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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

behind the surfaces « Previous | |Next »
August 7, 2004

This is how the image of politics looked was last week as it was reflected in the distorting prisms of the Canberra Press Gallery:

Alan Moir

The differences between them are so minor that any protracted political battle on the issue will not happen. It is all about tactics in a political battle for supremacy. That means we are not going to get a lengthy and detailed debate led by the Opposition about the merits of the FTA. A core feature of liberalism has been kicked out the window.

What we do have is the continuing dissemblence on the substance by the pro-American commentators. Consider Paul Kelly's argument in The Australian. He says that

"Contrary to what you read about the negotiations over the PBS, Australia did well. It deflected the campaign from the US and its drug companies to change the system to protect the US brand name drugs. Australia's lead negotiator, Stephen Deady, rejected at length before the Senate committee the fears mounted about the PBS. The main critique -- that the FTA will delay the entry of generic drugs (drugs no longer patent-protected and 30 per cent cheaper on average) -- is not substantiated. US law allows the big drug companies to obtain an injunction to stop the release of cheaper generics by merely lodging an application for a patent extension. It is the lodgment that protects the monopoly profits as sole supplier, a process called evergreening. Australian law doesn't allow this."

Well that is true. But what about the FTA text itself? Kelly quotes Deady and Ruth Lopert, a federal health bureaucrat:

'"Claims that these changes will delay generics entering the market, therefore pushing up the price of the PBS -- again, I will say this as clearly as I can -- are not true," Deady told the committee. The health department's Ruth Lopert said: "The evergreening of patents is something that will be pursued where pharmaceutical companies believe it is in their interests to do so. There is nothing in this text that either supports or impedes that."

In its conclusions the Senate committee concedes the contingent nature of the PBS scare. The concern, it says, is that the FTA is a "living agreement". Much of "how it will be implemented will be sorted out later" with the risk that the FTA could have "unforeseen and unintended consequences down the track"'.

Kelly concurs. It is all about unintended consequences. And these are? He does not say in relation to evergreening.

What Kelly does not says is this. Any Australian legislation that tries to stop evergreening by the US drug companies can, and will be, challenged by the US drug companies through the dispute settlement procedures. Under the FTA procedure a panel would judge the US drug company against specific criteria. These are all about rewarding innovation and research and development, and so weighted in favour of the US drug company's branded drugs.

If Australia loses the US challenge, and refuses to change its domestic law that protects against evergreening, then the US has the right to retaliate with sanctions in any other area of our bilateral trade.

| Posted by Gary Sauer-Thompson at 1:16 PM | | Comments (2)


There is a clause in the FTA currently in parliament which states:

With respect to a pharmaceutical product17-[24]that is subject to a patent, each Party shall make available an adjustment of the patent term to compensate the patent owner for unreasonable curtailment of the effective patent term as a result of the marketing approval process.

This would cause the duration of applicable patents to go from 15 to 20 years in Australia. This would delay the introduction of corresponding generic drugs.

How can the prime minister justify his statements that there is nothing in the FTA which would cause a rise in the prices of drugs through the PBS.

The Americans in contrast talk about the PBS in terms of price controls.These price controls need to be lifted and the deregulated market take its place.

Pretty clear, what the effects would be with the increased duration of the patents.

The PM would be in favour of using the instrument of the FTA to undermine socialised medicine and shifting it to user pays.

But you cannot admit to what you are doing. So it is fogged.