Healthy Skepticism Library item: 426

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Publication type: news

Eyers J.
PBS politics 'a risk to R&D'
Financial Review 2004 Jun 4

Full text:

PBS politics ‘a risk to R&D’

James Eyers and Eli Greenblat

Financial Review

June 4, 2004

The chief executive of one of the world’s largest drug companies, AstraZeneca, has claimed that international investment in the $12 billion Australian pharmaceutical industry may be at risk unless the pharmaceutical benefits scheme is streamlined.

Tom McKillop, who presides over the drug behemoth that recorded sales of almost $US19billion ($27.3 billion) last year, said this week that AstraZeneca had increased its Australian research and development spending to $22 million a year.

However, the cost focus of the PBS and cost shifting between federal and state governments was making Australia less attractive than lower-cost producers such as China and India.

“If Australia wants to compete in biotechnology and attract pharmaceutical investment, it should be thinking at the same time about the quality of its market,” Sir Tom said, ahead of a round of meetings in Canberra with federal Health Minister Tony Abbott, Industry Minister Ian Macfarlane and opposition health spokeswoman Julia Gillard.

Australia has a reputation for being a cost-competitive country for overseas pharmaceutical companies to conduct their clinical trials. The Australian biotech and pharmaceutical industry reaps annual revenue of more than $1billion, generating 60 per cent of total biotech revenues in the Asia-Pacific region.

But some in the industry fear the rivalry between the states and with Canberra deters investors. Moreover, there are fears that Labor may kill off the free-trade agreement with the US and with it opportunities for greater foreign input into the local drugs industry.

The Labor Party has said it will vote against the free-trade deal if the PBS is undermined, that is, if it means a price surge.

On signing the treaty in Washington last month, Trade Minister Mark Vaile said: “Let’s be clear. There is nothing in the FTA which would increase drug prices in Australia or change the way the PBS operates in relation to drug availability or pricing.”

AusBiotech executive director Tony Coulepis said the umbrella group’s 2000 members believed the FTA gave Australia an unparalleled chance to play a leadership role in the advanced discovery of medicines.

Sir Tom said he was satisfied with the quality of clinical research in Australia, but said the country could get “a bigger slice of the cake” if cost shifting between federal and state governments were eliminated.