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Power play hurts the nation’s health

The Australian

Scott Davies: Power play hurts the nation’s health

5 January 2006

THE Labor Party’s 2004 amendments to the legislation enabling the free trade agreement with the US have nothing to do with good policy and everything to do with good politics.

As a former Labor Party adviser, now a pharmaceutical company executive, I am probably uniquely placed to make this assertion.

Let’s not forget the context of these amendments: a Mark Latham idea designed to knock some of the paint off one of the glittering prizes of the Howard Government’s previous term in office, an executed FTA with the US.

The FTA was delivered immediately before the federal election campaign and Latham simply could not allow an achievement that significant to provide an electoral boost to the Government. However, he could not entirely knock it over and be seen as even more anti-American, let alone risk howls of criticism by denying Australia the extensive economic benefits of such a deal.

He needed to find a problem that he could fix with the deal. There is no easier problem to fix than one that doesn’t exist. The ALP had expressed its outrage at issues that gained little public traction, such as copyright protection and local television content. Evergreening, the issue of extending patents in the pharmaceutical industry, was unheard of. Then, only a couple of weeks before the legislation was due to pass, ABC TV’s Four Corners did a story on evergreening. Suddenly it became the ALP’s primary concern.

Never mind that it did not exist, could not exist and had never existed in Australia.

As one industry representative put it, it’s a bit like saying we don’t want sharks in Lake Burley Griffin; we will do all we can to protect the public from these sharks and, by the way, what has the Howard Government done to protect you from these sharks and why won’t they pass our anti-shark amendments?

It’s a logic that fails to recognise the lack of sharks in Lake Burley Griffin in the first place.

The entire debate was a brilliantly conceived piece of political theatre that had its desired effect: the FTA was severely diminished as a campaign tool for the Government and Latham could contend he was the Pharmaceutical Benefit Scheme’s white knight.

But why could no one see through it? The answer is simple. Very few people in this country actually understand the PBS, so any public assertion of a threat to it is never assessed with critical rigour.

I could barely contain my laughter this week when the Labor Party alleged that the potential withdrawal of these amendments meant the Government was bowing to the intense political pressure of pharmaceutical companies. I wish we could have found that influence last year when 12.5 per cent price cuts were imposed on therapeutic groups when a new generic drug entered the market, resulting in what may be a cut of up to a $1.38 billion from the PBS this year.

The Australian Government pays some of the lowest prices in the world for innovative medicines. We need to recognise that in the past 40 years ischemic heart disease has declined by 68 per cent and hypertensive heart disease has declined by 67 per cent. According to the Organisation for Economic Co-operation and Development, over the same period the use of medicines has helped halve the number of hospital admissions for 12 major diseases, including mental illness, infectious disease and ulcers.

The political nature of these Latham amendments simply serves to hijack the genuine debate in this country over healthcare policy. They are a primary example of politics standing in the way of good public policy. Scrapping these amendments will not see prices rise. However, while they remain on the statute books, they will send a negative message to the global investment community and act as a serious disincentive against new investment in Australia. These investments will go to our neighbours and Australia will miss out.

Scott Davies was ministerial chief of staff in the NSW Carr government and is now director of corporate affairs and health strategy for Wyeth Australia.