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A dubious and secret influence on our public health policy

The Age, Melbourne

A dubious and secret influence on our public health policy

Thomas Faunce

13 June 2007

A free trade group is influencing policy and what drugs will cost.

Australians have a natural dislike of faceless people making major government policy decisions. Such activity seems to run counter to core principles about how a democracy should operate. Yet, this is what appears to have happened with the Medicines Working Group, established under the free trade agreement between Australia and the United States.

There is no doubt the working group has played a significant role in creating the controversial changes to reference pricing arrangements for patented medicines under the Pharmaceutical Benefits Scheme, now in legislation before the Senate. Yet no information has been released to the public about the content of the discussions on such subjects between high-level US and Australian officials that have taken place in January 2006 and most recently in April 2007.

Remember how in 2004 we were told that the PBS would never be included in the free trade agreement? Then, after we discovered it had been included almost from the start of negotiations, we were informed that no fundamental aspects of PBS processes would change as a result.

In the fuss over the passage of the so-called "anti-evergreening" amendments, little concern was expressed about the creation of the Medicines Working Group.

Yet, it must surely be a strange thing (even in this age where the interests of state and the private interests of market so readily coalesce) to basically outsource policy development on medicines to such a body.

Of course, we are told that the working group has just been established to facilitate mutually beneficial discussions and that the body has no policy development role. How can we be sure of that when no minutes of its meetings have been released to the public?

A freedom of information application made by Pat Ranald of the Australian Fair Trade and Investment Network has revealed almost nothing about the group’s deliberations, just pages of blacked-out minutes.

This has worried those who have studied the area. We knew that US negotiators to the trade agreement had been required by legislation to seek the "elimination" of reference pricing under the PBS. We also knew that the US Government had commissioned a study arguing that reference pricing should be "eliminated" from all OECD countries.

Yet, one thing that was disclosed in the freedom of information application about the meetings was an editorial from The Australian newspaper. The fact that the the group discussed this is remarkable, chiefly for the fact that the editorial proposed the exact form of policy that has now been incorporated in the F1 changes to the PBS.

The editorial argued that new patented medicines should not have their claims to "innovation" assessed by comparison against cheap generic medicines, an approach that is fundamentally that of the US medicines negotiators to Annex 2C (on pharmaceuticals) of the agreement.

It involved assessing innovation chiefly through the operation of markets nominally called "competitive" but readily distorted by collusion, intellectual monopoly privileges and advertising.

This is what the new F1 PBS category for patented single brand medicines is on the way to achieving.

Australia’s approach, expressed clearly in Annex 2C of the free trade agreement, was to value pharmaceutical innovation scientifically through expert assessment of its "objectively demonstrated therapeutic significance". This is the task of the existing Pharmaceutical Benefits Advisory Committee. It is a crucial part of such transparent, evidence-based assessment that new patented products be assessed for innovation against all available therapies, generic or even non-medical, for the same main clinical indication. If a new drug can’t prove that it works better and is safer for a reasonable price difference than an existing generic competitor, why should the community have to pay more over time for its technical molecular flamboyance or associated advertising?

Surely we have a right to see that such an evidence-based Australian position, so contrary to that of the US, is being upheld in the group discussions. How can we do so if we have no idea what type of discussions and possibly deals are taking place?

Why would the US go to so much trouble to establish such a body, when informal discussions must take place all the time between health policy officials in both nations?

Reassurances that the Medicines Working Group has no policy role disrespect the Australian people who, after all, voted for the PBS in a 1946 constitutional referendum.

It is of further concern that the working group has reserved the right to discuss health policy matters outside those mentioned in the free trade agreement.

If it continues to do so in secrecy and without accountability, then its existence and operations should be exposed as a pernicious influence on the sovereignty and democratic foundations of health policy development in this country.

Dr Thomas Faunce is a senior lecturer in the medical school and the college of law at the Australian National University.