Rapid Responses to:
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Rapid Responses: Rapid Responses published:
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![[Read Rapid Response]](/icons/misc/sectionDOWN.gif)
The PBS should be adopted by the UK
- Fred Johnson (27 May 2004)
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Oppose the weakening of the PBS by the US-Australia FTA
- Ken J Harvey (29 May 2004)
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US FTA Medicines Strategies
- Thomas Faunce (30 May 2004)
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Testimony to the US House Ways & Means Committee on the Australian-US FTA
- Kevin Outterson (23 June 2004)
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Unwarranted fears about Australian FTA
- Eric Noehrenberg (23 June 2004)
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Read my lips - there will be NO increase !
- Dr. Herbert H. Nehrlich (23 June 2004)
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Fred Johnson, Physician London
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This is very bad news, and a gross abuse of power by the US. Perversely, it is a measure of the success of the Australian PBS in enforcing good prescribing habits: it works so well that the pharmaceutical industry feels the need to crush it. The need to emasculate the PBS is not because Australia matters as a market per se, but more that other countries having been showing an interest in adopting something similar. Essentially the PBS is like NICE with teeth, incorporating a system which strongly encourages doctors to use drugs which are clinically and cost effective. It would be relatively easy to extend this concept to other medical devices (e.g. artificial hip joints) that doctors seem incapable of choosing wisely. [I am a doctor who has just moved to the UK from Australia, and believe that both the PBS and the TAC are systems which would offer much to the UK.] Competing interests: None declared |
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Ken J Harvey, Senior Lecturer, School of Public Health La Trobe University, Bundoora, 3086, Australia
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I’m writing this from Amman, Jordan where I and a team of fellow Australians are assisting the Jordanian government with pharmaceutical policy reform; a reflection of the high regard in which Australian medicinal drug policy is held. I find it particularly ironic that, back home, Australian medicinal drug policy is being undermined by a Free Trade Agreement (FTA) with the United States of America (US); a country that many believe has the worst drug policy in the developed world (the most expensive, the most inequitable and the worst health outcomes)! Drug prices obtained by the Australian Pharmaceutical Benefits Scheme (PBS) are currently about 3-4 times lower than those in the US [1]. The PBS has kept drug prices low by a number of strategies now being copied by other countries. Pharmacoeconomic analysis and reference pricing are used to determine what the benefits of a new drug are genuinely worth while monopsony power is used to counter the increasingly prolonged price- setting monopoly accorded to pharmaceutical patent holders. Given the low drug prices achieved by the PBS and its role as an exemplar to other countries it is not surprising that the FTA was used as an opportunity by the US to target the PBS. What is surprising is that Australian negotiators (and the government) allowed concessions to be made. Perhaps they spent too long locked up with U.S. negotiators in protracted and difficult negotiations? On their return to Australia, our negotiators appeared to exhibit clear signs of the “Stockholm” or hostage syndrome. This syndrome includes emotional bonding with the captor/abuser, seeking favours and approval from the perpetrator and resenting those who attempt to rescue them from their delusions. In short, our FTA negotiators (and the Australian government) know not what they have done! Earlier this month, Australian Trade Minister Mark Vaile and his US counterpart, Robert Zoellick, signed the USA - Australia FTA. This is despite two on-going parliamentary inquiries in Australia that have received over 700 public submissions, the majority of which oppose the FTA, especially because of concern over its impact on the PBS. Written submissions & oral testimony (Hansard transcripts) to these inquires can be accessed at: http://www.aph.gov.au/house/committee/jsct/usafta/index.htm and http://www.aph.gov.au/Senate/committee/freetrade_ctte The battle to oppose the FTA is now focused on the Australian Senate where the Labor opposition, Greens, Democrats and independent senators hold the balance of power. I support the many concerned health and consumer organisations who have asked the Senate either to block the FTA in its entirety or produce a further exchange of letters between Australia and the US to resolve key PBS concerns before passing the necessary implementing legislation. I urge all those concerned about the global implications of the USA push for bilaterally negotiated TRIPS Plus agreements to assist us in this struggle. The key E-mail addresses to lobby are as follows: Labor: M.Latham.MP@aph.gov.au; Julia.Gillard.MP@aph.gov.au; senator.cook@aph.gov.au; senator.conroy@aph.gov.au Greens: senator.nettle@aph.gov.au Democrats: senator.ridgeway@aph.gov.au Independents: senator.murphy@aph.gov.au; senator.harradine@aph.gov.au; senator.lees@aph.gov.au; senator.harris@aph.gov.au At this time I keep in mind the following quotations from the English Statesman Edmund Burke who said, "All that is necessary for the triumph of evil is that good men do nothing". And the German pathologist and health activist Rudolph Virchow who said, "Medicine is a social science and politics is nothing more than medicine practiced on a larger stage". --- 1. Lokuge B, Faunce TA, Denniss R. 2003, A backdoor to higher medicine prices? Intellectual property and the Australia-US Free Trade Agreement. The Australia Institute. Competing interests: None declared |
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Thomas Faunce, Senior Lecturer ANU Medical School and Law Faculty Australian National University Law FAculty 0200
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Some strategies we have argued for to protect Australia's PBS reference price controls and generic pharmaceutical industry from US bilateral trade pressure, may be instructive for other nations contemplating similar agreements. We have suggested the following as the minimum five points that should be inserted in the AUSFTA before our Senate should pass amendments to legislation required to give effect to this agreement. First, the interpretive princiiples in any trade section dealing with pharmaceuticals must have an unqualified reference to the importance of "universal access to affordable essential medicines." Second, any group or committee established under such an FTA to look at phramaceuticals should include representation from independent public health and experts and the community. Third, any new review mechanism for a body involved in reference pricing of new pharamaceuticals should not have the power to overturn that body's decisions and should be able to review determinations to both list and delist. Fourth, any attempt by US pharmaceutical companies to "increase transparency" in such government pricing mechanisms should require the public disclossure on the web of all documentation submitted by a drug manufacturer to achieve such listing. Fifth, the capacity of generic manufacturers to rapidly "springboard" their products using existing data upon patent expiry free of the threat of litigation, should be protected. Competing interests: None declared |
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Kevin Outterson, Associate professor of law West Virginia University, Morgantown, WV 26506
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The U.S.-Australia Free Trade Agreement’s Unfortunate Attack on Good Healthcare Policy Kevin Outterson 1. The Australian Pharmaceutical Benefits Scheme Americans are increasingly looking to “pay for value” in health care. The Australian experience with the economic evaluation of drugs in the Pharmaceutical Benefits Scheme (PBS) is the gold standard of such programs worldwide. The PBS is not government price controls, but allows pharmaceutical companies to request higher reimbursement levels if data establishes the greater cost-effectiveness of the drug. It does not appear that Australia is ‘free riding’ on American-funded innovation, since companies are given ample opportunity to seek higher reimbursement for truly innovative drugs. The PBS has generated unwelcome attention from PhRMA and its Australian counterpart, Medicines Australia. This is unsurprising, since the PBS economic evaluations have resulted in some of the lowest patented drug prices in the OECD, much lower than even Canadian prices. After years of unsuccessful domestic attempts to derail PBAC in Australia, PhRMA and Medicines Australia turned to international trade law, namely the Australian-US Free Trade Agreement (FTA). The primary talking point on this issue is to increase transparency in the PBS (see section 5 below), but the actual goal is to increase Australian drug prices. 2. The FTA is Likely To Raise Australian Drug Prices A debate is underway in Australia as to whether the FTA will force significant changes in PBS. While scaled back from early proposals, the FTA nonetheless requires subtle modifications to the PBS which will lead to higher prices in Australia, as detailed by the recent editorial in the British Medical Journal and recent testimony in the Australian Parliament. Against this evidence, the Australian government claims that the FTA provisions won’t raise drug prices at all in Australia. If that is so, then why did PhRMA and Medicines Australia fight for the provision? If there is truly no impact on drug prices, then it should be removed immediately by a side letter. A similar non-sequitur arose under the ‘non-interference’ provision PhRMA added to the Medicare Modernization Act of 2003. This law commits the US federal government to purchase US$ 600 billion in pharmaceuticals over the next decade, but prohibits the government from using its purchasing power to negotiate better prices. The Bush Administration insists that this provision won’t affect the price at all. The US negotiated the FTA under the assumption that drug prices in Australia are too low and must be increased. Other observers might reach the opposite conclusion: that Australian prices are economically efficient and the appropriate targets of reform are excessive US prices. 3. This FTA Will Be Used As A Model To Increase Drug Prices Worldwide Ralph Ives was the chief US negotiator of the FTA. After his success in Australia, he was promoted in April 2004 to the newly-created post of Assistant United States Trade Representative for Pharmaceutical Policy. In his new post, he will attempt to raise patented drug prices throughout the OECD through trade agreements, even though it is not clear that higher prices are necessary to pharmaceutical innovation. 4. US Consumers Will Not Benefit From Higher Australian Drug Prices and Blocked Drug Exports There is no guarantee that US consumers will benefit from higher drug prices in Australia. Drug companies are under no obligation to lower US prices as Australian prices increase. Press reports indicate that under the FTA, Australian negotiators ‘gave assurances’ that low-cost drug exports to the US would be blocked, despite legislation in Congress to specifically permit importation from Australia. The FTA is being used to block Congressional attempts to give Americans access to low-cost drugs. 5. Transparency We are told that the FTA is needed to promote ‘transparency’ in the PBS process. If transparency is the goal, let me suggest the first place to start: publicly release all of the submissions to the relevant PBS committee, the PBAC. Policymakers worldwide would benefit from seeing all of the data previously collected. If drug companies think they’ve been unfairly treated, then the debate can proceed publicly. Today, PBAC data is secret (‘commercial in-confidence’) because the drug companies demand secrecy. Release the data publicly and allow the world to see the economic evaluations. Let the world see all of the clinical data on which drugs are truly innovative, and which ones offer modest or no improvements. Second, transparency should require drug companies to disclose all financial relationships with researchers and policymakers. The US National Institutes of Health is currently embroiled in a major controversy as we are just beginning to understand how profoundly PhRMA influences research. We need to see if the researchers touting drugs are truly independent. All of this is absent from the FTA. Third, if transparency is needed, they why were health care NGOs excluded from the Advisory Committees to the FTA? The key committee on this issue, ISAC-3, included representatives of the pharmaceutical industry, but not groups critical of extending TRIPS Plus rules to drugs. On this issue, Australian and American representatives of drug companies negotiated with themselves, while NGOs were shut out. Fourth, will transparency apply to the new Medicines Working Group under the FTA? Who will be appointed? Will those meetings be open to the public? Will NGOs be permitted to participate? Will past and present conflicts of interest be disclosed? Fifth, the very concept of ‘transparency’ is laughable in a Free Trade Agreement exceeding a thousand pages in length. This is a frightfully complex agreement, with minutely negotiated provisions that are very difficult for even trade lawyers to understand. For example, when the US stood against the world to attack unlicensed generic anti-retroviral drugs for AIDS, it was the ‘public health’ language of the WTO TRIPS agreement which rallied the world against the US and eventually led to the concessions at Doha and Cancun. In the FTA, the ‘public health’ language is missing, replaced by other language supporting ‘pharmaceutical innovation.’ In the future, when the US invokes the FTA dispute resolution mechanism, a panel of highly specialized trade experts will decide whether Australia’s efforts to reform the PBS satisfy the FTA. To these experts (several of whom may have participated in the negotiations), the absence of the TRIPS public health language and the additional provision on pharmaceutical innovation will be viewed as very significant. Australia could well lose a panel decision on such a basis, allowing a Government to plead years from now that its hands are tied by the FTA. I suspect that the FTA includes many other subtleties. It will take some time to find them all. Finally, a call for transparency should be received with a little skepticism from an industry with incredibly complex and opaque pricing and business practices, including the practice of blocking publication of clinical studies which demonstrate problems with their products. * * * * * * In my home state of West Virginia, we are exploring a drug reimbursement system which includes economic evaluation. We will ask the drug companies for copies of the work already completed for the PBAC. Other states are exploring similar programs. If Australia can maintain the PBS for a few more years, it will be hailed as a model in the United States. This is both my hope and PhRMA’s fear. Undermining Australia’s PBS is an inappropriate topic for a free trade agreement. Competing interests: None declared |
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Eric Noehrenberg, Director of International Trade and Market Issues International Federation of Pharmaceutical Manufacturers Associations (IFPMA), Geneva 1211
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Editor - In their editorial (29 May, 2004, Professors Drahos and Henry claim that the free trade agreement (FTA) between the USA and Australia will harm public health in Australia and will undermine the flexibilities in the WTO TRIPS Agreement, harming public health. Fortunately, the authors are incorrect on both accounts. In reality, the FTA will improve, not reduce, access to innovative medicines for Australian consumers through giving companies more incentives to introduce new products into the Australian market. Innovative products, bringing improved therapeutic benefits to patients, improve health care and quality of life. Furthermore, the independent review of the decisions made by the Australian pharmaceutical benefits scheme will create a more transparent process for medicine pricing, strengthening Australians’ access to innovative medicines, not raise prices. Indeed, Australian Prime Minister Howard has said that reports by “some academics” that the price of medicines would rise as a result of the FTA are “just wrong”. The Australian government’s position regarding the FTA points out a broader truth which the authors seemed to ignore: governments are free to create a stronger and more effective standard of intellectual property rights (IPRs) than the minimum standard established by the TRIPS Agreement if these governments judge it to be in their countries’ interest. Indeed, the authors’ criticisms of the FTA’s provisions on “public health” grounds are not substantiated by facts: · Compulsory licensing has not been used by any WTO member against a pharmaceutical patent after the WTO member had implemented the TRIPS Agreement. Indeed, Canada and New Zealand, eliminated broad compulsory licensing regimes in the early 1990s as the governments of these countries realized that these policies did not benefit public health. Restrictions on compulsory licensing will not have deleterious effects on public health. · Parallel trade: Experience has shown that allowing medicines to enter a country through unauthorized channels makes it easier for substandard and counterfeit products to penetrate the market. That is why many countries have safeguards against parallel trade. The Doha Declaration on the TRIPS Agreement and Public Health §5(d) clearly states that each WTO Member is free to establish a regime of “international exhaustion” of rights (i.e., allowing parallel trade or not). Thus, the government of Australia is perfectly within its rights to protect its consumers against the potential dangers to public health created by parallel trade. · Data protection: The authors are incorrect in stating that TRIPS “simply requires its members to protect [test data] against unfair commercial use”. TRIPS also mandates that WTO Member States “shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use.” There is a worldwide trend towards establishing strong data protection for a period of several years, including the European Union for eight to ten years and China for a period of seven years. · Patent term extension: The registration process for pharmaceuticals has become increasingly lengthy due stricter regulatory review. The effective patent life for pharmaceuticals has dropped to less than eight years, given that the nominal patent life is 20 years but over 12 years of that patent is taken up by development times and regulatory reviews. The USA and European Union have thus implemented policies which grant a limited amount of additional patent protection to compensate for these delays. In sum, Australia and other countries which have concluded FTAs with the United States have concluded that these FTAs, including the intellectual property provisions, are in the best interests of their populations. This is not just a US-led phenomenon; FTAs being negotiated between the European Union and other countries also have such provisions. This worldwide trend shows that stronger IPRs are indeed seen as being constructive aspects of FTAs and are far from being the disaster which Profs. Drahos and Henry portray in their editorial. Competing interests: None declared |
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Dr. Herbert H. Nehrlich, Private Practice Bribie Island, Australia 4507
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Perhaps Eric Noehrenberg needs to come out of his comfortable armchair in Geneva and pay us Aussies a visit. Within days of his statement that certain fears in Australia concerning the possibility of rising prices for pharmaceuticals were 'unwarranted' (he also used Prime Minister John Howard's assurances to strengthen his assertion) we have headlines. "Prices for prescription medications are to rise by an average of 30 %....." . Of course this would not have anything to do with the agreement 'hammered out' under difficult circumstances and with patriotic enthusiasm, by both sides..... I wonder if it's for a good cause. Competing interests: None declared |
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