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Friday Forum with Lindsay Tanner and Senator -

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Broadcast: 06/08/2004

Friday Forum

Reporter: Maxine McKew

MAXINE McKEW: In the Parliament this week, it was an argument about Patent Law, but in the
community and on talk-back radio, it was much simpler - the Government's stubbornness over the free
trade agreement, specifically its immediate refusal to back Labor's proposals to protect cheap

It has to do with what's called 'evergreening', a practice that's widespread in America whereby
pharmaceutical companies seek to extend the life of a patent and thereby keep cheaper, generic
drugs off the market.

Inhibiting this practice is anything but simple, but by this morning, as we've seen, the PM had
reappraised the electoral mood and was suddenly sounding much more accommodating.

But what is it that Labor has in mind?

To help flesh out the detail, I've been joined tonight by Labor's Opposition spokesman on
Communications Lindsay Tanner and by Senator George Brandis, a member of the Senate committee which
reviewed the text of the trade agreement.

So, good evening to both of you.

George Brandis, to you first, it does look like the PM has blinked, doesn't it?

I mean, what was unworkable a few days ago is today in the national interest.

What's happened?


What Mark Latham announced on Tuesday, which was based on a complete misunderstanding of the
differences between the way Australian patent law works and American patent law, he has now
retreated from and we're waiting for him to put up his revised proposal.

What the Prime Minister has said is, "Well, look, this is unnecessary.

The free trade agreement makes no changes to Australian patent law.

It makes no changes to the operation of the Pharmaceutical Benefits Scheme at all."

But to reassure Mr Latham, if he is able to put forward an amendment which is workable - the
amendment he proposed on Tuesday was a legal nonsense, but he has relented from that - if he is is
able to put up an amendment that's workable, we'll look at it because the national interest demands
that the FTA be passed.

Can I remind you, Maxine, that on Monday we had bipartisanship on this.

The Labor Party as well as the Government is of the view that the FTA is in the national interest.

They don't apparently fully understand its operation, but if they want that reassurance, we'll give
it to them.

MAXINE McKEW: Don't you agree, though, that Labor won the politics?

I mean, in the public mind, this is now really a simple proposition about further protection for
cheap drugs on the PBS.

SENATOR GEORGE BRANDIS: Well, I think Mr Latham said loudly and frequently that he is about
protecting the PBS, but the truth of the matter is...

MAXINE McKEW: And that message got through.

SENATOR GEORGE BRANDIS: Well, it did get through to a degree, but it is a false message because
there are no amendments to the PBS at all as a result of the free trade agreement.

I think the Prime Minister's emphasis on that point has begun to surface in the last couple of

MAXINE McKEW: Which is why, I assume, we saw Graham Morris, the PM's former adviser saying this in
the 'Financial Review this morning, "What the ALP is advocating might be a bit silly, but in a
political sense, Labor is making things awkward for the Government."

That's what it comes down to, doesn't it?

SENATOR GEORGE BRANDIS: Well, I think it was a bit of a political stunt.

Mr Latham moved from bipartisanship on the issue on Monday to the throwing this red herring into
the ring on Tuesday.

MAXINE McKEW: Well, it didn't like sound like bipartisanship on Monday, it was a conditional
support SENATOR GEORGE BRANDIS: No, no, that's not right, and that's another misapprehension people

The Senate committee made one common recommendation and that is that the free trade agreement be
passed by the Senate.

That was a motion moved by Senator Stephen Conroy, seconded by me, and if you look at the text of
it, it is unconditional.

The Labor senators then made 42 other recommendations, but recommendation one, the key
recommendation that the Senate passed the FTA Bill, was not expressed to be conditional on anything

And if you read the text of what Senator Conroy said at the press conference on Monday, that's
quite clear.

MAXINE McKEW: Lindsay Tanner, to you now - what can we expect next week?

Where is the detail in what Labor is proposing?

LINDSAY TANNER, LABOR FRONTBENCHER: Labor's amendments will be put forward in a few days' time,
Maxine, and they will ensure that there are stronger penalties, strong disincentives for drug
companies that are engaged in abuse of the patent system in order to keep generic drugs off the
market for longer, cheaper drugs, and therefore have a negative effect on the interests of
Australian taxpayers and consumers.

And the hair-splitting and nit-picking...

MAXINE McKEW: Sorry, just to be clear, is that a change to the Patents Act, is that what you're
getting at?

LINDSAY TANNER: My understanding is that that's what it would be, but obviously I'm not directly
involved in the drafting of these amendments because it's not relevant to my portfolio.

But all the hair-splitting and nit-picking that John Howard has been carrying on about doesn't
really alter the fact that he has engaged in a backdown because he has misread the mood of the
Australian people.

We've got a dispute here, a debate, between the interests of big American drug companies and the
interests of Australian consumers.

We're standing up for the interests of Australian consumers.

I would like to know where John Howard stands?.

Where do you stand on that, George?

Whose side are you on, the interest of Australian consumers or big American drug companies?

SENATOR GEORGE BRANDIS: Lindsay, I want to make a point that has been escaped in this debate so

The reason evergreening exists in the United States is because their patent law is quite different
from ours.

Evergreening has never been a feature of Australian patent law.

The reason for that is because in America, if the holder of a patent wants to stop a generic drug
coming onto the market, they can get an automatic 30-month injunction under American law.

During the negotiations on the free trade agreement - and this was the evidence of the chief
negotiator, Mr Deady, before the Senate committee if you bothered to read it - the Americans
pressed us very hard to incorporate into Australian law the system that they have in American law
that makes evergreening possible and we resisted.

The great irony of this debate, the great misconception, Maxine, is what was a great win for
Australia in these negotiations, that is, to keep the American legal regime out of Australia so as
to prevent evergreening is being disregarded.

MAXINE McKEW: But, Senator, as you know, there are any number of patent lawyers or academics who
have been saying this week that, yes, it is an issue that is rife now in the US and it could be
quite a problem here.

What did the Senate committee do to address this point before Mr Latham's suggestion of penalties?

SENATOR GEORGE BRANDIS: Well, what the Senate committee did was pointed out that the evidence of
the chief negotiator who, of all the couple of hundred witnesses we had, the chief negotiator, Mr
Deady, was far and away the man who was across the detail of the FTA than anyone else.

He was quite emphatic that the American agenda in these negotiations was to get Australia to adopt
a similar system to the American system, a system under an American act called the Hatch Waxman Act
and we resisted those attempts.

This was a win for us.

We kept our patent law intact and, by doing so, we kept the opportunity to engage in the practice
of evergreening out of the Australian market.


Lindsay Tanner -

LINDSAY TANNER: Maxine, it's not true to say, it's not try to say that the free trade agreement has
changed nothing with respect to the PBS and patent law.

There is a significant change.

Generic manufacturers will now have to give notice to existing patent holders of their intention to
produce cheaper generic versions once the drug comes out of patent.

That means that the door is open more to the prospect of abuse.

It changes the relative balance between the two players and that means there is a greater threat of
these kind of activities --

MAXINE McKEW: Just on that point -

LINDSAY TANNER: We need to strength our protection against it.


Just on that point, Lindsay Tanner, you are quite right, there is now a certification process

If that is in any way problematic to the generic industry, why haven't we heard them bellyaching
about this?

They've been silent on this issue, in the lead-up, during the inquiry and, indeed, certainly this

They're not saying it is a problem.

LINDSAY TANNER: There has been a variety of voices expressed in the debate, Maxine, running right
across the spectrum.

All we're seeking to do is guarantee that there are stronger protections there to ensure that we
don't get the kind of behaviour that we see in the United States because we have a pharmaceutical
benefits scheme that keeps drugs as cheap as possible for all Australians.

We're committed to defending that.

John Howard is playing politics with it.

He has pursued the free trade agreement all along with the idea of trying to use it as a political
weapon against the Labor Party and that's now being exposed.

If you're fair dinkum about this then make sure the PBS is protected.

MAXINE McKEW: Alright, let's get fair dinkum.

Lindsay Tanner, what legal advice is it that Labor has at this stage to suggest that these
penalties that you're talking about, that that whole regime is doable, that in one amendment you
can really achieve what is regarded as a highly problematic set of changes?

LINDSAY TANNER: Look, I haven't seen the legal advice because I'm not directly involved in drafting
the amendments.

You'll see those amendments within the next few days...

MAXINE McKEW: You're confident it is doable, though?

LINDSAY TANNER: Oh, quite clearly.

I understand that the amendments will relate to putting in place the prospect of damages available
to generic companies that are having their drugs delayed by spurious patents, that the Commonwealth
will be able to pursue damages as well for potential loss of income with respect to the PBS because
obviously it is the taxpayer that ultimately foots the bill and even the possibility of fines,
criminal penalties for more extreme behaviour.

SENATOR GEORGE BRANDIS: Oh, let's have the amendments, Lindsay.

LINDSAY TANNER: I'm not involved in the drafting of those things.


LINDSAY TANNER: You'll get the amendments, George, and I might say that you made a reference to
some false assumptions about Labor's amendments earlier.

You haven't seen them yet!

How can you draw those conclusions?


LINDSAY TANNER: You've just been trying to create a smokescreen.

You will back down.

Let's face it.

You'll go to back down.


What Mr Latham said on Tuesday was unworkable.

The Prime Minister pointed that out and in the House of Representatives this week.

LINDSAY TANNER: You are just misinterpreting what he said.

SENATOR GEORGE BRANDIS: Mr Latham is now proposing another option and we're waiting to see it and
we think it's unnecessary because...

LINDSAY TANNER: You didn't see the previous one.

How can you denote it unworkable when you haven't see it?

You're saying with this one you're waiting to see it.

SENATOR GEORGE BRANDIS: We heard what Mr Latham had to say about it and what he had to say was
based on the misconception that the application for a patent in Australia can stop a generic drug
coming onto the market.

That's not so.

That's the position in the United States under the Hatch Waxman Act.

It's not the position in Australia.

Mr Latham simply didn't know what he was talking about.

LINDSAY TANNER: Apparently you have misinterpreted what he was saying.

SENATOR GEORGE BRANDIS: But apparently a more mature head has prevailed and Mr Latham has now
abated from that position.

He has promised us an amendment based on damages.

Well, let's see it.

If it's in the national interest, Lindsay, as you and I both know, to get this FTA through, if an
amendment which a journalist, Dennis Shanahan, described in one of this morning's papers as a
placebo is necessary to give your side the reassurance that you obviously need because you're not
across the detail of the text of the FTA, you want this extra reassurance, we'll give it to you if
it's something that doesn't interfere with the intellectual property law of Australia.


George Brandis, there is another...

LINDSAY TANNER: I assure you it won't be a placebo and protecting the Pharmaceutical Benefits
Scheme for all Australians is a lot more serious than that.

SENATOR GEORGE BRANDIS: There are no changes to the Pharmaceutical Benefits Scheme as a result of
the FTA, full stop.

MAXINE McKEW: Lindsay Tanner, bottom line, are we likely to have a bipartisan agreement on the FTA
by this time next week?

LINDSAY TANNER: I think we probably will because I think the Prime Minister is clearly preparing
the way for a backdown on this issue of the PBS and it is a serious issue and we have extracted a
major change with respect to local content rules.

We have entrenched the 55 per cent local content for television and 80 per cent for advertising and
what that will mean is that in future it will take bipartisan agreement, both sides of politics
will have to agree if it is to be reduced and the reason that's important is because under the free
trade agreement, if it's reduced, it can't go back up again.

That means that we will have to have bipartisan agreement in the future for that to happen.

That's a very important protection for the erosion of local content that the free trade

MAXINE McKEW: Sure, but tell me this, Lindsay Tanner - when you look at the wider problems of the
Australian film industry, do you agree that they're a lot more complex than simply the volume of
material that pours out of Hollywood?

LINDSAY TANNER: Oh, there is no doubt about that.

In fact, in the longer term, the biggest threat to the Australian content industry on television
and other media will be technological change, so we shouldn't assume that the FTA is the only

The free trade agreement is not the only issue.

MAXINE McKEW: So we've hearing some half-baked arguments from the likes of our acting community?

LINDSAY TANNER: No, we haven't been hearing some half-baked arguments.

They've had very legitimate concerns.

What we're doing is first putting in place that guarantee that only bipartisan agreement will
ensure that the local content rule is reduced in future.

Secondly, we intend to legislate in government to define interactive audio-visual media as broadly
as possible where the agreement specifies that Australia can continue to regulate for local content
and, thirdly, a Labor government is going to increase funding for organisations like the ABC which
are at the heart of our local content sector.

So we are going to put in place serious steps to ameliorate the negative impacts of the free trade
agreement but it's not the only threat facing our content industry, by any means.

MAXINE McKEW: Alright.

George Brandis, this time next week a lot of us are going to be watching the Opening Ceremony of
the Olympic Games, but is John Howard also going to be thinking about going out to Yarralumla?

SENATOR GEORGE BRANDIS: Well, I'm not privy to the Prime Minister's thoughts about that, Maxine.

I think most people expect that the election will be before the American election in the first week
of November.

There are certain dates that have been ruled out because of sporting finals.

You're down to three or four potential Saturdays.

One of them is 18 September.

That's the earliest feasible date now.

MAXINE McKEW: Sound likely to you?

SENATOR GEORGE BRANDIS: Um, I really don't want...

MAXINE McKEW: Firming, firming?

Come on.

SENATOR GEORGE BRANDIS: I really don't want to speculate because I honestly don't know.


Lindsay Tanner, according to Newspoll this week Labor has lost the very good lead it had in May.

The two-party vote is now 50/50.

It is late five minutes to the election being called for Labor to reverse this trend, isn't it?

LINDSAY TANNER: I think we're still highly competitive.

It is always going to be a very close race.

Yes, we had a bit of a stronger lead earlier in the year, but I think a lot of that was off the
back off the surge that comes with a new leader who had a very positive response.

But inevitably things tighten as you get close to the election.

We've seen that many times before.

I think it's going to be a very tight race and I think we're very much in with a very strong

I think we're going to win.

It is obviously unlikely to be a big margin either way and a lot will depend on the campaign, but
we're in a strong position and I'm pretty happy with where things are and --

MAXINE McKEW: But if the PM calls this election right at the start of the Olympics, you're going to
lose a couple of weeks of oxygen time in terms of news space and national attention, aren't you?

You've left a lot of your top-policy detail to the last minute.

LINDSAY TANNER: Not necessarily.

Jeff Kennett thought that when we called his 1999 election which was smothered by the football
finals, and he lost.

So all of these platitudes about, theories about how elections operate and what will happen with
respect to football finals and Olympics and so on, I don't place much store in.

Australian voters are a bit smarter than that.

They'll form their views, they'll make their minds and obviously we, as an opposition, we've got
some obstacles to overcome to get our messages through but I think Mark Latham has struck a chord
with the Australian electorate.

They are interested to hear what he's got to say and they're going to take notice of our positions
and form their own views and vote accordingly.

SENATOR GEORGE BRANDIS: Maxine, there is one thing I agree with Lindsay about.

I think the Labor Party is competitive in this election.

I think it will be a tight election and that's what the Prime Minister has been saying all along.

But one thing I would predict to you is that when people judge John Howard against Mark Latham
during the election campaign, the stature gap between the two men will emerge very plainly, the
fact that Mark Latham --

LINDSAY TANNER: Which stature are you talking about, George?

SENATOR GEORGE BRANDIS: Mark Latham is just too underdone, just too light-on, just too glib to be a
plausible or a credible prime minister of Australia.

MAXINE McKEW: Equally, George Brandis, would you agree that the Prime Minister is not going into
this election with the same credibility level that he did last time?

SENATOR GEORGE BRANDIS: I don't agree with that at all.

I mean, I think...

MAXINE McKEW: Well, when he said - there was ridicule in the Parliament when he said this week, "I
have advice from five different departments that says we can't do anything on patent law," it
sounded ridiculous.

SENATOR GEORGE BRANDIS: Well, he did have that advice and not only did he have advice...

MAXINE MCKEW: Well, I'm sure he did, but now that entire advice is questionable.

SENATOR GEORGE BRANDIS: ...from five different departments, he also had, if you read the morning
newspapers, the almost unanimous advice of every patent lawyer who was consulted by the press
saying that what Mark Latham had said on Tuesday reflected an elementary misunderstanding of the
way patent law worked and was simply ridiculous.

MAXINE McKEW: Gentlemen, we are out of time.

George Brandis and Lindsay Tanner, thanks very much.

We'll talk to you again soon.


LINDSAY TANNER: Thanks very much, Maxine.

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