The 2013 Budget papers suggest that the Health sector in particular is going to face significant growth and require significantly increasing expenditure going forward. Several mentions are made of Australia’s ageing population, the resulting increase in demand for healthcare services and the increasing cost of new technology. Further, one might expect that a significant portion of the expenditure allocated to the National Disability Insurance Scheme, now known as DisabilityCare Australia, will flow into the broader health sector as funding for enhanced health care.

The Budget also records a further significant increase in the take up of private health insurance, suggesting that Australians are concerned both about the cost and availability of quality health services.

Multiple responses attempt to address the stresses in the health sector, including incentives for doctors to move to rural areas, further expansion of the care in the home program, and $660 million in funding over five years to improve incentives for aged care providers to invest in residential care facilities.

From the pharmaceutical sector perspective, all eyes are focussed on the Pharmaceutical Benefits Scheme (PBS). Here the Budget recognises the potential ongoing dividends from the price disclosure regime, and also allocates funding of $691 million over five years for the inclusion of new medicines in the PBS, including ground-breaking drugs for the treatment of chronic nerve pain, chronic hepatitis C and Parkinson’s disease.

However, the Budget papers also state that “PBS estimates do not include the potential listing of new drugs following recommendations by the Pharmaceutical Benefits Advisory Committee”. This may suggest that no allowance has been made for drugs not yet recommended for listing by that Committee.

More than $500 million has also been allocated to a program of Innovation Precincts. Given the focus of this program on innovation and promoting collaboration between business and research institutions, one might expect that this announcement will create some considerable opportunities – particularly for the biotechnology sector.

Other matters of interest to the health sector in the Budget include:

  • $226 million to improve cancer prevention, detection, treatment and research, and provide better patient care and support.
  • $17 million in 2013-14 to replenish items within the National Medical Stockpile, the strategic reserve of medicines and medical equipment for health emergencies or disasters.
  • Continued funding of the staged implementation of the Australia New Zealand Therapeutic Products Agency.
  • $19.6 million over two years for the Medical Services Advisory Committee (MSAC) to review the quality, safety and cost effectiveness of existing items listed on the Medicare Benefits Schedule, and examine the evidence for proposed new medical technologies and procedures.
  • An unpublished sum to enable the Department of Health and Ageing to mitigate and respond to the risk of legal challenges in relation to the PBS. This is interestingly associated with a reference to “The ongoing implementation of the Government's pricing policies such as price disclosure, reference pricing and post market reviews.”

Given the obviously fiscally constrained position of the Government, the Budget presents a reasonable combination of settings and programs for both the Pharmaceutical and Life Science sector and the Health sector.

For the longer term, the Budget continues to recognise the value of innovation, and the need to support it through education, infrastructure and a range of incentives, such as the R&D concession.