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Budget Bullet Dodged

The 2012 Federal Budget was a relief for the Australian medicines industry. Leading up to it, the Treasurer made his intention to deliver a surplus abundantly clear. This imperative was, however, described by some as political rather than economic. And it left niggling doubt that, despite historically low growth in PBS expenditure, the PBS might be a target for savings.

But the Budget contained few surprises. The Government sought to share the wealth created by the mining boom, and the main winners were low-income earners, families and the elderly.

The PBS was left largely untouched. No new reforms were announced, neither were any major pricing cuts or new therapeutic groups. No barriers to the listing of new medicines were announced or increases to the patient co-payment. Even changes to the R&D tax credit system that the Government was still considering in the weeks leading up to the budget were absent. This was the third consecutive Federal Budget containing no surprises for industry.

Take a moment …

It’s worth reflecting on these outcomes. Individual companies, the GMiA and Medicines Australia have worked tirelessly to inform politicians and policy makers that the PBS had already undergone significant reforms, and that those reforms should be given a chance to play out.

Savings delivered through the MOU have clearly played a role in preventing further PBS cuts in this Budget. The Australian medicines industry has achieved something in this ‘nothing’ budget simply by maintaining the status quo.

What’s next?

The industry can’t rest on its laurels. The Budget has yet to be voted through Parliament, so current proposals may not be delivered. Government revenue from the mining resources rent tax and the GST has decreased, and the Treasurer has said he will make any extra cuts needed to deliver a surplus.

To avoid future reforms, it’s time for clear and consistent messages to Government about the Australian medicines industry’s importance. We need to look beyond the current MOU, ask ourselves if the industry would benefit from a ‘MOU2’ and, if so, what might that look like? What are our ‘asks’ and what are we willing to give up in exchange?

In the meantime, this Budget supports a predictable business environment for industry and enables business as usual: researching, manufacturing, exporting and bringing new products to Australian patients.

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