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Monday, 7 May 1984
Page: 1626

Senator RICHARDSON —Is the Minister representing the Minister for Health aware of the recent decision by Ciba-Geigy Australia Ltd to close down its pharmaceutical manufacturing plant at Smithfield in Sydney by 1 October 1984 at a loss of some 80 jobs? One of the reasons listed by Ciba-Geigy for that decision was its concern over the Government's generic policy. Is there any basis in its claim that the extremely low selling prices for its products under the pharmaceutical benefits scheme and the second stage of the Government's generic policy were major factors in the decision to close down its Smithfield manufacturing operations? Does the Government know of any other companies in the pharmaceutical industry which are facing similar difficulties? Will the Government negotiate with Ciba-Geigy to ensure that no hardship is caused either to those people who reply on the drugs formerly produced by the company or to the retrenched employees of the company?

Senator GRIMES —I am aware that Ciba-Geigy intends to close its Smithfield operation. I think the job loss involved is about 80. Ciba-Geigy's close-down is part of a reconstruction of its pharmaceutical manufacturing operations in this country and, one could say, part of a general restructuring of pharmaceutical operations by such companies in this country. This is not surprising in view of the fact that most informed people in the area, including I hope Senator Townley , would accept the fact that there was a considerable over-expansion in this area in the 1960s and 1970s.

Senator Peter Baume —Do you mean that manufacturing has over expanded in this country?

Senator GRIMES —Yes. Senator Baume does not accept that that is so. The pharmaceutical industry does. I assume that Senator Baume is arguing that we should maintain an artificially high price for the pharmaceuticals we are purchasing through the national pharmaceutical system in order to maintain companies like Ciba-Geigy at the scale at which they are operating.

One of the problems which, interestingly enough, arose on a well-known television program last night has been the operations of companies such as the Ciba-Geigy and Roche companies throughout the world which have indulged in transfer pricing and artificial pricing arrangements in countries such as Australia. They maintain their operations in countries at this level at the expense of patients and governments. Ciba-Geigy, if I remember rightly, had problems in this country with the price of hydralazine-I may be incorrect in naming that substance-and other drugs. It claimed that the prices offered in this country were too low whereas, in fact, it was selling them at much lower prices in other countries. The pricing of pharmaceuticals in this country is the result of negotiations between the companies and the Government. This Government has, and I believe the previous government had, no intention of being ripped off by large multinational companies indulging in transfer pricing of this type to the detriment of the patients and the government.

I believe that Ciba-Geigy's close-down is part of a general restructuring of that company. There is no evidence I believe-I will seek further information from the Minister for Health-that any patient in this country will suffer from the lack of drugs produced at the Smithfield operation. All I can say is that Ciba-Geigy's operations in this country have been under a process of reconstruction for some time. I will certainly seek information from both the Minister for Health and the Minister for Employment and Industrial Relations as to the likelihood of the people who have lost their jobs in this area receiving similar work in the industry in Australia.