E-drug: Two papers on the AUSFTA & PBS in eMJA
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eMJA rapid online publication 25 July 2004
MJA 2004; 181 (5) : 1-2
For Debate:
1. Will the Australia�-United States Free Trade Agreement undermine the
Pharmaceutical Benefits Scheme?
by Ken J Harvey, Thomas A Faunce, Buddhima Lokuge and Peter Drahos
http://www.mja.com.au/public/rop/ausfta/har10408_fm.html
eMJA rapid online publication 25 July 2004
Introduction
Is Australia paying its way with pharmaceutical R&D?
Seven AUSFTA provisions that impact on the PBS
1. Interpretive principles
2. Transparency provisions
3. Medicines Working Group
4. Disseminating information via the Internet
5. Adjustment to PBS prices
6. Intellectual property provisions
7. Dispute resolution
Abstract
The Australia-United States Free Trade Agreement
(AUSFTA) contains major concessions to the US
pharmaceutical industry that may undermine the
egalitarian principles and operation of the
Pharmaceutical Benefits Scheme (PBS) and
substantially increase the costs of medicinal
drugs to Australian consumers.
AUSFTA's approach to the PBS excessively
emphasises the need to reward manufacturers of
"innovative" new pharmaceuticals, instead of
emphasising consumers' need for equitable and
affordable access to necessary medicines (the
first principle of our National Medicines Policy).
Several features of AUSFTA may bring pressure to
bear on the Pharmaceutical Benefits Advisory
Committee (PBAC) to list "innovative" drugs that
the committee initially rejected because the
evidence for cost-effectiveness was not
compelling.
Intellectual property provisions of AUSFTA are
likely to delay the entry of PBS cost-reducing
generic products when pharmaceutical patents
expire.
We support the many concerned health and consumer
organisations who have asked the Senate either
not to pass the enabling legislation, or to delay
its passage until a fairer deal in terms of
public health can be obtained.
In January 2003, the Pharmaceutical Research and
Manufacturers of America lobbied the US
negotiators for the Free Trade Agreement with
Australia (AUSFTA) to seek a commitment from the
Australian government to "refrain from trade
distorting, abusive, or discriminatory price
controls" in relation to the operation of its
Pharmaceutical Benefits Scheme (PBS). 1In October
2003, President George Bush allegedly told Prime
Minister John Howard that raising Australian
prices for pharmaceuticals manufactured in the
United States was important for ensuring that
consumers in all countries, not just US
consumers, paid for the high research and
development (R&D) costs. 2AUSFTA was signed by
both governments in May 2004. If we presume at
least some of this rhetoric influenced the
provisions of AUSFTA, what implications will
these provisions have for our PBS?
2. Free trade in pharmaceuticals
by M Kevin Outterson
http://www.mja.com.au/public/rop/ausfta/out10366_fm.html
Look behind the transparency curtain
Prescribe large grains of salt with government pronouncements
Abstract
Provisions in the Australia-United States Free
Trade Agreement (AUSFTA) may threaten the
Australian Pharmaceutical Benefits Scheme (PBS),
the gold standard of such programs worldwide.
If Australia postpones passing of the US Free
Trade Agreement Implementation Bill in the
Senate, there will be opportunity for broader
interests in both the United States and Australia
to carefully study the agreement.
The provisions of AUSFTA relating to the PBS are
supposed to promote transparency, but the
pharmaceutical manufacturers themselves (who are
demanding transparency) do not reveal the content
of their submissions to the Pharmaceutical
Benefits Advisory Committee, or disclose all
their financial relationships with researchers
and policymakers.
In AUSFTA, the "public health" language of
affordable prescription drugs is missing and is
replaced by language supporting "pharmaceutical
innovation".
Debate as to whether AUSFTA will force
significant changes to the PBS, including higher
drug prices, is currently under way in Australia.
Perhaps the appropriate target of reforms should
be the excessive US drug prices, and not the
economically efficient Australian drug prices.
--
Dr. Ken Harvey
Senior Lecturer
School of Public Health, La Trobe University
Bundoora, 3086, Australia
Telephone +61 3 9479 1750
Facsimile +61 3 9479 1783
Mobile 0419 181910
e-mail: k.harvey@latrobe.edu.au
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