E-drug: USA pressure on Australia's affordable drugs scheme
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[Copied as fair use. HH]
BMJ 2003;326:680 (29 March 2003)
http://bmj.com/cgi/collection/regulation
US wants Australia to modify its cheap drugs scheme as part of trade
deal
Canberra, Bob Burton
US government negotiators are pressing the Australian government
to agree to modifications to the government subsidised
pharmaceutical benefits scheme in exchange for allowing Australian
farmers better access to US markets, as part of a free trade
agreement.
Under the scheme, the Australian government subsidises approved
drugs and negotiates heavily discounted prices from the
manufacturer. Patients, who pay what is often a nominal
"co-payment" on a prescription, are then able to receive them far
more cheaply than they otherwise would.
Assistant US trade representative Ralph Ives confirmed at the
conclusion of the first week's negotiations in Canberra that the
scheme was on the agenda at the behest of the Pharmaceutical
Research and Manufacturers of America (PhRMA). "We understand
the strong feelings of Australia towards the PBS [pharmaceutical
benefits scheme] . . . I'll take the information I got here and go back
to PhRMA, and we'll see where we go from here," Mr Ives said.
The 50 year old scheme guarantees drug companies a larger
market mostly poorer consumers while allowing the government to
negotiate "price for volume" discounts. To qualify for inclusion under
the scheme, applications for new drugs are assessed for whether
they deliver health advantages and are cost effective compared with
drugs that are already listed.
In January PhRMA lobbied US trade negotiators to seek Australian
government commitments to "refrain from trade distorting, abusive, or
discriminatory price controls," which, it claimed, constituted
"significant trade barriers." In its submission, PhRMA complained that
innovation by drug companies should not be "hampered by stop-gap
policies such as current 'reference pricing' priorities."
Australia's lead trade negotiator, Stephen Deady, said discussions on
government procurement policies, the provision affecting the scheme,
will be held over until the month preceding the next round of
negotiations in Washington, DC, in May.
Steven Haynes, the director of strategic relations for Medicines
Australia PhRMA's Australia counterpart confirmed meeting with
US trade negotiators last week but said it was too early to comment
on the likely provisions of the free trade agreement at this stage.
Martyn Goddard, senior policy officer with the Australian Consumers'
Association, is worried that the Australian government will agree to
weaken the cost effectiveness test for new drugs and precipitate the
financial demise of the scheme. He said: "If the cost of getting an
agreement is fiddling about with a [pharmaceutical benefits scheme]
pricing process that hardly anybody understands then they may well
just do that."
Mr Goddard believes that part of PhRMA's hostility to the scheme is
due to its impact as a global role-model for governments. "Other
countries look to the [scheme] as a model of how to control the high
cost of new medicines, and the big companies don't like that."
Australia's trade minister, Mark Vaile, insists that the government will
defend the scheme in negotiations. All major opposition political
parties oppose the inclusion of the scheme within the ambit of the
negotiations.
A recent opinion poll, undertaken by UMR research and
commissioned by trade deal opponents, showed that 89% of
respondents would oppose a trade deal if that "could make it more
expensive to buy prescription drugs."
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