Medical research fund revived

EXCLUSIVE Andrew Probyn Federal Political Editor
Back on: Tony Abbott visits medical researchers at QEII Medical Centre in Perth. Picture: Nic Ellis/The West Australian

The Abbott Government will recommit to a multibillion-dollar medical research fund in next week's Budget despite abandoning the $7 Medicare co-payment which was to help fund the plan.

The Weekend West understands the Government intends the Medical Research Future Fund to reach $20 billion within four years.

Sources concede this is ambitious given the 2019-20 timeframe was originally to be achieved through patient contributions for 70 per cent of Medicare services.

The $7 co-payment on GP, pathology and diagnostic services was to raise $3.5 billion but the idea was ditched in March, three weeks after Prime Minister Tony Abbott had his "near death experience" in his party room.

Funding for the MRFF now largely relies on Health Minister Sussan Ley securing big savings from the $9.2 billion-a-year Pharmaceutical Benefits Scheme.

It is understood the Government considered but rejected extending a freeze on the Medicare Benefits Schedule beyond 2018.

As _The West Australian _revealed on Thursday, Ms Ley has put some of the most common PBS-listed drugs on a Government hit list to drag down the taxpayer subsidies paid for big-brand pharmaceuticals with generic competition.

This includes cholesterol drugs Lipitor and Crestor, antidepressant Cymbalta, blood thinner Plavix and antipsychotic Seroquel.

The Government believes it can save patients up to $18.85 a script and up to $2 billion over five years on the PBS with a more aggressive approach to the price disclosure regime which controls taxpayer subsidies. All up, the Government hopes to save $3 billion through PBS changes.

It is understood legislation for the MRFF will be introduced in the second half of this year. It will have $1 billion in seed funding after money is transferred from the Health and Hospitals Fund.

The fund improves Treasurer Joe Hockey's Budget bottom line because the money is treated as a saving rather than an expense - a handy accounting trick for a deficit-challenged Government.

Money for medical research will start flowing from the MRFF next financial year with $20 million in 2015-16 and growing to $1 billion by 2022-23.