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May 20, 2004
US trade deal raises prescriptions
By Peter Mitchell in Los Angeles
THE free trade agreement with the United States would lead toAustralians paying 30 per cent more for prescription drugs, a leadingAmerican academic warned today.
Kevin Outterson, a law professor at the University of West Virginia andan expert on international drug pricing, believes Australia received araw deal on pharmaceuticals in the FTA.
"Australia got nothing on the pharmaceutical deal," Professor Outtersonsaid.
"It's exclusively to the United States' benefit."
Prime Minister John Howard said today Australians would not pay more formedicines because of the FTA.
"The free trade agreement does not affect in any way the operation ofthe Pharmaceutical Benefits Scheme," he told radio 2UE.
"I am aware of the concerns and I was very much addressing them when thenegotiations were going on and this proposition about the PharmaceuticalBenefits Scheme is just wrong."
Professor Outterson describes Australia's present PharmaceuticalBenefits Scheme (PBS) as a "gold-standard model for the rest of the world".
"Australia has lower prices and a more functional and complete systemthan anyone else and that's exactly why the drug companies want to shutit down, because it is such an outstanding model," Professor Outterson said.
"The FTA is designed to gum up the works on a very efficient, thoughtfulsystem, that many of us wish we could import into the US."
Americans now pay about one-third to 50 per cent more for leadingprescription drugs than Australians, according to research by ProfessorOutterson.
For a 30-day supply of the cholesterol-reducing drug Lipitor (30mg),Australians pay about $US42.92. Americans, for the same quantity, arecharged about $US94.57.
For 30 200mg capsules of the pain reliever Celebrex, Australians pay$US24.97, while in the US it costs $US76.09.
A West Virginia state commission of which Professor Outterson is amember, is looking at introducing a system to the state similar toAustralia's PBS.
The PBS is an Australian government scheme subsidising the cost of manyprescription medicines.
"It seems a beautiful, gold-standard model for the rest of the world andI am troubled by US trade representatives utilising the FTA to attack itjust when our own domestic states are beginning to evaluate it andpossibly embrace it," Professor Outterson said
The academic predicts the FTA will have little impact on the cost ofprescription drugs in Australia in "the next year or two".
But, he believes prices will rise about 30 per cent in five years.
"The real cost will become evident three to four to five years out andat that time it will be too late," he said.
"The FTA will be firmly ensconced."
Australian Trade Minister Mark Vaile and US trade representative RobertZoellick signed the FTA in Washington DC yesterday.
US manufacturing and pharmaceutical companies support the deal, althoughUS farmers have voiced opposition.
Professor Outterson has concerns about the overall agreement.
"If you and I wanted to write a free-trade-agreement we could do it in aparagraph - No more tariffs and everything comes in free," he said.
"Instead, this thing is 1000 pages and the reason why it's so long isthat it's filled with very carefully crafted language that favours veryspecific companies and very specific industries throughout it.
"Everything in it has people who care, a small lobbying group, that carevery much about that one paragraph.
"It's nearly impossible for you and I, the press, or even theopposition, to have any idea really what it all does. It will take yearsto figure out who is actually behind these provisions.
"You have to ask: why 1000 pages?"
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