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Higher drug price fears in trade deal fall-out

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Health groups remain concerned the massive Trans-Pacific Partnership trade deal will push up the cost of medicine and hamper public health initiatives despite indications United States negotiators are prepared to give ground on controversial intellectual property protections.

While the future of the controversial trade pact is clouded following the failure of officials from 12 nations to seal an agreement in Hawaii last month, reports have emerged that the US is willing to back down on demands that data used to produce biologic medicines be subject to a 12-year exclusivity clause.

The clause would delay the competition pharmaceutical companies would face from cheaper generics, adding billions of dollars to their bottom line.

On the eve of the Hawaii talks, Trade Minister Andrew Robb told Fairfax Media he was pushing for the data exclusivity period to be slashed to five years, and it is understood the United States’ chief negotiator, US Trade Representative Michael Froman, was considering a counter-proposal for a base period of five years, followed by a three-year extension contingent on “certain circumstances”.

The secretive nature of the talks has meant that most observers have had to rely on information gained by websites like Wikileaks for information about the direction of negotiations on the deal which, if concluded, will encompass about 40 per cent of the global economy.

Mr Robb said that although the deal was not concluded at Hawaii, “we are definitely on the cusp”.

“While nothing is agreed until everything is agreed, I would say we have taken provisional decisions on more than 90 per cent of issues,” the Minister said.

But he admitted data protection for biologic medicines was among a number of “big outstanding issues” to be resolved: “You’ve got to set a balance somewhere between people getting a return on innovation on investment, and enabling competition to bring prices down for the rest of the community.”

Biologic medicines are derived from biological sources, and though they comprise only a fraction of drugs listed on the PBS, many are extraordinarily expensive, with a course of treatment often costing hundreds of thousands of dollars. In 2013-14, they accounted for a quarter ($2.3 billion) of PBS spending in 2013-14.

While the US may have given ground on access to biologic data, the AMA and other health groups remain concerned that other clauses in the proposed trade deal, including provisions allowing pharmaceutical companies to “evergreen” drug patents and giving investors scope to block governments taking public health measures, could undermine health care.

The AMA Federal Council has called on the Federal Government to reject “any provisions in trade agreements that could reduce Australia’s right to develop health policy and programs according to need”.

The Association said it was concerned that aspects of the proposed TPP could be used to attack key health policies and measures including the PBS and the cost of medicine, food labelling and tobacco control laws, restrictions on alcohol marketing, the operation of public hospitals and the regulation of environmental hazards.

Among the most controversial provisions are investor-state dispute settlement (ISDS) procedures that would enable corporations to mount legal action against government policies and laws they felt harmed the value of their investment or future profits.

Tobacco giant Philip Morris Asia used just such provisions in a 1993 investment agreement between Australia and Hong Kong to challenge Australia’s world-first tobacco plain packaging legislation in the courts and seek compensation, arguing that the policy undermined the value of its investment by ‘expropriating’ its trademarks and branding.

It is understood that Australia is arguing that health and environment policies, as well as the Pharmaceutical Benefits Scheme, be made exempt from ISDS provisions.

In addition, the TPP includes proposals demanding the removal of technical barriers to trade – provisions which companies have used to challenge regulations such as alcohol warning labels, alcohol excise, and front-of-packet food labelling.

There are also concerns market access rules in the TPP may be used to restrict government support for public hospitals and other health services by requiring that there be competitive neutrality between such entities and private health providers.

Medical charity Medecin Sans Frontieres is also apprehensive about the deal.

It said that without major changes in the Hawaii talks, the deal would have a “devastating impact” on global health.

MSF was particularly concerned about provisions it warned would “strengthen, lengthen and create new patent and regulatory monopolies for pharmaceutical products that will raise the price of medicines and reduce the availability of price-lowering generic competition”.

It said some of the most concerning provisions centred on patent evergreening, which would force governments to grant drug companies additional patents for changes they made to their medicines, even if these were of no therapeutic benefit.

Adrian Rollins