Healthy Skepticism Library item: 201

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Publication type: news

Vaughan , M .
Grassley Says Australia Drug Provision Intrudes On Hill Debate
CongressDaily 2004 Feb 18

Full text:

A provision in the recently concluded U.S.-Australia free trade agreement aimed at ensuring more fair conditions of competition for U.S. drugmakers overseas has drawn the ire of Senate Finance Chairman Grassley.

As part of the free trade pact announced Sunday, U.S. and Australian negotiators agreed to prohibit the re-importation to the United States of medicines covered by Australia’s pharmaceutical benefits scheme, according to congressional sources. Grassley charged that the inclusion of that ban in the trade agreement intruded on the congressional debate over access to drugs for U.S. seniors.

“This is an important issue that Congress is currently debating.

Given the importance of this issue, I don’t understand why it wasn’t raised earlier in the negotiations,” Grassley said in a Monday statement.

The House voted last year to permit re-importation, but the language was struck from the House bill in the Medicare prescription drug conference.

Australia agreed to several other demands from the U.S. drug industry, including establishing a consultation process under which the U.S. government can object to decisions on whether or not to list a new drug on the PBS.

But congressional sources said that in the face of refusal by the Australians to make more far-reaching changes to the way drugs are priced under the scheme, the United States sought a ban on re-importation of drugs as a way to ensure, at the least, that U.S. companies’ sales in this market are not undercut by lower-priced Australian drugs.

Business groups Monday praised the agreement as a whole and urged Congress to ratify it this year. “This is an excellent agreement for manufacturers,” said Franklin Vargo, vice president for trade policy of the National Association of Manufacturers. Under the agreement, tariffs on nearly all U.S. manufactured goods exports — including auto parts, chemicals and information technology products — will go to zero immediately.

Grassley, who said he was pleased that the United States had reached a deal with Australia, also said he was “disappointed” in two other aspects of the deal. The agreement’s exclusion of sugar could set a “dangerous precedent” for other trade agreements. Finally, the agreement does not provide a process for investors to challenge government regulatory decisions — even though this is called for by the 2002 trade act, Grassley said.

A spokesman for the Pharmaceutical Research and Manufacturers of America said the group was still studying the proposal and had no comment on its provisions.