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Thursday, 12 August 2004
Page: 26310

Senator NETTLE (12:12 PM) —We have had two Labor speakers try to justify what they are doing. The Labor Party in this public debate claim these amendments seek to protect our Pharmaceutical Benefits Scheme. Our Pharmaceutical Benefits Scheme is undermined by this US-Australia free trade agreement in a raft of different ways. The Labor amendment deals with one component of one of the areas in which the PBS is undermined by the free trade agreement. It is not a fix-all; it is not an opportunity to take it off the table. Right from the outset the Greens—and the Labor Party, too, in the Senate inquiry I was part of—called for the PBS to be exempt from the negotiations, to be completely removed from the negotiations. That has not happened, and the Labor Party no longer support removing the PBS from the free trade agreement.

The PBS is going to be undermined, and not only by this issue of evergreening, which is occurring in Australia and proliferating in the United States. Evergreening happens when brand name manufacturers of pharmaceuticals take out exorbitant and spurious patents to stop generic manufacturers from being able to get their products onto the market. That is one of the ways the Pharmaceutical Benefits Scheme will be undermined through this free trade agreement.

There are two other main areas in which this free trade agreement will undermine our Pharmaceutical Benefits Scheme. The agree-ment will bring in a review mechanism under which US pharmaceutical companies can appeal decisions that our Pharmaceutical Benefits Advisory Committee has made about the cost-effectiveness and medical effectiveness of a drug before it chooses to list it on our Pharmaceutical Benefits Scheme. The United States have made it quite clear, both through the members of congress and the pharmaceuticals industry, that they consider this to be an appeals mechanism. It is a mechanism that this government looked at in 2000. Senator Grant Tambling looked at this issue and recommended that the government not introduce a review mechanism as is proposed in this trade agreement. The government took that advice from its own senator at the time and rejected the proposal. What has changed for the government now that, all of a sudden when the request is coming from George W. Bush and the US pharmaceutical companies, they are prepared to accept a review mechanism they rejected on their own advice four years ago?

The other area in which the Pharmaceutical Benefits Scheme is impacted on and undermined by this free trade agreement is the setting up of a medicines working group that explicitly has, in its terms of reference, providing opportunities for US pharmaceutical companies to get more revenue for their innovation, research and development. That is what the United States have been trying to do through their negotiating. They have made that quite clear from the outset. The Australian government has known about that. The Australian government was aware of documents printed in the Australian in December last year marked `Australian confidential information: to be treated as US confidential information' in which the pharmaceuticals industry and the US negotiators made it quite clear that they sought to use intellectual property issues as a backdoor route for dealing with and undermining the Pharmaceutical Benefits Scheme. That has been clear from the outset and has been put on the record by the Americans. The Australian government and the Australian negotiators have known of that and ignored it. They have allowed the United States to continue putting in all of these extra parliamentary committees and processes in which pharmaceutical industries can have their concerns heard over and above our own determination about what is in our public health interests and what is in the interests of Australians in being able to get affordable and effective medicines. The Australian government has ignored those and has signed on to a deal that we will see undermining our Pharmaceutical Benefits Scheme.

The Labor Party have said: `Oh, no, that is an issue. We are supposed to be a party that stands up for public health and for our Pharmaceutical Benefits Scheme, regardless of the fact that we just increased the price of essential medicines in the Pharmaceutical Benefits Scheme the last time we were here in the Senate debating this particular issue. But, because we have got to try to maintain that perception within the community, let's come up with some fiddly little amendment that makes minor changes which we can portray as being a great win for the Labor Party in standing up for public health.' That is not good enough. That is not fooling anyone. That does not convince us.

If the Labor Party were genuine about wanting to protect public health, they would have continued with the commitment they made last year to exempt the Pharmaceutical Benefits Scheme from the US-Australia free trade agreement negotiations—full stop, from the start, take it off the negotiating table and don't put it in the trade negotiations. Over the last few days there have been several opportunities for the Labor Party to continue with that position through amendments that have been put up by the Greens, the Democrats and One Nation about these issues to say: `Let's take it off the table. Let's make sure it is not undermined.' But that is not the approach that the Labor Party have taken. That is not the path that they have gone down. They have said: `We want to have this trade agreement. We do not want a government to wedge us on this issue, so we will sign up and let's see if we can run a public relations campaign which tries to convince a few people that we really care about these issues.' Well, that is not convincing the people who know about these issues.

Let us have a look at some of the comments that experts in this area have made about the effectiveness of the amendments that the Labor Party are proposing. Professor Peter Drahos is one of them. He is an intellectual property law expert at the Australian National University. He said on Tuesday:

... these rules are not attacking the actual ability of the company to get a patent in the Patent Office, but simply placing restrictions on what they can do once they have them.

So they are not actually stopping the process of evergreening from occurring, a process we are already seeing occur in Australia, but simply putting in place penalties that may deter some companies from being involved in this. But they are not about stopping the process of evergreening that is occurring in Australia and is proliferating in the United States. Over the last few days the government's and the opposition's lawyers have been arguing about the effectiveness of the amendments that are being put forward. What we will see from the amendments that are being proposed is that more lawyers will have the same debates that the government's and opposition's lawyers have been having over the last few days. More lawyers will be having debates about what is good faith and how good faith is defined. This is a real opportunity for the large-scale manufacturers—the brand name manufacturers of pharmaceuticals—to get their way. On Monday, in an interview with the ABC, Peter Drahos said:

... lawyers will argue over the meaning of words like good faith and what is the reasonable prospect of success ... complexity ... is the friend of the large pharmaceutical company.

Complexity is not the friend of the generic manufacturers trying to get their products into the marketplace. Peter Drahos was asked on TheLawReport on Tuesday:

In your view, if these amendments are passed, will they prevent evergreening?

He answered `no'. He described the situation in these terms:

[In] eliminating ever-greening patents you need a system of weed control. All Labor have is like a hoe. You know, you are being asked to tackle a field of weeds with a hoe. You ... need a system of weed control to do the job.

Kevin Outterson, who is Associate Professor of Law at West Virginia University in the United States, was shown prominently on last week's FourCorners program talking about these issues. His comments in the media this week about the Labor amendments were:

... it's too easy for a law firm to give an opinion to a pharmaceutical company—`Yes, there is some reasonable prospect that your patent to be upheld'. That could be a one in ten chance, or a one in five chance. It won't take much for a law firm to be able to give that ... opinion.

He was asked by a reporter on an ABC program:

You have a reasonably good understanding of the way so-called big pharma works. How do you think it would be reacting to these amendments here in Australia?

He replied:

I think they would find this to be something they could live with. I think they probably would fear something that was more stringent.

We have a similar law in the United States—

and he described the provision in the Therapeutic Goods Act, and then added:

and we have a similar provision—

which is called the Hatch-Waxman Act—

in the United States, and for a decade our Congress has been trying to change that law, in order to stay one step ahead of big pharma and to allow generics in more aggressively, to stop this evergreening practice.

He continues:

Every time our Congress puts in a complex law, big pharma has found a way to get around it. So I suspect that with this law we'll see the similar thing that the pharmaceutical companies may complain, they may throw up some smoke screen, but at the end of the day, I'd be very surprised if any company ever has to pay one dollar under this amendment.

That is the view from an associate professor of law at West Virginia University who specialises in these areas of evergreening patents and who lives in the country that has seen the greatest proliferation of evergreening patents from pharmaceutical companies in the United States. I will read from an article in Saturday's Age by Thomas Faunce, who is a senior lecturer in the medical school and a lecturer in the law faculty at ANU in Canberra. He says:

In 2002, an extensive inquiry by the US Federal Trade Commission found that as many as 75 per cent of new drug applications by generic drug manufacturers were the subject of legal actions under patent laws by the original brand-name patent owner. These were driving up US drug costs by keeping the cheaper generic versions off the market.

In Canada, similarly extensive investigation by the Competition Bureau revealed similar problems with drug patent evergreening.

He continues:

The evergreening article in the Australia-US FTA ... is far worse than the US or Canadian versions. For the first time it links the operations of our Therapeutic Drug Administration ... with supervising patent law.

It requires that the TGA drug marketing approval be “prevented” indefinitely (not for the 30-month and 24-month periods as in the US and Canada) whenever any type of patent (including a speculative evergreening patent) is merely “claimed”.

He describes Labor's proposed legislative penalty for evergreening as the `lowest common denominator solution'. He also says:

The generic drug industry in the US and Canada has the financial resources and independence to fight evergreening patent claims. The profit margins of generic companies in Australia are extremely fragile. Most are subsidiaries of the multinational pharmaceutical companies. As a result, it will be much harder for them to resist the threats posed by evergreening.

These are the so-called safeguards that the Labor Party believes it will be putting in place. This is not going to protect our Pharmaceutical Benefits Scheme. It is not going to protect us from the process of evergreening. We are already seeing evergreening in this country—and not just one instance. Several instances have occurred. There are court cases that continue about the issue of evergreening. There are law companies based in Sydney that I know of that are doing extremely well out of the process of evergreening as big brand-name manufacturers try to stop generic drugs from getting onto the program.

The United States have a coup in getting this free trade agreement, not just by getting the government to come on board but also by getting the opposition to come on board in Australia. They have set an international precedent that they have not been able to negotiate in international trade negotiations through the WTO. They have set a precedent which allows them to then negotiate free trade agreements with, for example, African countries, where these evergreening patents will be able to stop generic drugs for the prevention and cure of HIV, which is a growing epidemic in Asia and in Africa, from being able to come on board. They will prevent these generic drugs being available for people in those communities where they are most needed.

This is the international precedent that is being set by the opposition and by the government today. Australia is signing up on the back of John Howard's and Mark Latham's ride to say: `We will undermine a system of allowing generic drugs to come on board early. We are going to draw up a system which ensures generic manufacturers are disadvantaged. By doing so, we will make it easier for the US pharmaceutical companies to be able to bring in a similar system in each of the individual free trade agreements that they negotiate with poorer and weaker countries.' They have not been able to negotiate that in the international trade agreements, but now a precedent has been set for them. They can set up this, ensuring that women who are in African countries or in South-East Asia, suffering as a result of HIV, will not have access to timely and affordable generic drugs at a time when they need them. That is the precedent that has been set. It is not just about undermining our Pharmaceutical Benefits Scheme here in this country; it is setting an international precedent to ensure that people across this world who need fast access to these cheaper and therefore more affordable medicines will not be able to get them. Thank you for nothing. The Greens will not be standing for this at all.