Submissions are due by 6 December. AFTINET will produce a
draft submission beforehand and circulate this to members.
DFAT is holding community consultations on the government’s approach to the
services negotiations. Times and venues are yet to be confirmed, but the dates are as
follows:
Brisbane - 25-26 October; Darwin - 27 October; Melbourne - 28 October; Hobart - 29
October; Sydney - 1-2 November; Adelaide - 4 November; Perth - 5 November.
For more information contact:
Rhonda Piggott,
Assistant Secretary,
Office of Trade Negotiation
Phone: (02) 6261 3156
Email: rhonda.piggott@dfat.gov.au
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2. Change of date for AFTINET China seminar: now 7 December
AFTINET and the AMWU are organising a seminar about the proposed China-Australia Free
Trade Agreement. This had previously been planned for 23 November, but will now be held on
7 December, from 12 to 2pm at Parliament House, Sydney.
We will circulate further details shortly.
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3. USFTA update
We are waiting to see whether the US will object to the ALP amendments to the USFTA
implementing legislation. Letters signing off on the legislation are due to be exchanged
by 31 October. If the government acts to put a new implementing bill through Parliament
removing the amendments, we will circulate letters that you can use to lobby Opposition
Senators. The composition of the Senate will not change until July next year, so the
Government will not control the Senate until then.
Below is an article which describe pressures from the US regarding the amendments to
Australia’s implementing legislation for the USFTA, as well as an article which
discusses some of the related pressures on the PBS.
Canberra feels trade deal heat from Congress
Katharine Murphy, The Australian, Wednesday 20 October 2004 p 6
The Howard Government is facing intense pressure over its US free trade agreement, with
some of Australia’s strongest supporters in congress telling President George W. Bush
to ensure that Australia is in full compliance before implementing the deal.
Eighteen prominent members of Congress, including the co-chairs of the Friends of
Australia Congressional Caucus, Republican Jennifer Dunn and Democrat Cal Dooley, have
written to Mr Bush urging the administration to "keep all its options
available".
"We believe that Australia must assure that it will be in full compliance with the
FTA before the agreement is allowed to enter into force," the letter says. "The
administration should keep all its options available. Prior to making any decisions, we
also ask that you consult with Congress on actions that will be taken to ensure Australian
compliance."
The signatories to the letter include Republicans and Democrats, members of the
influential Ways and Means Committee, and several of the Congress’s strongest
supporters of bilateral free trade deals. The letter follows weeks of intense lobbying in
Canberra and in Washington by the pharmaceutical industry, leading film production
companies and software producers. All have been arguing that Australia is fundamentally in
breach of the principles of the deal negotiated earlier this year.
US ambassador to Canberra Tom Schieffer has already warned that the differences between
the two sides could see a delay in the start-up of the deal, originally planned for
January 1. This will be a critical week in the final set of negotiations required between
Washington and Canberra to implement the deal in time for a New Year’s Day start.
There are three important issues still to be resolved.
The first involves a complaint from the US pharmaceutical industry that Labor Party
amendments to the FTA enabling legislation, designed to stamp out the
"ever-greening" abuse of patents, breach international trade rules.
The second involves a separate complaint from drug manufacturers about a Coalition
election promise to cut prescription medicine prices by a mandatory 12.5 per cent once a
generic drug comes on to the market – a commitment that the pharmaceutical sector
says is in breach of the FTA. Several people close to the negotiations have confirmed that
the mandatory price cut has infuriated the American and Australian drug lobbies.
The third area involves a range of copyright matters relating to enforcement of
computer piracy and piracy of cable television signals.
The International Federation of Pharmaceutical Manufacturers Associations – a
Geneva-based umbrella organisation representing manufacturers in developed and developing
countries – also joined the complaints about Australia’s implementation of the
USFTA over the weekend.
The IFPMA blasted the Labor Party’s ever-greening amendments, saying they were
proposed in an "over-hasty manner and without adequate consideration of the
consequences". But a spokesman for Trade Minister Mark Vaile remained optimistic
yesterday that the dispute could be resolved in time for a January 1 start-up.
PBS faces winds of change
Alan Mitchell, Economics editor, 20/10/2004, Australian Financial Review, Page
70
Late in the election campaign the government surprised itself and the pharmaceutical
industry by finding a $700 million saving in the pharmaceutical benefits scheme (PBS). The
saving over four years is to be achieved by a 12.5 per cent price cut on drugs once their
patents have expired and generic versions are available. Previously the government has
negotiated the price reductions on a case-by-case basis.
It was a quick fix, roughly estimated (actually, overestimated by $130 million) on the
back of a ministerial adviser's envelope. But its roughness briefly drew attention to the
next big pressure point in health care.
The pharmaceutical industry peak body, Medicines Australia, expressed concern about the
possible effect on new-generation biopharmaceuticals still under patent. Health Minister
Tony Abbott immediately replied that he would ensure that holders of patents on medicines
would get the benefits they deserve over the life of their patents. The flames were
doused, for now.
But the conflict between the government's desire to restrain pharmaceutical costs and
the industry's determination to make a profit on its research and development has the
potential to change the shape of the PBS.
Not long before the election the government told the Productivity Commission to begin a
major study on the impact of new medical technology on health-care spending. There was
scarcely a political ripple, perhaps because the commission was not explicitly asked to
consider the future of the PBS.
But the first submission posted on the commission's website left no doubt that the
architecture of the PBS would become a major issue. That submission was a paper by the
University of Canberra's National Centre for Social and Economic Modelling on the impact
of the high-cost new-generation pharmaceuticals on the PBS.
The paper argues that the new biotech-based therapies have the potential to
"increase considerably" the already high growth rates of PBS expenditure and
explores the ways these cost pressures could be contained.
In the process it provides a road map of several major PBS reform options. These
possible reforms range from measures to oversee the use of the drugs to basic changes in
the design of the patient co-payments.
As with past generations of pharmaceuticals, a key issue will be "leakage",
but the form of leakage has changed. Previously it occurred as the pharmaceutical
companies found additional uses for their newly-listed drugs. The new high-cost biotech
drugs are highly targeted therapies. Many of the drugs have been introduced to treat the
advanced stages of particular diseases. The new form of leakage will be the use of the
drug for different stages of the disease, where the benefit is not judged by the
authorities to justify the cost.
One form of control is a central registry which permits authorities to oversee patient
selection and medication. Other possible models include an extension of the existing
highly specialised drugs program, in which drugs are supplied through hospitals under the
supervision of specialists.
On the demand side, there is the possibility of budget-holding arrangements, such as
those used with varying degrees of success in Europe. There is also scope for the reform
of patient co-payments. Co-payments in Australia are of the "fixed" variety, but
in other countries they are proportional to the cost of the drugs. In several countries
the extent of the government subsidy varies with the medical importance of the drug.
One claimed advantage of a proportional payment is that it gives patients a greater
interest in the relative costs as well as the benefits of competing drugs. They also
enable the government to recover a larger patient contribution to the total cost of new
drugs, with safety nets to protect low-income families.
A further possible variation on the PBS theme is an expanded role for private health
funds. The funds provide some reimbursement of pharmaceutical costs, but like the PBS they
will have to adjust to pressures of the new high-cost technology.
In theory the funds could expand to provide an alternative to the PBS, with the cost of
drugs shared between the funds and the government. It seems inevitable that both the PBS
and the rest of Medicare will be re-engineered gradually to meet the pressures of
population ageing, increasing demand and the high cost of new medical technologies. In the
process, we should be prepared to revisit the issue of means testing.
At a time when the distribution of wealth and income has widened significantly in
Australia, there is a stronger argument for insisting that the wealthy make a bigger
contribution to the cost of their health care. The availability of reverse mortgages, for
example, should permit people who have made large capital gains in real estate to
contribute generously to the cost of their health care in later life.
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4. New book: How to Kill a Country: Australia’s devastating
trade deal with the US
This book by academics Linda Weiss, Elizabeth Thurbon and John Matthews, published by
Allen and Unwin, is now available in bookshops.
The book reflects many of the issues raised in the campaign against the USFTA. The
authors returned to Australia after the text became public, and were shocked at the
lopsided nature of the deal, symbolised most blatantly by the exclusion of sugar and the
low level of Australian access to other US agricultural markets.
They analyse some of the impacts of the USFTA least debated in the media, including on
quarantine, government procurement and on intellectual property law. They point out that
the USFTA disputes process enables the US government to challenge Australian law and
policy that is not consistent with the agreement, backed up by trade penalties. They argue
that the impacts in these key areas, plus the impact on the PBS, undermine key
institutions and will damage Australia’s capacity for future economic development,
subordinating our interests to those of the US.
