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Thursday, 24 June 2004
Page: 31581


Ms GILLARD (5:54 PM) —Like other members who have spoken during this debate on the US Free Trade Agreement Implementation Bill 2004 and the US Free Trade Agreement Implementation (Customs Tariff) Bill 2004 and like the member who spoke before me, the member for Shortland, I would like to add my voice to the central call that this House does not need to be dealing with this legislation today. Indeed, it is precisely the wrong process to have this legislation before the House today, because the matters, the subject of the free trade agreement, are the matters and the subject of a substantial Senate inquiry. The obviously correct process is to hear from that inquiry before any member of parliament is required to debate or vote on the legislation. The only reason we know that the Howard government has brought these bills on in such an urgent flurry in the last sitting week is that it smells some political advantage. It is not that it is rationally processing a trade agreement it believes may be in Australia's economic interest but that it smells some political advantage in trying to force the debate on today.

Australians are right to be suspicious of that process. They are right to be suspicious of what the Howard government has said about the free trade agreement. The Australian people are right, because of their suspicions, to wait to have independent and objective advice and a thorough investigation which has been hooked up with experts, as the Senate Select Committee on the Free Trade Agreement between Australia and the United States of America investigation has been, and to have the benefits of that material before being forced to decide.

In the area that I am going to substantially address tonight—the area of the Pharmaceutical Benefits Scheme—there is a track record of the Howard government not telling the truth about the interrelationship—



Ms GILLARD —That remark is perfectly in order. There is a track record of the Howard government not telling the truth about the interrelationship between the—


Dr Stone —Backflips?


Ms GILLARD —We are, unlike the government, completely truthful. I know my friend over there would be substantially embarrassed about the way in which the Howard government has not told the truth about the interrelationship between the Pharmaceutical Benefits Scheme and the free trade agreement, and the nature of her embarrassment is being laid clear.

The start of untruths was during the negotiation of the free trade agreement. We were told by the Howard government and its representatives that the PBS was not on the table, that there was no cause for concern because the PBS was not on the table. Indeed, in Senate estimates in June 2003 the then Minister for Health and Ageing, Kay Patterson, when asked about the matter, said, `It has not been put on the table.' We know that is not true, because the Australian negotiator for the PBS had said as early as March 2003 that it was on the table and the concerns of the US drug companies about the PBS had been well known, with US drug companies saying things like the PBS had adopted increasingly draconian regulatory and budgetary cost-control schemes.

The PBS was always going to be on the table: the pretence by the Howard government that there was a point at which it was not going to be on the table was always a pretence. Minister Vaile sought to further this pretence by pretending at the start of this year that suddenly the PBS had been `brought onto the table out of left field by the American pharmaceutical industry'. It was always on the table, and the Howard government did not tell the truth about it. In those circumstances, we need to get clear answers from the government or, if they are incapable or unwilling to give them, independent experts, to a series of questions about the PBS before we are required to make a final decision about whether or not the free trade agreement ought to be supported.

The principal intersections between the free trade agreement and the PBS as we understand them from the free trade agreement documents are these. There are the questions of the review mechanism, the ongoing working group and the impact on generics. On the question of the review mechanism there is no person in the world who could tell you what the impact of the review mechanism on the Pharmaceutical Benefits Scheme is going to be, because the review mechanism is not agreed.

This House is being asked to deal with this legislation before we can assess what the impact of the review mechanism is on the PBS. There is no way of assessing that impact today because the review mechanism is not agreed. That was made very clear in today's Sydney Morning Herald. I think it is a matter that was known to people who have been following this process more generally, but it was reported today in the Sydney Morning Herald. The Sydney Morning Herald records:

An Australian expert panel is still haggling with drug company representatives over the proposed review process, which critics say gives companies more scope to undermine Australia's capacity to restrain the prices it pays for drugs listed on the $6.2 billion-a-year Pharmaceutical Benefits Scheme.

So the most basic of questions about the impact of the FTA on the PBS cannot be answered by anyone tonight—no member of the government, no member of the opposition, no person in this parliament and no person in this nation—because the review mechanism is not agreed. How can we rush to judgment on the free trade agreement when we cannot tell what impact that review mechanism will have on the PBS? My call to the government would be to fully disclose, as soon as it is agreed, the complete nature of the review mechanism proposed and to be truthful about the consequences of that for the PBS. That is the challenge for the government. Perhaps, through the Senate select committee process, they might acquit that challenge for basic honesty with the Australian people about what is in this agreement.

The second cause for concern is the ongoing medicines working group that the free trade agreement creates. The FTA text says that the purpose of the group will be the `continued improvement of health care outcomes'. It also says:

The Working Group shall comprise officials of federal government agencies responsible for federal healthcare programs and other appropriate federal government officials.

We really cannot ascertain from that description what the purpose of the group is, what the items on its agenda will be and what the long-term consequences for the PBS will be. There is an interesting question. It is the case now that our PBS rules apply to drugs generated by drug companies from whatever nation. If this medicines working group agrees a set of changes, will they only apply to drugs manufactured by US drug companies or will they apply more generally? We do not know the answer to that. On the face of it, it appears that there is no ability for stakeholders in the PBS—doctors and patients—to have any input into the medicines working group process. Once again, this House is being forced to debate this legislation in circumstances where we have the scantest of information about what it is that this medicines working group is to do and what the impact of that would be on the Pharmaceutical Benefits Scheme. No rational person could rush to judgment on the FTA without that information.

Thirdly, and very concerningly, we do not really know, sitting here today, what the impact of the FTA will be on the ability to access generic drugs. I think we are all aware that when new drugs are invented they are subject to patent by the company that invented them. The company sells those drugs for a period at a price that is agreed. When the patent runs out, other manufacturers can make the identical drug—and often make it much cheaper. It is very important in our PBS system that we are able to access the cheaper generics as soon as branded drugs come off patent. That is the current way in which the scheme works. We know that is going to change, because it was one of the matters caught up in the legislation today. But we do not know what the effect of those changes will actually be.

The central concern here is that the immediate impact will be that a generic manufacturer who is intending to produce a drug once a brand name drug has come off patent will now be required to give notice of its intention to the patent holder, whereupon the patent holder may engage in a set of litigation to stop the generic company going into the market and producing the drug. That is not the case in Australia now. In Australia now a generic company can start up and can be in the market as soon as a patent has expired. If it is required to give notice to the patent holder, that means that the patent holder could create litigation and other hurdles to prevent the generic manufacturer bringing their drugs to market.

If that happened in even the smallest of ways, it could have catastrophic consequences for the PBS. I will give you some feel for that. We know that under the PBS currently a whole class of medication is very shortly to go off patent, and cheaper generics should be available. That class of medication is the anticholesterol medication—the cholesterol-lowering medication—known as statins. It is a huge class of medication that is coming off patent together. If Australia can access the cheaper generics as soon as the patent has expired then it is anticipated that the savings for the PBS over four years could be as high as $900 million. If there is something in the FTA that in any way delays that transition to the cheaper generic then obviously you are jeopardising access to that $900 million worth of savings.

We have written to the government. I have written to my counterpart, the Minister for Health and Ageing. My colleague the member for Fraser has written to his counterpart, the Minister for Finance and Administration. We have said, `Please tell us whether you think the US FTA will in any way delay access to or ultimately prejudice access to these savings of $900 million.' Of course, we have not received a reply. In those circumstances, I think we have to be very concerned about the impact of the FTA on our access to generic drugs. As I say, the smallest variation in the ability to access generic drugs—a delay of a year or a delay of two years—can mean hundreds of millions of dollars worth of difference and can fundamentally jeopardise our PBS. We want, and are entitled to, answers to those questions before being forced to make a final judgment about this decision.

The PBS issues are enormously significant. The ones that I have outlined are the most significant of them, but in the health area there is another very important issue which I believe has not received sufficient public recognition and needs to be taken into account in our decision making processes about the FTA, and that is blood plasma fractionation. The fact that the FTA opens the door for a trade in blood and blood products I think was a surprise to everyone—but it does. I understand that it was certainly a surprise to CSL, which current manufactures blood products for the Australian market. As we all know, the Red Cross is responsible for blood collection in Australia. Volunteers go and donate their blood to the Red Cross, and the Red Cross is funded by the states to do those blood collections. CSL uses that Australian blood to make a range of blood plasma products, some of which have quite small markets. The main purchaser of these products is the state hospital system.

The Review of the Australian Blood Banking and Plasma Product Sector, conducted by Sir Ninian Stephen in 2001, found no grounds—I repeat: no grounds—to open up the plasma fractionation industry, despite the dominant market position of CSL. During the review by Sir Ninian, considerable emphasis was placed on the importance of Australians having a national plasma fractionator, with the capacity to do research, as a means to meet domestic needs and safeguard the national interest. The Plasma Fractionation Agreement that the government signs with CSL provides certainty of both supply and price. If tenders are opened up, and especially if a competitor chooses not to manufacture and market the whole range of products but picks only the most profitable of them, then CSL will lose market share and viability. Oversight of safety and quality, which is obviously critical for these products, becomes a whole lot harder.

As we understand it, it is proposed to change the current Australian situation with regard to blood plasma products basically for the benefit of one US company, and that is Baxter. I think the government should verify whether or not that is its understanding of the real implication of this. We need to understand what is being talked about here. What I think is being talked about, and what the Howard government needs to confirm, is that there would be a tender process, which means that it is conceivable that Baxter, based in the United States, would win a share of the blood plasma product production market in Australia. Where are Baxter then to produce those blood plasma products? There are only two choices: they could come and build a plant here to do it or they could take Australian blood to the United States and do it in their current facilities. I understand—though this needs confirmation from the Howard government—that the idea is that Australian blood would be collected and that plasma products used in Australia would still be made from Australian blood, but that the processes to achieve those plasma products could be done by Baxter here or, more likely, in the United States. So we would have the spectre of Australian blood being shipped offshore to the United States for further processing into plasma products.

The consequences of this are diabolical, in my view. They are very important. What we know about the US blood supply is that it is less secure than ours. It is less secure partly because the blood is collected from people who are paid to donate it, not from volunteers. Those people in the United States who are routinely blood donors are often people on the margins of society who are desperate for the money. They are often people struggling with drug addiction and other issues. The very fact that they are struggling with those issues and so are desperate to sell their blood for money tends to imply that they are people who are more likely to have the sorts of diseases that can go into the blood supply. It is well known that the US blood supply is less secure than ours.

In addition, the US has had exposure to mad cow disease. We have not. We are one of four nations in the world that remains free of the human variant of mad cow disease. If Australian blood is to be taken to the United States for processing, the critical question is: will it be processed in lines that are dedicated solely for the production of Australian blood products? Will no blood ever go through those lines except Australian blood? If that is the case, provided it is lived up to time and time again, that would prevent Australian blood being contaminated by any of the blood-borne diseases in US blood. But if that is not the case and the intention is that Australian blood would be processed through the same lines that American blood is currently processed through, that clearly leads to disease risks. The most pressing of them in this debate is the risk of CJD or the human variant of mad cow disease, which we know can live on and can pass from person to person through equipment. People would be aware that there have been major issues requiring the destruction of surgical equipment in some cases to prevent the same equipment that has been exposed to CJD giving CJD to another person.

I think this is the most basic of questions for the government to answer. If a government cannot provide answers about the security of a nation's blood supply when we have known in this nation the tragic consequences of HIV-AIDS and hepatitis C in relation to the blood supply, the last thing in the world a responsible government would or should do is put this nation at risk of known diseases like CJD or the other diseases that may be around the corner. This is not a static picture. Over time there will be other blood-borne diseases that come onto the planet, I suspect, in the way that HIV-AIDS did, and we will have to struggle with them. Until the government answers that question about the safety and quality of the blood supply, there is no-one who should be forced to make a judgment about the FTA in the way that this House is being forced to make a judgment. It is a fundamental question, like the questions I have raised about the PBS, which ought to be answered before anybody is required to articulate a final view about the FTA. I challenge the minister to come into this House tonight and give the assurance that I am seeking on blood products. (Time expired)