Treasury confirms MRFF funding hole

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The Medical Research Future Fund will reach its $20 billion target 12 months late unless the Government secures parliamentary support for its proposed increase in PBS patient co-payments and safety net thresholds.

According to Treasury, based on current projections and government policy, which includes health savings measures announced in the 2014-15 Budget, "the Medical Research Future Fund (MRFF) is expected to reach $20 billion by 2019-20."

The 2014-15 Budget included a range of controversial health savings measures, including $1.3 billion from the PBS for higher patient contributions and $266.7 million for changes to the Medicare Safety Net.

The related savings were set aside for the MRFF, which is expected to provide $1 billion annually in additional support for medical R&D by 2020.

Political and stakeholder opposition means the measures remain unlegislated.

Department of Health Secretary Martin Bowles has previously said the $1.3 billion in savings associated with the PBS changes will "not be taken off the table...unless an offset is found".

According to Treasury, "At the 2014-15 Budget, the Simplifying Medicare Safety Net measure was to save $266.7 million and the Pharmaceutical Benefits Scheme – increase in co-payments and safety net thresholds was to save $1.3 billion over the forward estimates. If the savings from these two measures are excluded, the MRFF would be expected to reach $20 billion one year later, in 2020-21."

The Government faces a quandary with the PBS measure given it subsequently announced a $1 discount in co-payments as part of its PBS Access and Sustainability Package. Political support for the co-payment increase appears unlikely, but the Government retains a policy that would effectively more than cancel out the impact of the discount.

The Government has announced the first spending under the MRFF, which is $250 million for a Biomedical Translation Fund that will support mid-stage development.