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Tuesday, 7 December 2004
Page: 112

Senator NETTLE (8:23 PM) —Thanks for that answer. I suppose all we can presume is that PhRMA group, the US pharmaceutical lobby, did not have success—if that is what the minister is telling me—in convincing the US government that this was a breach of obligations, because that was certainly the view they expressed internationally in the media at the time the coalition made that announcement. So if the minister, in his answer, is assuring the Senate that that is not a view held by the American government, that is good.

I now move Australian Greens amendment (1) on sheet 4467:

(1) Schedule 1, page 9 (after line 11), after item 41, insert:

Therapeutic Goods Act 1989

41A After section 26D


26E Cost effective medicine pricing

In order to clarify its commitments under the US Free Trade Agreement (the Agreement) the Australian Government acknowledges that, notwithstanding anything in the Agreement, in its interpretation, the cost-effectiveness system of medicines pricing under section 101 of the National Health Act 1958 will continue to form the basis of the Pharmaceutical Benefits Scheme.

Further it is the view of the Australian Government that Annex 2C of the Agreement does not interfere with the capacity of an Australian Government to implement the principle of universal access by Australians to affordable, essential medicines which is also the basis of the Pharmaceutical Benefits Scheme.

Similarly, it is the view of the Australian Government that reward of pharmaceutical innovation as mentioned in Annex 2C of the Agreement must be assessed, amongst other factors, against a new medicine's overall benefit to the Australian community when compared against existing medicines.

Similarly, it is the view of the Australian Government that Annex 2C and Chapter 17 (on Intellectual Property) of the Agreement implicitly include reference to the Doha Declaration on TRIPS and Public Health.

Finally, it is the view of the Australian Government, that Article 17.10.4 of chapter 17 (on Intellectual Property) of the Agreement does not permit the practice known as “evergreening” of brand name pharmaceuticals.

I will address specifically what this amendment does. The amendment is to the original act, the US Free Trade Agreement Implementation Act 2004. We are adding a new section, 26D, at the end of schedule 7, to the Therapeutic Goods Act 1989. The amendment is designed to ensure that public health takes precedence over private profit. It puts in writing in Commonwealth legislation interpretations which are entirely consistent with what the Australian government has told the Australian public—that is, nothing in the US-Australia free trade agreement undermines the Pharmaceutical Benefits Scheme and the primacy of public health. The government obviously ought to be able to support the amendment, seeing as it is based on the commitments and the statements the government has made publicly in relation to the free trade agreement and its impact on the Pharmaceutical Benefits Scheme—or, as the government would put it, its lack of impact on the Pharmaceutical Benefits Scheme. With this amendment the Greens are ensuring that none of the processes for which details were not available at the time that we passed the implementing legislation, such as the independent review or the medicines working group, are able to undermine the core principles of our public health system.

The first paragraph deals with the issue of cost effectiveness. This paragraph ensures that the primary basis for a decision to list a drug on the PBS will be its cost effectiveness. It is designed to act as a buffer against the provisions of annex 2C of the agreement that require the Australian government to `make available an independent review process that may be invoked at the request of an applicant directly affected by recommendation or determination'. The government has said that this review process will not undermine the PBS. If this is the case, there can be no objection to stating this principle plainly in the act, as is in the Greens' amendment.

The second paragraph of the Greens' amendment deals with the issue of universal access. The Pharmaceutical Benefits Scheme is a vital part of Medicare that is designed to ensure that all Australians can obtain essential medicine at affordable prices. This principle must be paramount. There can be no compromise on it. Unfortunately, we have already seen the coalition government undermine the affordability of the PBS by imposing, with the support of the opposition, a 21 per cent increase on the patient charge, effective from next month, and the Treasurer has flagged that there will be more large rises. Co-payments in health hurt the sick and low-income people most of all. The Greens believe that we need to review how we finance the Pharmaceutical Benefits Scheme; hence our moving for an inquiry into this, which was not supported by any other party. In the meantime we insist that the principle of universal access by Australians to affordable essential medicines be safeguarded from potential adverse impacts of the US-Australia free trade agreement, hence the second paragraph in the Greens' amendment that we are currently discussing.

The third paragraph of our amendment is about price effectiveness. The Greens are concerned about the provisions of annex 2C, particularly 1(d) of the Agreed Principles, which suggest:

the need to recognise the value of innovative pharmaceuticals through the operation of competitive markets or by adopting or maintaining the procedures that appropriately value the objectively demonstrated therapeutic significance of the pharmaceutical.

This provision could be used by US drug companies to try to obtain higher prices from the Australian government for medicines accepted for listing on the PBS than a product warrants by arguing that innovation itself should attract a premium. One of the important principles for listing on the PBS currently is that the government will not pay a higher price for a new medicine simply because it is new; it must be better than the existing listed medicines. This use of a comparator in determining a listing price is critical to keeping the cost of PBS medicines low and affordable for all Australians. If the Australian government starts paying more for a medicine simply because it is new, the PBS will become unsustainable.

The fourth paragraph in the Australian Greens' amendment deals with the Doha declaration on trade related aspects of intellectual property rights—the Doha declaration on TRIPS and public health. The Doha declaration gives nations the right to make public health a priority over intellectual property rights. It empowers states to determine what constitutes a national emergency, thereby triggering exceptions to the pharmaceutical intellectual property protections in TRIPS. This is about life and death situations, the life and death of people particularly in low-income countries. For example, Australia's involvement in the provision of AIDS drugs, if there were an HIV epidemic in Papua New Guinea, may be an example of one of these emergency situations. The US-Australia free trade agreement represents an attempt by the US to undermine the Doha declaration by introducing a lesser standard through a series of bilateral trade agreements with more restrictive provisions. If we allow this attempt to undermine the primacy of public health to stand, we will see the US ultimately argue that this new lesser standard should replace the standard set out in the Doha international declaration—that is, a tougher global standard on compulsory licensing.

In this trade deal with the US we have agreed that the Australian government will only be able to compulsorily license cheap generic drugs in a public health crisis of extreme urgency. That is a different threshold level than that which exists in the Doha declaration. Does this mean that we have to wait until the situation is out of control before the government can provide affordable drugs to deal with such a situation? Why did we agree to a provision restricting our capacity to provide cheap generic drugs to deal with public health emergencies in neighbouring countries? Australia is being complicit in the deliberate US global strategy to block competition from cheap but equally effective generic drugs through a network of bilateral trade agreements modelled on the Australian precedent. This amendment ensures that the principles of the Doha declaration will be honoured and that the Australia-US free trade agreement will not be used to undermine this global commitment to put lives ahead of profits.

The final paragraph of the Greens' amendment deals with the issue of evergreening. This paragraph is designed to ensure that US drug patent holders cannot frustrate the entry of generic drugs into the market. The Greens are concerned about how the notification provisions in section 7 of the Therapeutic Goods Act will operate. Will they enable a patent holder to apply for an injunction on a spurious ground in order to delay a generic drug from entering the market? Perhaps a company so notified will use an injunction to buy time to make a minor change in the form, but not the substance, of a product and apply for a new patent, thereby preventing a generic product from being available. This practice of extending the life of a patent product, known as evergreening, is one more way that the free trade agreement might add to the cost of the Pharmaceutical Benefits Scheme without having any discernable public health benefit. Such a process will cost the Australian government, which buys drugs for the PBS, and patients will have to pay a charge at the time of filling the PBS script.

The government says that we should not be concerned about the prospect of evergreening. It says that Labor's amendments to the implementation bill earlier this year to address this issue were unnecessary. We note, however, that the US continues to disagree about the interpretation of the agreement on this point. The US Trade Representative, Robert Zoellick, in his letter to Minister Vaile that we were discussing earlier, said:

Under these amendments, pharmaceutical patent owners risk incurring significant penalties when they seek to enforce their patent rights. These provisions impose a potentially significant, unjustifiable, and discriminatory burden on the enjoyment of patent rights, specifically on owners of pharmaceutical patents. I urge the Australian Government to review this matter, particularly in light of Australia's international legal obligations. The United States reserves its rights to challenge the consistency of these amendments with such obligations.

Clearly, as far as the US government is concerned, this matter is far from settled. This amendment will make it clear that, as far as Australia is concerned, nothing in the free trade agreement is to permit the practice of evergreening to occur. I commend the Australian Greens' amendment to the chamber. Given that all of the amendment is based on statements that the government have made about the way in which they believe that the free trade agreement does not impact on our pharmaceutical benefits scheme and on our public health provisions, I look forward to the government's support.