April 2004

Free trade and the PBS

Throughout the negotiating period for the recently concluded Free Trade Agreement (FTA) between the USA and Australia, the ANF raised concerns about the possibility of the PBS being included in the negotiations.

The ANF was particularly concerned that if American pharmaceutical companies were given access to the Australian pharmaceutical market where subsidies were removed under a free trade agreement, the cost of medicine would be likely to skyrocket.

This would have a significant impact on the Australian community, particularly families and people with chronic illnesses who rely on the PBS to obtain their medicine at a reasonable price.

The Australian Government gave assurances that the PBS had not been placed on the negotiating table.

Now the final agreement has been signed, it is clear that the PBS was placed on the table. The Australian Government maintains that American negotiators only did so on 20 January 2004, less than three weeks before the agreement was concluded.

With the release of the full text of the agreement, the ANF attended a government briefing on the documents relating to pharmaceuticals.
The Australian Government maintains the draft text of the agreement reflects current systems in place for the PBS. However, it also introduces a Medicines Working Group comprising government officials from both the USA and Australia for the purpose of promoting discussion and mutual understanding of issues relating to the PBS annex.

Terms of reference and an implementation timetable for the Medicines Working Group have not been determined yet.

The draft side letter on the PBS provide additional detail on the expected outcomes of the agreement.

Again, while the government asserts most of the clauses refer to established procedures for the PBS, the letter also commits to establishing an independent review process for applications to the Pharmaceutical Benefits Advisory Committee (PBAC) that are not recommended for listing.

Although the government insists this is not an appeals process, a review could lead to a recommendation to the Minister for reconsideration by PBAC on the basis that PBAC did not consider or gave inadequate weighting, to some evidence.

It is difficult to ascertain the impact this additional measure will have until all the details relating to this review body have been made public.

The FTA will now be considered by a joint standing committee on treaties in the Australian Parliament and by a Senate Inquiry.

The full text of the FTA is available at www.dfat.gov.au

Victoria Gilmore
Federal Professional Officer