Healthy Skepticism Library item: 441

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Publication type: news

Fabro A.
FTA study claims drug costs will rise
Australian Financial Review 2004 Jun 15

Full text:

Australia’s free-trade agreement with the US could still be rejected in the Senate after Labor yesterday expressed concern about new research showing the FTA would result in higher drug prices.

``[The latest report] is a major concern about the nature of the trade agreement,” Opposition Leader Mark Latham said. ``Certainly, $700 million extra cost in the pharmaceutical scheme is a black mark against the trade agreement.”

The study, compiled by academic Philippa Dee, is the second in the past fortnight to question the supposed economic benefits to Australia of the FTA. While the study suggested the price of pharmaceuticals would rise under the agreement, it attributed the $700 million cost increase to Australian taxpayers to the extension of copyright terms from 50 to 70 years.

It also suggested economic benefits to Australia of $53 million a year, as opposed to the $6.1 billion a year forecast by the Centre for International Economics in its government-commissioned report.

Mr Latham stopped short of rejecting the deal yesterday, despite the party’s previous pronouncement that an increase in the costs of the pharmaceutical benefits scheme would be ``a deal breaker”.

``We’ll await the final advice of the committee to work out what’s in the national interest,” he said.

The federal government dismissed the study, saying it was another attempt to discredit the FTA and bilateral agreements by academics who were in the multilateral camp.

``We reject the comments on drug prices and continue to maintain that there will be no impact on [drug] prices for Australian consumers,” a spokesman for Trade Minister Mark Vaile said yesterday. ``We also think [the report] is wrong about the [costs of] the copyright extension.”

Legislation giving effect to the agreement is expected to be introduced in the federal parliament by the end of the current session, which ends on June 24.

The Democrats and the Greens have already announced they intend to oppose the agreement. If the ALP also decides to oppose the deal, the government will require the support of the four independent senators to get the legislation through.

Health Minister Tony Abbott is expected to release further details of proposed changes to the PBS review mechanism before parliament resumes in early August.