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Government shelves Jan drug price hike

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Patients have been saved from a $5 jump in the cost of prescriptions after the Federal Government withheld legislation to increase the Pharmaceutical Benefits Scheme co-payment in the face of a hostile Senate.

In a development that has blown a further $1.3 billion hole in the Budget, the Government decided not to introduce a Bill that would have raised the patient co-payment for subsidised prescription medicine from $36.90 to almost $42.70 from 1 January, taking into account indexation. Pensioners and concession card holders faced an 80 cent rise in their co-payment to $6.90.

The planned price hike lacked crucial support from cross-bench senators, and was condemned by AMA President Associate Professor Brian Owler, who said it was an unjustified and poorly conceived measure.

The Government had argued that the $5 co-payment increase was necessary because of what it claimed was an unsustainable increase in health spending.

But A/Professor Owler said the claim was rubbish, with official figures showing health accounted for just 16.13 per cent of the Commonwealth Budget in 2014-15, down from 18.22 per cent in 2007-08.

“The proportion of the Federal Budget going to health is actually falling,” he said.

Health Minister Peter Dutton withdrew the Bill calling for the PBS co-payment increase on the last parliamentary sitting day for the year after failing to secure sufficient support for the measure in the Senate.

Both Labor and the Greens are opposed to the increase, as are the two Palmer United Party senators and several other cross-bench MPs.

Unlike the Medicare co-payment, any increase in the PBS co-payment has to be legislated, and the Government quietly pulled the Bill off the Order of Business for the Senate last Thursday, 4 December.

The decision means the co-payment will not increase on 1 January, as planned in the May Budget, adding to the disarray over the Government’s fiscal strategy.

Budget measures worth $28 billion are in limbo as the Government struggles to secure the support in the Senate that it needs, including its Medicare co-payment, a 20 per cent cut to university funding, a freeze on Family Tax Benefit payments, a six month delay for dole payments and lowering the indexation rate of pensions.

While admitting the Government had missed its 1 January 2015 deadline for the PBS co-payment hike, Mr Dutton remained hopeful that a deal could be struck with the Senate cross-bench.

“In its current form, it is clear that the [PBS] co-payment doesn’t have the numbers in the Senate, but we have negotiations in train with the independent senators,” the Health Minister said. “The Government is not ruling in or out other options. I believe that we can arrive at a compromise position, but I’m not going to publicly canvass those options and those discussions.”

Mr Dutton said the delay in approving the co-payment increase was costing the taxpayer $20 million a month.

Adrian Rollins