Free Trade Agreement Bad For Our Patients’ Health

Published in

Australian Doctor April 2004

Access to a comprehensive range of pharmaceuticals for all of our patients is now at further risk due to the US Australia Free Trade Agreement (FTA). There are at least five areas of concern:-

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1. The coercive powers of the FTA

2. The listing and pricing of new drugs

3. The potential for further changes through the proposed Medicines Working Group.

4. Direct to consumer advertising

5. The (development) restriction of the generic industry

Free Trade Agreements are enforced by a process in which one country disputes another country’s practice. The dispute is resolved on the basis of the wording of the agreement, interpreted behind closed doors by a trade tribunal. Its decision is final. The wording of the pharmaceutical section of this FTA starts with principles which must guide the tribunal. It includes lots of references to the importance of innovative pharmaceuticals and research and development but sadly for our patients it contains no references to equity of access, comprehensiveness of drugs, or universality.

New drugs are currently subject to an exhaustive selection process by a Government appointed independent committee, the PBAC. It is proposed that a further independent review process be developed. No details are given. We are assured that the PBAC will still have the final say about listing (before it goes to the Minister). But extra pressure can be applied to the PBAC by an appeals process, and the amount of pressure that may be exerted is unknown. Given that the appeals process has been proposed by the US, it is reasonable to expect that it will help their interests more than ours.

A Medicines Working Group is proposed. This is a group of US and Australian officials, with the poorly defined task of promoting discussion between the two countries. No mention of equity. What do we have to learn about drug policy from a country with the most inequitable access to drugs in the western world?

Proposals relating to provision of drug information on the internet are said to be simply stating what is already the situation. If that is so then the only change which will occur because of the FTA will be that the current situation will be enshrined in the wording of the FTA and therefore subject to interpretation in the secretive dispute process based on the unbalanced principles mentioned previously. It is possible that this could lead to increased direct to consumer advertising (it already occurs in Australia under the guise of getting drugs onto current affairs and lifestyle shows, advertising for help for conditions such as obesity, impotence etc).

The generic industry in Australia is small but does lead to savings for the PBS, hospital pharmacies, and for individuals for over the counter preparations. Any additional barriers to the generic industry are likely to lead to a decrease in savings for all these groups and increased costs. Proposed changes do lead to small but definite increases in the hurdles generic companies must jump before getting a license to manufacture a new drug.

The US has been very open about its belief that Australians do not pay their fair share for drugs. Apart from some changes to the transparency and speed of the listing process (which could improve access for our patients and are suggested by many irrespective of the FTA), this FTA is designed to get Australians to pay their way ie contribute more to the already hugely profitable US drug industry. The basic tenets of the PBS, ie affordability, comprehensiveness, and universality are ignored.  There is much to fear as one or all of the above proposals gradually lead to an unnecessary increase in PBS costs. Then we will see the Government looking to `cost saving measures’. Higher copayments or decreased comprehensiveness are already proposed. The Government will feel even more justified in introducing such measures as costs rise.

Already in Australia 23% of sick non hospitalised patients fail to fill out prescriptions because of copayments (Commonwealth Fund Survey 2002). This FTA will see that percentage rise and our patients will suffer.

Tim Woodruff

President, Doctors Reform Society