Oz BUDGET BOLSTERS HEALTHCARE
Circumstances have continued to evolve as the COVID-19 Omicron variant has added further pressure to Australia’s healthcare re sector, as well as increasing supply chain disruptions, uptions, bringing about staff shortages and reducing cing household spending. With a Federal election n due on May 21, 2022 to elect members of the 47th Parliament of Australia, Josh Frydenberg, ydenberg, Treasurer of the Commonwealth h of Australia presented the Federal Budget on March 29. The Coalition Government led by Scott Morrison is investing in a stronger health system as part of its plan for a stronger future through a record $132 billion in 2022–23 Budget, increasing to $140 billion in 2025–26, with a total commitment of $537 billion over r the next four years. This record funding will ensure Australians have access to improved healthcare, when and where they need it, helping them to lead healthier lives, with improved ed health outcomes and to provide ongoing protection on against COVID-19.
‘‘T he Federal government is committed to its Long Term National Health Plan, through important and strategic investments to deliver the world’s best health care system to the Australians, including $537 billion over the next four years, up $34 billion compared to the 2021–22 Budget; $45.5 billion over four years to access more affordable medicines through the Pharmaceutical Benefits Scheme (PBS), and more than $2.4 billion this Budget to add vital new medicines to the PBS,” said Greg Hunt, Minister for Health and Aged Care, Government of Australia.
In his Budget remarks the Minister for Health and Aged Care said “As we move to living with COVID-19, it is important that Australians refocus on their overall health. We are investing $55.7 million to encourage Australians to resume having their regular health checks, diagnostic screening, and other preventive health activities. This investment includes: $10.2 million for a cervical cancer screening campaign promoting the rollout of self-collect tests; $10.2 million for a colonoscopy triage nurse pilot to help improve colonoscopy access; $9.7 million for short term surge capacity for BreastScreen
Australia; $5.9 million for rapid cervical screening testing and follow-up, including Aboriginal Torres Strait Islander communities, and $4.1 million for a pilot of non-medical healthcare provider delivery of cervical screening.”
He further said “Part of this funding will also remind Australians to refocus on their overall health with a new $15 million communication campaign encouraging people to stay up to date with their health checks and to encourage continued uptake of telehealth.”
The Australia’s primary health care system is world class and has been the front line and first point of contact for many Australians, including during the COVID-19 pandemic. Since committing to the release of Australia’s Primary Health Care 10 Year Plan, the Government has implemented $1.1 billion in primary care measures, with an additional investment of $632.8 million in this Budget. This brings the total investment in the Primary Health Care 10 Year Plan to $1.7 billion, far in excess of the initial investment objective of $448 million. Throughout the COVID-19 pandemic, the government has committed almost $4 billion through the COVID-19 primary care response. This record and ongoing investment is ensuring primary health care can deliver the best contemporary health care, to meet the challenges of today and tomorrow.
The government is building on the 10-Year Stronger Rural Health Strategy within the Primary Health Care 10 Year Plan, to focus on improving health outcomes by ensuring there is quality health workforce distributed across the country according to community need. The 10-Year Stronger Rural Health Strategy was unveiled in 2018–19 and the Government originally invested $550 million in the Strategy. This investment is built on through $296.5 million in the 2022–23 Budget. The government is continuing to improve access to critical and life-saving diagnostic imaging in regional and rural areas, with a $66 million investment through the deregulation of Medicare funded Magnetic Resonance Imaging (MRI) services in MMM 2–7 areas.
The government is also announcing the Biotechnology in Australia – Strategic Plan for
Health and Medicine to support the development of a vibrant and thriving biotechnology sector in
Australia. Biotechnology, or technology based on biology, is one of the most promising developments of our times. Modern biotechnology is contributing to many areas of society, and in health it is creating medicines and technologies that can combat debilitating and rare diseases.
The government is investing $6.8 billion in medical research to drive world-leading research, which will improve health outcomes, as well as creating jobs and economic growth. This investment is being provided through three funding sources: $3.7 billion for the National Health and Medical Research Council (NHMRC); $2.6 billion for the Medical Research Future Fund (MRFF) and $500 million for the Biomedical Translation Fund (BTF).
Besides, the Federal Budget has covered many other key issues related to post COVID-19 management, mental health, aging care, women’s health including $4.2 billion to continue protecting Australians against COVID-19, through supply and access to safe and effective vaccines, treatments and support for our health workforce in primary care, aged care and hospitals; $648.6 million for Stage 2 of the Government’s Mental Health and Suicide Prevention Reform Plan, to ensure Australians can access appropriate mental health care when they need it, taking total investment in the Plan to nearly $3 billion and $333 million to increase outcomes in women’s health.
Responding to the Budget, Medical Technology Association of Australia (MTAA) observed that as expected, this year’s Budget health measures
particularly focused on pandemic recovery and response, with health announcements featuring late in the Treasurer’s speech.
Overall, the Budget’s focuses were on economic growth and cost of living relief with a claim that in the forward estimates the Budget deficit will be significantly reduced from its current levels.
While there were no announcements specific to the Prostheses List (PL), Minister Hunt’s Health Budget media release did make specific mention of the co-signed PL agreement inked by MTAA and the Commonwealth, according to MTAA release.
Reacting to the Federal Budget, Stuart
Babbage, Partner, Health Policy & Economics,
ACT, PwC, Australia said “After the challenges of funding significant spending on COVID-19, 2021’s $17.7 billion aged care reform package and the additional $2.1 billion for mental health, it was not unreasonable to expect that 2022’s pre-election Budget would be less exciting for health than previous years.”
Nevertheless, he pointed out that there are some notable areas of spending by the Federal government during the year including $2.4 billion for new medicines being added to the PBS, including treatments for breast cancer, cystic fibrosis, severe eczema, asthma, human immunodeficiency virus (HIV) infection and heart failure. Establishing Australia’s own onshore manufacturing plant for mRNA vaccines (for an undisclosed amount) which will secure supply not just for vaccines related to this pandemic but for a range of future vaccines and therapeutics. $522 million added to the aged care reform package, with $345 million of this focussed upon improving medication management in residential aged care through on site pharmacists and community pharmacy services. This could play a significant role in better management of the health of residents as medication management delivered as part of multidisciplinary teamwork improves the safety and quality of aged care.
A further $547 million for mental health, with a focus upon suicide prevention - an area where access to care on a timely basis, wherever and whenever it is required, is vital. Separately, there is also a commitment of $60 million related to the national mental health workforce strategy, with a major focus ($28 million) on growth in the psychiatry workforce.
The other notable spending from the government include $296.5 million over four years added to the government’s investment in improving regional, rural and remote health. This includes a focus on workforce with almost $100 million for training and education opportunities in rural areas. An investment
“As we move to living with COVID-19, it is important that Australians refocus on their overall health. We are investing $55.7 million to encourage Australians to resume having their regular health checks, diagnostic screening, and other preventive health activities.” - Greg Hunt, Minister for Health and Aged Care, Government of Australia “The government will provide $1.1 billion over two years from 2022-23 to support the government’s emergency response to COVID-19. As part of this, $984 million will be invested over two years from 2022-23 to extend activities under the National Partnership on COVID-19 Response. A further $2.6 billion will be invested over two years from 2021-22 to distribute free rapid antigen tests (RATs) to priority population groups, and $1 billion over two years from 2021-22 to support the continued distribution and uptake of COVID-19 vaccines across Australia.” - Evan Rawstron, Partner in Charge, Policy, Programs & Evaluation and Global Lead, Health Analytics, KPMG Australia “This is the first Budget since 2016-17 where there is no new investment in growing home care services. This may have implications for meeting consumer preferences to age in place and the ongoing demands for home-based supports.” - Nicki Doyle, National Sector Leader, Ageing, KPMG Australia
“After the challenges of funding significant spending on COVID-19, 2021’s $17.7 billion aged care reform package and the additional $2.1 billion for mental health, it was not unreasonable to expect that 2022’s preelection Budget would be less exciting for health than previous years.” - Stuart Babbage, Partner, Health Policy & Economics, ACT, PwC, Australia “A perfect score would have been given for a Budget that avoided price pressure while giving business the best possible platform from which to be as productive as possible. These policies would, in turn, lift the GDP potential, make the COVID debt easier to pay off and help address growing demand for government funded health, disability, aged care and defence.” - Cherelle Murphy, Oceania Chief Economist, Director, EY Australia “Life Sciences organisations will welcome the features of this Budget which facilitate translation of Australia’s strong reputation for R&D into viable commercial outcomes. The additional support for critical issues facing the life sciences industry (strengthening local manufacturing, addressing supply chain and cash flow issues and investment in medical research) is encouraging, but businesses will need to carefully assess eligibility and timing criteria.” - Kelly Chong, Partner, Corporate Tax, KPMG Australia
specific to women’s health, with $333 million devoted to initiatives including specific support for women experiencing endometriosis ($58 million) and health measures to prioritise women’s safety as part of the National Plan to End Violence against Women and Children ($137 million). Further confirmation of the scale of cost related to an ongoing COVID-19 pandemic, with $4.2 billion covering supply and access to vaccines, treatments and support for our health workforce in primary care, aged care and hospitals.
In addition to these health portfolio investments, the health and wellbeing of Australians was also supported by significant additional funding projected for the NDIS (over $40 billion over the forward estimates). These investments illustrate a continued focus upon sustaining our health - all Australians benefit from a health system that is high-quality, accessible and relatively cost-effective. Just one example - the listing of Trodelvy for the treatment of triple negative breast cancer - illustrates how this balance is met, with this listing providing $80,000 per course of treatment: something few of the average of 580 patients each year would be able to afford. Babbage pointed out that the challenge, however, is that to truly invest in the things that matter, we need to do more.
Sharing her views on Budget, Kerry McGough, National Sector Leader – Health, Ageing & Human Services, KPMG Australia said “Through prioritising innovative models of care for specific conditions, expanding onshore vaccine manufacturing capability and capacity, and harnessing health technology, this Budget prioritises maintaining the resilience of the Australian healthcare system.
The government has also focused healthcare investment on the extension of funding for existing programmes, providing welcome additional funding for the health workforce, mental health, and access to healthcare services.”
Talking about the investments in post -COVID-19 pandemic period, Evan Rawstron, Partner in
Charge, Policy, Programs & Evaluation and Global Lead, Health Analytics, KPMG Australia said “The government will provide $1.1 billion over two years from 2022-23 to support the government’s emergency response to COVID-19. As part of this, $984 million will be invested over two years from 2022-23 to extend activities under the National
Partnership on COVID-19 Response. A further $2.6 billion will be invested over two years from 202122 to distribute free rapid antigen tests (RATs) to priority population groups, and $1 billion over two years from 2021-22 to support the continued distribution and uptake of COVID-19 vaccines across Australia.”
Speaking on the investments related to mental health space, Rawstron said “Every year, more than 3,000 people lose their lives to suicide, and suicide remains the leading cause of death for Australians between the ages of 15 and 44 years old. Mental Health remains a high priority in this Budget, with the government providing $547 million over five years from 2021-22 to implement reforms under the National Mental Health and Suicide Prevention Plan. This investment includes $285.5 million over five years from 2021-22 for a range of mental health treatment initiatives. Priority areas include services for young Australians with severe mental illness, innovative pilot programs to address the needs of people with eating disorders, and digital mental health services.”
Sharing views on improving access to health care Kerry observed that the government will provide $2.4 billion over five years from 2021-22 for new and amended listings on the Pharmaceutical Benefits Scheme (PBS) and other pharmaceutical and consumable schemes. Within this funding, $525.3 million over four years will be
provided to reduce the Safety
Net thresholds, which will mean patients will reach the Safety Net sooner each year. To support research and cancer care the government will invest $375.6 million over four years from 2022-23 to establish the WA Comprehensive Cancer Centre and $28.1 million to establish Genomics Australia, with a view to drive translation and integration of genomics in the Australian health system.
Similarly on primary and preventative care,
Kerry noted that the government will provide
$230.7 million over five years from 2021-22 to improve access to primary health care services, including better integration and availability of services. This includes $108.5 million over two years from 2022-23 to extend public dental services and $56 million to support Primary Health Networks deliver after hours care. With a focus on preventative health, $170.2 million will be invested over five years from 2021-22. This includes $31.6 million over 4 years from 2022-23 to fund projects under the National Ice Action strategy.
Life sciences industry
“Through prioritising innovative models of care for specific conditions, expanding onshore vaccine manufacturing capability and capacity, and harnessing health technology, this Budget prioritises maintaining the resilience of the Australian healthcare system. The government has also focused healthcare investment on the extension of funding for existing programmes, providing welcome additional funding for the health workforce, mental health, and access to healthcare services.” - Kerry McGough, National Sector Leader – Health, Ageing & Human Services, KPMG Australia
Talking about the Budget announcements on life sciences industry Kelly Chong, Partner, Corporate Tax, KPMG Australia, said, “Life Sciences organisations will welcome the features of this
Budget which facilitate translation of Australia’s strong reputation for research and development into viable commercial outcomes.”
The government has made two significant expansions to the patent box regime, which taxes profits attributable to eligible patents at a concessional rate of 17 per cent. Eligible patents now include those granted or issued (rather than only those applied for) after 11 May 2021, as well as utility patents issued by the United States Patent and Trademark Office, and European patents granted under the European Patent Convention, to the extent R&D occurred in Australia. Patents must link to a therapeutic good entered in the Australian Register of
Therapeutic Goods.
Whilst the expansion of the patent box regime is a welcome development, Kelly observed that there may be practical challenges in identifying eligible patents with sufficient links to research and development in Australia and determining the quantum of attributable profits subject to the concessional tax rate of 17 per cent.
Kelly further noted that the additional support for critical issues facing the life sciences industry (strengthening local manufacturing, addressing supply chain and cash flow issues and investment in medical research) is encouraging, but businesses will need to carefully assess eligibility and timing criteria.
A further $1.3 billion has been committed to the Medical Research Future Fund (MRFF), which will provide research funding of $6.3 billion over 10 years from 2022-23 to support innovative treatments, advanced health care and medical technology.
Acknowledging industry comments regarding commercialisation of medical research and development, the Government has announced additional funding of $328.3 million over five years for the Modern Manufacturing Initiative (with