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Generics industry and doctors nervous over free trade deal

Canberra Bob Burton

The generic drug industry and doctors groups have warned that a proposed free trade agreement between Australia and the United States is likely to increase pressure on the Australian government’s subsidised pharmaceutical benefits scheme.

Under the scheme, the Australian government subsidises approved prescription drugs and negotiates discounted prices from the manufacturer. Patients pay what is often a nominal "co-payment" on a prescription and are able to receive the approved drugs far more cheaply than they otherwise would.

Supporters of the new trade agreement claim that it will make the pricing of drugs fairer. Alan Oxley, a lobbyist from the Australia-US Trade Agreement Business Group (AUSTA) told a hearing of the parliamentary Joint Standing Committee on Treaties last week, which is inquiring into the effects of the treaty, that the agreement would create a "fairer, more transparent process for the pricing of medicines." The drug industry group Medicines Australia is a member of AUSTA.

However, Ms Di Ford, executive director of the Generic Medicines Industry Association, expressed concern over provisions covering patents. She said that new provisions in the agreement were likely to delay inclusion of generic drugs in the benefits scheme and that this would drive up costs to the taxpayers.

The association fears the agreement will encourage the filing of a "new use" patent as the expiry date nears on the basic composition patent. "It is vital that the current presumption allowing the marketing of generics is preserved because if it is not, it will undoubtedly lead to abuse of the system by the branded companies, as is the case in Canada," Ms Ford submitted.

Australia’s biggest doctors group has offered qualified support for the agreement despite its earlier opposition to the benefits scheme not even being included in the negotiations.

The vice president of the Australian Medical Association (AMA), Dr Mukesh Chandra Haikerwal, told the Joint Standing Committee on Treaties: "Government assurances that the draft FTA [free trade agreement] will not lead to overall increases in the prices of drugs on the PBS [pharmaceutical benefits scheme] is basic to our support."

Whereas Medicines Australia has celebrated provisions that require greater disclosure of information on the benefits scheme’s decisions on new drug applications, the AMA wants a broader approach to transparency. "The AMA is concerned that ‘commercial in confidence’ secrecy surrounding research data—including the identity of the comparator drugs used in evaluations of the cost effectiveness—is a major restraint on the quality use of medicines," Dr Haikerwal said.

"Such transparency across the whole PBS approval process is fundamental to AMA support for the FTA," Dr Haikerwal warned.

The Doctors Reform Society, a smaller doctors group, rejects the proposed agreement. "The [society] believes that any potential benefits for Australia from the AUSFTA [Australia-US free trade agreement] are outweighed by potential costs to the community," it said in its submission to the inquiry.

The joint parliamentary committee is due to report by 23 June; a parallel Senate committee inquiry may report in July.

Details of the inquiry can be accessed at the Joint Standing Committee on Treaties’ website (www.aph.gov.au/house/committee/jsct/usafta/index.htm).