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[e-drug] USA - Australia FTA; Impact on pharmaceuticals

E-DRUG: USA - Australia FTA; Impact on pharmaceuticals

USA - Australia Free Trade Agreement: Impact on pharmaceuticals

This agreement [1] contains major concessions to the US pharmaceutical
industry that are likely to undermine the Australian Pharmaceutical Benefits
Scheme (PBS) and ultimately increase the costs of medicinal drugs to
Australian consumers.

The agreement is unbalanced in that it focuses entirely on the rights of
pharmaceutical manufacturers and totally neglects the rights of consumers to
equitable access to affordable drugs. In particular the agreed principles on
pharmaceuticals (FTA Annex 2C) leave out the key principle of the Doha
Declaration [2] on the TRIPS Agreement and Public Health, adopted by the WTO
Ministerial Conference in November 2001, namely that trade agreements should
be interpreted and implemented so as to protect public health and promote
access to medicines for all.

The FTA allows pharmaceutical manufactures to ask for an independent review
of a decision by the Australian Pharmaceutical Benefits Advisory Committee
(PBAC) not to list a drug because the evidence showed it not to be
cost-effective.  This is despite the fact that such appeals were previously
rejected by a review of PBS processes held in 2000. Appeals against PBAC
decision-making are likely to favour multi-national pharmaceutical companies
who have large budgets and numerous lawyers; inevitably they will lead to
drugs being listed at higher prices; why else would companies want such

The exchange of letters between Trade Minister Vaile and US Ambassador
Zoellick also shows that Australia shall provide opportunities for
pharmaceutical manufacturers to apply for an adjustment to PBS prices over
time. There appears no corresponding provision for price adjustment
downwards when pharmaceutical manufacturers cause PBS blow-outs by excessive
advertising encouraging inappropriate use, a well documented tactic in
recent years. [3]

The agreement sets up a medicines working group with the USA, a country
which many people argue has the worst (most inequitable, highest priced)
pharmaceutical system in the world. Yet the public health goal of equitable
(affordable) access is not a consideration of this FTA or the working group.
If it was, then the USA and its citizens who now go to Canada and Mexico to
buy affordable drugs could learn much from the Australian PBS.

The provision about dissemination of pharmaceutical information via the
Internet raises concern that this will allow Direct to Consumer Advertising
(DTCA) in Australia by default. DTCA is legal in the USA but not in
Australia. It has been associated with a substantial increase in usage of
the products targeted (and thus health care costs) which are often not in
accord with best-practice. [4]

Finally, although not part of Annex 2-C on Pharmaceuticals, there appears to
be extensive changes to Australian patent laws which are likely to delay the
introduction of cost-effective generic drugs. These changes are likely to
lead to increased PBS costs and increased costs of over-the-counter (OTC)
medicines. [5]

In conclusion, it is very sad that at the same time that the Australian
Health Insurance Commission is successfully exporting Australian medicinal
drug policy to many countries who are struggling to balance health policy
with industry policy, the current Australian government has totally ignored
public health considerations in a one-sided trade agreement with the USA.
Beware of Free Trade Agreements with the USA!


1. http://www.dfat.gov.au/trade/negotiations/us.html

2. http://www.who.int/medicines/organization/ood/trips_med.shtml

3. http://www.mja.com.au/public/issues/179_08_201003/dow10457_fm-2.html

4. http://www.chspr.ubc.ca/hpru/pdf/dtca-v1-execsum.pdf

5. http://www.tai.org.au/WhatsNew_Files/WhatsNew/Patents.pdf

Dr. Ken Harvey, Council Member, Australian Consumers Association;
Board Member Therapeutic Guidelines Ltd.;
Senior Lecturer, School of Public Health, La Trobe University;

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