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Thursday, 12 August 2004
Page: 26373

Senator BROWN (4:39 PM) —I thank the One Nation senator for that thought-provoking contribution, which I am sure the minister is going to answer in a short while. We have before us amendments from the Labor Party to enable a challenge to be made to head off evergreening—this process by which big corporations can delay the expiry of patents so that they can enrich themselves over an extended period of time through knocking out the opposition of generic, cheap drug producers.

I draw your attention to an interview on the ABC's The World Today program just a couple of days ago with a world-famous expert on the matter of the delivery of pharmaceuticals to the public and an American patent law expert. Professor Kevin Outterson is an Associate Professor of Law at West Virginia University and has been mentioned earlier today. He said that the big pharmaceutical companies will find a way around the legislation—that is, the amendments—possibly by challenging them at the outset. I will come back to that. Associate Professor Outterson said:


the amendment—

does have the potential of a large penalty that goes to the Commonwealth if a company improperly tries to block a generic, and it also has the potential for a part of the penalty to be paid directly to the generic company, which I think is an innovative step.

The difficulty I see with it overall though is that the standard for triggering this payment is whether they've been unreasonable in filing their application.

He said:

I think the language that they chose—

that is, the opposition—

saying is there a reasonable prospect of this pattern being valid, is just too soft, 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 will 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 easy of an opinion.

Professor Outterson went on to say:

If you took the same legislation and the same structure and implied a slightly higher standard, more likely than not it's often used internationally in tax opinions, then you would have a more substantial piece of legislation.

I have had Margaret Blake in my office in contact with a number of people and now the Greens will bring forward amendments which take that very clear reasoning from Professor Kevin Outterson and raise the bar—the standard—in this easygoing Labor amendment. I therefore seek leave to move together Green amendments (1) and (2) to opposition amendment (2) on sheet 4371.

Leave granted.

Senator BROWN —I move:

(1) Amendment (2), omit paragraph 26C(3)(b), substitute:

(b) are more likely than not to succeed;

(2) Amendment (2), subsection 26C(4), omit “have reasonable prospects of success”, substitute “are more likely than not to succeed”.

There we have a change of wording to Labor's amendment which I think Labor will see the good sense in. It probably raises the bar for the test for a renewed patent from `have reasonable prospects of success' to `more likely than not to succeed' from a 10, 20 or 30 per cent level to a 50 per cent level. It is a tighter wording and a better legal phraseology to ward off the evergreening pressure that will inevitably come to Australia as it has to North America.

By the way, it is worth noting that in Canada they also have an oversight body with professional expertise to assess patent applications and they knock out 50 per cent of them. It is called the Office of Patented Medicines and Liaison. It is something that we should have here—a public body to take action. We should not rely on the generic companies to do so, because in Australia most generic companies are subsidiaries of brand-name pharmaceutical companies anyway. The body, as with the Canadian one, would need both patent expertise and pharmaceutical expertise. That should be a matter of government action and I hope Labor will take that one up if its fortunes are realised and it gets to be the next government.

Stiff penalties are, of course, a second component to reduce the impact of evergreening. The millions of dollars that could be there are very small relative to the potential billions of dollars that drug companies could make from certain brand names. Then you could have a positive incentive for the generic companies to manufacture a drug, for example a 180-day exclusivity period for the first generic company to enter the market—that is, it would be protected from competition from other generic manufacturers for those 180 days. The ALP amendment only addresses one of those components and, of course, it does not address the appeal or review mechanism at all, which hovers now over the Pharmaceutical Benefits Scheme with the prospect of rising prices. Again, the Greens have come forward with an amendment to tighten up Labor's amendment, which is not strong enough and which will be easy game for the big pharmaceutical companies.

I want to follow up on what Senator Harris had to say about the Prime Minister's lunchtime press conference. First of all the Prime Minister says that you cannot see the legal advice. He will not show it to you—it would be a threat to the country and Mr Latham had better not show it to you either. We are debating this matter in the parliament and I think it is a matter that should be debated by all parties and it should be available to be seen by all parties. We can judge whether or not it is in the public interest. That aside, he does have this extraordinary letter from Mr Zoellick—read President Bush. It says that the United States is not going to intervene now and say what it thinks about this fairly trifling amendment that the Labor Party has brought in, which is causing so much domestic dispute and headlines in Australia. It says, `Put that through your parliament or whatever over there; we reserve the right to act on it later.'

This is John Howard at his most transparent. Here is the Prime Minister coming out for the second time today to talk about this issue and what he says is, `The Labor Party amendment, minor as it is, is a threat to society as we know it. It is a threat to our relationship with the United States.' The United States, backed up by the Prime Minister—he says, `Good on them'—is reserving the right to take action further down the line. Instead of saying, `Go paddle your own canoe,' he says, `Yes, you've got a right to take Australia on during the election campaign after parliament has put this legislation through and it might show the Labor Party up.' Let me warn the Prime Minister, as a friend, about public opinion in Australia. Australians will not like to have the sword of Bushocles hanging over their heads in the run to an election, where President Bush is able to act and say, `We won't have this free trade agreement if the amendment that the opposition put through is not taken off or ameliorated,' or more particularly, `We won't decide until after the election's over; we'll just leave everybody in a state of tension and apprehension.'

That is a Prime Minister John Howard special. Leave people feeling anxious in the run to the election. He does it every time. He is building it up now and his friend Mr Zoellick at the behest of the White House and George W. Bush is saying, `Hey, we can worry people over there in Australia. We'll leave this all messy and you can blame the opposition.' What a patently transparent, poor piece of politics this is. Instead of the Prime Minister defending this country, he is sending letters to the White House to enhance his election strategy. That is reprehensible, but it is getting a bit obvious, isn't it? The Prime Minister might just come a cropper if he tries to hang the threat of the American drug companies running this country and its pharmaceutical prices over the head of the electorate in the run to the next election. Let him try it. As far as the Greens are concerned, we think that Labor has caved in. It is not just pharmaceuticals; it is all those other issues, from quarantine to jobs to cultural content.

But what this episode shows is that the United States corporations know that all they have to do is wait for a bit—wait until it is all out of the parliament, get the signatures on the paper and have the exchange of letters that finalises the matter—and then they can strike. They do not have to come to the parliament and they do not have to be worried by any legal systems in Australia. They go to what is called a joint committee—appointed, no doubt, with their assent, by the governments—this ayatollah of trade, and say, `We've got a dispute here. Here's what our lawyers say. Settle it for us.' The Australian people cannot stand in that court and put their point of view, and neither can the American people; it is just a corporate fight-out. At the end of the day, if Australia loses there then the taxpayers pay whatever the penalty is.

At lunchtime today, Prime Minister Howard held up a bit of paper from the White House and said, `There's a penalty clause here if our democracy asserts itself.' What he did not say is that taxpayers could have to fork out billions of dollars because he signed away our rights. It is extraordinary. He is saying, `Be anxious, everybody. This free trade agreement's unsettling the relationship between us and the United States.' What he should have been saying was, `Be anxious, everybody. You're all locked out. If these drug companies and President Bush don't like the decision made on the last day of sittings of the Senate, it ultimately could end up facing a dispute mechanism with millions or billions of dollars compensation required.' Alarmist? Ask the Canadians. Alarmist? Ask the Mexicans who have been at the wrong end of suits brought under the North American Free Trade Agreement. The powerful corporate sector, in this case the pharmaceutical industry, are quiet. Have you noticed? The big corporations are not saying anything on either side. They have gone quiet on this issue because they know it is in their interest to get this legislation through this Senate, have the exchange of letters completed between President Bush and John Howard, and then strike—with this corporate-friendly, faceless joint committee which is out of the reach of the parliament and the people of both countries. (Time expired)