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US-Australia trade deal strengthens power of Australian drugs industry

BMJ 2004; 328 doi: (Published 11 March 2004) Cite this as: BMJ 2004;328:604
  1. Bob Burton
  1. Canberra

    The release of details of the free trade agreement between Australia and the United States has rekindled concern over its impact on Australia's pharmaceutical benefits scheme (PBS) and the country's present ban on advertising drugs directly to consumers.

    Speaking at a business conference supporting the agreement, the deputy secretary of the Department of Health and Aging, Philip Davies, insisted that the changes to the scheme were minor. “All the changes in the agreement are essentially process related when it comes to the PBS,” he said.

    Under the scheme the government subsidises approved drugs and negotiates discounted prices from the manufacturers. Patients, who pay a “co-payment” on a prescription, are then able to receive them far more cheaply than they otherwise would.

    Australia has agreed to institute a process by which companies can seek to appeal against decisions of the Pharmaceutical Benefits Advisory Committee (PBAC) to reject listing of drugs under the scheme. “I can assure you that this review process will not have the authority to overturn a recommendation of the PBAC … Some of the details about the review process operating practices are yet to be worked out,” Mr Davies said.

    David Henry, professor of clinical pharmacology at the University of Newcastle, New South Wales, sees the review process as one more way of pressuring the committee to approve drugs. “Any review that seeks to overturn a PBAC decision will be used by the drug companies to mobilise patients, doctors, and media to ensure a drug is approved, even if it is not cost effective for the benefits it delivers,” he said.

    The government has also agreed to “provide opportunities to apply for an adjustment to a reimbursement amount” and institute a working party of US and Australian government officials to discuss healthcare policy issues.

    A spokesman for the Australian Consumers Association, Martyn Goddard, said the text had increased the association's fears about the future of the PBS. “Our concerns about an appeals provision against rejected drugs, restrictions on generics, and a working group of officials without a specified charter remain. Add to that our concern that the text may allow direct to consumer advertising via the web,” he said.

    Steve Haynes, director of strategic relations for Medicines Australia, the drug industry group, has welcomed the changes to the PBS. Under the existing system, he said, “the PBAC may use information in assessing a product of which the company is unaware.”

    While Mr Davies insists there will be no changes to Australia's ban on direct to consumer advertising—despite the fact that the US drug industry promoted such a change in its submission to US negotiators—consumers' groups are not reassured. Mr Goddard fears that a provision in the trade agreement on “dissemination of information” on drugs on the manufacturer's website, or sites “linked to that site,” may allow promotion of drugs to consumers through the internet.

    The text of the agreement is available at

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