, minimise the negatives. And if they do mention PBS restrictions, which they may well after this budget because they've been asked to, they often then go on and say, but of course - as we've just heard from Kerryn - that, you know, nevertheless it is very good. Although the PBS recommends it be restricted for this condition, in fact it's very effective for this and that and that Professor Bloggs certainly recommends it. And in practice again they keep on promoting excessive use and they get trips to Bali for their increased sales that they produce.

COMPERE: Now, that's the voice from the rarefied atmosphere of Academe, Dr Ken Harvey. Thanks for your time, Ken. And Dr Kerryn Phelps, the President of the Australian Medical Association, on this very difficult question of PBS.

Ends

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