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Bullying big pharma puts pressure on Australians

Bullying big pharma puts pressure on Australians

by Tony Walker

Australian Financial Review

13 August 2004

US Trade Representative Robert Zoellick’s warning to Australia that an amended free-trade agreement might conflict with the letter and spirit of the original agreement was prompted by bullying from the American pharmaceuticals industry, according to a US trade adviser. "This is a town where bullies rule the roost," said the adviser, who works for one of Washington’s biggest law firms and who is familiar with the US PhRMA’s concerns about Labor’s amendments.

PhRMA (Pharmaceutical Research and Manufacturers of America), the powerful lobby group for the pharmaceutical industry, has been agitating behind the scenes over Labor’s amendment to penalise frivolous lawsuits aimed at stopping cheaper, generic drugs coming on to the market. "Zoellick’s intervention suggests to me that the pharma lobby has taken a look at Labor’s amendment and said we can’t live with this," said the trade specialist, who would not be identified.

The US pharmaceutical industry’s worries about Labor getting away with the amended legislation reflect intense concern about Australia’s Pharmaceutical Benefits Scheme becoming a model for the US. The high cost of drugs has emerged as an important issue in the US presidential election campaign, with the Democrats looking seriously at ways in which cheaper drugs can be made available as part of an attempt to bring down health-care costs.

US states have been trying to introduce bulk purchasing schemes, like the PBS, to lower the cost of drugs, but have been stymied by fierce opposition from the pharmaceutical lobby, which is capable of deploying enormous resources. One of the devices used by these companies to protect their products against generic drugs is to lodge bogus patent applications to stop these cheaper products coming on to the market. This is called "evergreening".

The US trade specialist said that any attempt to unravel the free-trade agreement would run into strong opposition from American manufacturers, who stand to benefit from a reduction in tariffs from January 1. US industry has estimated that American manufacturers will reap an additional $US2 billion ($2.8 billion) in sales annually from the free-trade agreement.

But the trade specialist warned that with the Bush administration, special interests were "tough to override". He also observed that the US side may have been seeking to "rattle [Prime Minister John] Howard’s cage" to ensure that there was no more backsliding over the FTA.

On the other hand, he said it was also difficult to imagine that the administration would "want to walk that particular horse back into the barn", meaning that the Bush White House would be reluctant to put the FTA on hold. Another factor to consider, the trade adviser said, was that the Bush administration’s position may be academic since it was possible there would be a change of management after November 2. A Kerry administration would be less susceptible to pressure from the pharmaceutical lobby.