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Thursday, 12 August 2004
Page: 26314


Senator ALLISON (12:27 PM) —I do not often agree with Senator Boswell, but I do agree that these amendments are a fig leaf and spurious. They have also been described as `bizarre' by people who have had a look at them. Senator Carr says they are tough. They are all about writing out a certificate that says: `We've been good. We've done all this in good faith. We've got reasonable prospects of success in this case that we are mounting and we'll conduct it without unreasonable delay.' It is my understanding that if you get a lawyer to write a letter that says: `Yes, pharmaceutical company X is taking this action in good faith, of course. I think they have a reasonable prospect of success. Of course we'll progress this as quickly as possible,' that's it. That is about as much as you need in order to get rid of this spectre of a $10 million fine for doing the wrong thing on evergreening. That is how ludicrous this amendment is. This will not work because there are 50 or so provisions in the free trade agreement which enable evergreening to take place one way or the other. I am going to highlight a few of those today. Some of them have not been mentioned so far in this debate.

This is why Labor's amendment will have absolutely no effect. For one thing, the principles of the agreement specifically recognise the rights of innovative drug manufacturers but nowhere in the agreement are there any references to the principle of negotiating the lowest prices for consumers. There is nothing in the free trade agreement about the public interest. There is no requirement for negotiations or for disputes to take into account that the most important and fundamental principle of our PBS is that it enables the government to deliver low prices.

The review process has already been mentioned. It is going to be largely about challenges to the non-listing of slightly modified drugs at the end of the patent period, the so-called `me too' drugs. Article 17(10)(4) takes the radical step of linking and indefinitely preventing market approval by the TGA if any type of patent has been claimed over the relevant drug. In the United States and Canada patent owners endeavour to protect their big-selling pharmaceuticals with speculative claims.

Another provision which has hardly got a mention—we certainly have not seen an amendment from Labor to overcome this one—allows the advertising of pharmaceuticals on the Internet. Drug advertising is banned in this country, and it is banned for very good reason. Drug manufacturers advertise their latest, most expensive brand—the `me too' drug—and people go running to their doctors, saying, `Doctor, we've got to have this one. The ad says this is going to solve the problems that I've got and my current conditions.' It is critically important not to have advertising in this agreement, but there is no sign of an amendment by Labor to get it out. Of course, advertising on the Internet is just the first step. Next it is going to be, `We need to advertise in the press,' or, `We need to advertise on the radio or on television.' We will see full-scale advertising in this country, advertising that has seen the price of drugs in the United States and elsewhere rise enormously.

In this agreement there is a clause which prevents our generic drugs industry from providing cheap drugs to neighbouring countries that might have a health crisis. HIV would obviously be one of those crises, but there are plenty of other examples. There are specific measures within this agreement which would stop us coming to the assistance of neighbouring countries. There is no amendment from the Labor Party to deal with that. Article 17(9)(8) locks in preferential patent term extensions. Nothing has been put forward so far by Labor that stops that. Article 17(10)(4) takes the step of linking and indefinitely preventing market approval by the TGA if any type of patent has been claimed over the relevant drug. Why is locking in the five-year data exclusivity period for pharmaceutical test data of benefit to this country? Why are any of those measures within the trade agreement of benefit to Australia? The answer is they are not.

Requiring the PBAC to publish the reasons for non-listing decisions opens the way for successful challenges through review or in the courts. Once you get the PBAC to spell out precisely what its reasons are for refusing to list a drug it puts pressure on the PBAC in preparing its decisions for non-listing, because it knows that every single word in the reasons for not listing will be open to challenges in the courts. We do not have that level of transparency in the drug industry. There is no requirement that clinical trials, for instance, be made public, often for the spurious reason: `This is all about confidentiality.' Where is Labor's amendment that would deal with that? It is missing. We also have the medicines working group, which has already been discussed here.

The ALP amendments are simply window-dressing. They do not go to the nub of the issue. Furthermore, pharmaceutical companies are already evergreening. I know that senators will have seen evidence of this. I know that it was brought before the committee. There are many cases currently in our courts. Clayton Utz has circulated a speech which was given that talks about patent law and how the pharmaceutical companies are using our courts right now.

Good faith is arguable. It is not a clear-cut matter. You can say you have done this `in good faith', and it is up to someone who is challenging you to prove that you have not. Unless you are a pharmaceutical company that has left a trail of memoranda all over the place saying you are doing this because you simply want to extend the patent or evergreen—and who would be stupid enough to do that?—then you are going to be able to say, `We did it in good faith,' hand on heart. It is a ridiculous notion to rest your case that you have improved or protected the PBS. This is a sham. You are pulling the wool over people's eyes. It is awful to watch the Labor Party do this—to give up on 50 provisions within this agreement, all of which damage the PBS. Its amendment goes to one very small, highly ineffective and unlikely to succeed way of dealing with this problem, and it is useless.

There is the question of whether the principles in this agreement will mean that the pharmaceutical companies can challenge anything which goes on in this country to do with putting up market barriers or any barriers at all to stop generics coming on the market. Those principles are critically important, because they will be the basis on which the legal arguments are conducted. It would have been a lot simpler for the ALP to have rejected the PBS measures in the FTA—all of them, to get rid of the lot. Let us maintain the status quo. That is bad enough. As I said, the pharmaceutical manufacturers already have so many cases in the courts. We should be protecting the PBS on the basis of what is already happening, let alone worrying about all of the provisions in this agreement which are going to damage it more.

At the end of the day it means higher costs for the PBS for all Australians, and I want to know what will happen at that point. We have had advice that we could see an increase in prices of three to four times the current level. That means that the PBS will collapse, because the government of the day, whether it is Labor or Liberal, will say: `We can't afford the PBS anymore. Let's go to a system like the United States has and let people pay for their own medicines.' That is where we are heading. That is what all the best advice that we have been given tells us.

It was very disappointing that in Senator Carr's speech he talked very quietly and very briefly about this certificate. Most of his speech was haranguing the Prime Minister for going back to President Bush. I agree that that is pretty ludicrous and pretty farcical, but what we want to know is: how can this work? It is my understanding that it has not worked anywhere else. Canada has an Office of Patented Medicines and Liaison and they look at evergreening cases. It is my understanding that they have 30 active right now. Canada rejects 50 per cent of all the drug patents every year. I think they have similar laws to the ones that are being proposed by the ALP, but my advice is that they are never used. They are never used because the drug companies put injunctions on anyone who seeks to use them. The generics do not take action, because half of the time they are owned by the big pharmaceutical companies anyway and the rest of the time they supply the big pharmaceutical companies with goods. They are not a separate industry. They are entirely part of the whole sector. It is ludicrous.


Senator Conroy —That is why the Commonwealth and state governments can take action!


Senator ALLISON —Getting onto the subject of state governments, Senator Conroy, I have actually seen a suggestion that the state governments probably have not realised that this agreement is going to boost the cost of pharmaceuticals to hospitals and that there will in fact be a direct cost. I think the estimate is $134 million by 2008. That is what the states are likely to have to shell out in extra costs because of the increases in pharmaceuticals that are dispensed in hospitals—because the states negotiate in a similar way to the government. That $134 million is an estimate of a research group at the Australian National University. They say:

New research presented in this paper demonstrates that these changes—

meaning the free trade agreements—

will raise drug expenditures in State public hospitals required to purchase products outside the PBS system. While many State Premiers have given support to the free trade deal on the basis of the limited agricultural gains in the agreement, these new findings threaten such support, as the deal may undermine the public hospital system in Australia. The authors, who are part of a research group analyzing the impact of international trade agreements on health systems at the Australian National University, estimate the impact of the FTA to state budgets to be in the order of $134 million per year.

So the state premiers, I think, are wrong in coming out and saying that this is a good deal for them. They obviously have not read that advice, which suggests that in fact it is going to cost them a great deal of money. I think there are a lot of questions that need to be asked on this whole matter and I propose to do that. I also suggest to the ALP that they seriously consider supporting our amendment removing schedule 7 altogether from this bill and tell the government that the free trade agreement should never have had the PBS in it. The government promised us, after all, that it would not. The minister even said today that there is no impact on the PBS. Well, what is with all of these provisions? What do they do? What effect will they have on our PBS? I think we need to know that. I have spelled out a few, but there are many more in this agreement. They are not there for fun; they are there because the United States wants more money out of Australia. Innovative pharmaceutical companies' rights are being acknowledged and will be very important at the end of the day in decisions about whether or not we will pay more.