Published by Computachem Services

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Our daily news of recent times has been filled with images from Baghdad and shock-horror stories from Pan Pharmaceuticals.
It has diminished two other stories running concurrently- proposed changes relating to the Medicare Agreement and the Free Trade Agreement (FTA) being negotiated with the US.
All the above have some relationship, one to the other, due to their treatment from a global perspective.
I would like to comment on the FTA and the way in which US drug companies can engage with their government, and receive massive support for a power base which already appears excessive, particularly when that base engages with a developing country, or in some instances a developed country such as Australia.
The tactics employed can only be regarded as "bullying".

Recently, the Oxfam organisation undertook a review of the US government bilateral policies on patents and medicines, and the lobbying efforts of US global drug manufacturers. It found that the number of bilateral complaints made by the pharmaceutical companies to the US government had not fallen, and significantly, the number of complaints taken up by the US government had not fallen.
In other words, both parties are ignoring their obligations under Doha.

This is against a moral background of a world where 14 million people die each year of preventable infectious diseases, and a world where new infections are suddenly appearing in epidemic proportions (like the recent SARS outbreak).
Also a world where 40 million people now live with HIV/AIDS.

The Agreement on Trade Related Aspects of Intellectual Property (TRIPS) which summarises WTO patent rules, is now accepted as restricting the poor from gaining access to life saving medicines, because of price.

This has not prevented the US government from demanding even higher standards of patent protection.
A special trade report, known as "Special 301" is regularly published, and highlights those countries considered by the US government as not having adequate intellectual property rights.
Countries that appear in this report are warned to improve or have unilateral trade sanctions applied, and are accompanied with associated diplomatic and political pressures.
It is a coordinated response which can only be viewed as bullying, and yes, Australia does appear in this report through a submission by the Pharmaceutical Research and Manufacturers of America (PhRMA), which claims members such as Pfizer, Novartis, and Glaxo Smith Kiline Beecham.

The PhRMA submission for Australia requests an Australian listing on "Special 301" citing issues under intellectual property protection as the reason.
While it acknowledges that Australia has strong intellectual property laws consistent with TRIPS, it is concerned with processes of "springboarding" and "stockpiling".
The Australian government has considered proposals for allowing generic manufacturers, pending the expiration of a patent, to begin manufacturing for export and to build inventory up to the date of patent expiration, for sale to both domestic and export markets.
That is, the PhRMA are seeking to negate a marketing tactic under the guise of breach of WTO patent rules. Their further claim is that this approach does not make economic sense as it would undermine Australian investment in innovative life sciences and would send a negative message about Australia's commitment to innovative life sciences and the future success of the FTA negotiations.
This is simply an implied threat-and not too subtle at that!

The PhRMA goes on to describe certain market access barriers that effectively diminish intellectual property rights. These claims are tenuous at best, but appear to be supported by the US government in various trade negotiations.

The complaint lists the following "barriers".

* Restrictive listings on the Pharmaceutical Benefits Scheme (PBS)-the focus on cost effectiveness somehow devalues quality of life benefits (faster recovery times, return to work and function, reduction in patient out-of-pocket costs). It is considered that the Pharmaceutical Benefits Advisory Committee (PBAC) somehow does not seem to take these factors to sufficient account when determining whether a drug should be listed.
Surely a drug should stand on its own merits?

* Reference Pricing on the PBS-this is the section where proposed products are compared to existing chemical analogues of the proposed drug class, or the product most likely to be substituted.
Premiums are available if clear clinical advantages can be demonstrated.
Again the claim is made that this practice seriously erodes intellectual property protection, devalues innovation and discourages investments in new medical discoveries.
What seems to be missed in all this argument is that the PBS contracts drugs on behalf of taxpayers who wish to be part of the Australian government's health scheme.
Drugs are not prohibited from being sold through the private prescription market, but this would pose a difficulty because of high manufacturer prices.
This difficulty is easily overcome by the manufacturer selling at a realistic price.
The argument is really one of price and marketing, and has nothing to do with intellectual property.
The PBS has built up an effective negotiating process for the supply of drugs to Australians, for those manufacturers who wish to participate.
If they are unable to fit into this system, they are free to go elsewhere and Australians must then collectively wear the associated losses.
The fact that the majority of drugs submitted in recent years have been "me too" drugs (which do not demonstrate much in the way of research or innovation), seems to have been lost by the PhRMA.

* Relisting of existing drugs on the PBS- pharmacoeconomic cost effectiveness criteria has to be presented to justify a relisting of a product on the PBS.
It is claimed by the PhRMA that the definition of economic benefit is very restrictive and devalues quality of life considerations.
Why should a manufacturer continue to receive a high price if he is not competitive?

The PhRMA concludes that all the above measures lead to a defacto reduction in the effective patent life of products. However, while individual members report that the above so-called "barriers" have had a significant commercial impact, it is too difficult to estimate with "precision" and therefore the PhRMA does not yet have an estimate.

What they are saying is that they are losing business, but they don't know how much or what dollar value that represents.
Why then, did the US government accept the above arguments in the first place when they could not even be quantified?

Perhaps a precise documented estimate may have opened a bigger "can of worms", which may then have provoked the question as to why global drug manufacturers charge such high prices that cannot be really justified anywhere on this planet.

The implication for Australians as a whole is that our economy can be manipulated by narrow focussed global drug manufacturer interests. If they are successful, then it is obvious that pharmacists, along with taxpayer patients, will be forced to work with a system that is costly and substandard.
Bullying by the US government, and its informant, the PhRMA will not work.
As an Australian, I would rather go without the latest "gee-whiz" product if it were to impact adversely on the Australian way of life, because I am not too impressed with images of the American way of life.
Part of the FTA agreement being negotiated also includes content of Australian produced film and television programs, and by this process, the US will want to inflict more images of American culture and way of life.
Globalisation is simply not just for the benefit of the US, and they need to back off now if they wish to retain Australian loyalty and support, as evidenced by the recent war in Iraq and its aftermath.