There has been much concern that Australian citizens and residents are being ripped off on the price of medicines by multinational pharmaceutical drug companies. And the problem is only likely to be exacerbated by global trade deals — like the Trans-Pacific Partnership.

The Trans-Pacific Partnership is a regional agreement under negotiation at the moment, involving a dozen countries across the Pacific Rim, including Australia and the United States. The secret trade agreement covers a score of topics — including such matters as intellectual property, investment, transparency in health procedures, and trade in services.

The Trans-Pacific Partnership will have a significant impact upon the health of everyone in the Pacific Rim — particularly their ability to buy affordable medicines.

The intellectual property chapter of the deal provides for strong protection of patent rights and data exclusivity for pharmaceutical drug companies and the biotechnology industry. Of course, we don’t know what exactly is in the deal, because it is shrouded in secrecy (WikiLeaks published leaked versions of the IP chapter in 2013, and in 2014). But Michael Grunwald, who has seen a recent leaked draft of the deal, warned in Politico: “A recent draft of the Trans-Pacific Partnership free-trade deal would give U.S. pharmaceutical firms unprecedented protections against competition from cheaper generic drugs, possibly transcending the patent protections in U.S. law.”

Grunwald also noted that “the draft chapter will provide ammunition for critics who have warned that TPP’s protections for pharmaceutical companies could dump trillions of dollars of additional health care costs on patients, businesses and governments around the Pacific Rim”. And the leaked text revealed that “U.S. negotiators have fought aggressively and, at least until Guam, successfully on behalf of Big Pharma.”

Further evidence of the worrying power the deal would give pharmaceutical companies can be found in the investment chapter, which includes a provision for investor-state dispute settlement.

There has been concern that big pharmaceutical companies have deployed investor clauses against nation states over the regulation of public health. Notably, Eli Lilly has brought an investor action against the government of Canada under the North American Free Trade Agreement 1994 over the rejection of its drug patents. In its memorial, Eli Lilly contends that “Canada’s invalidation of the Zyprexa and Strattera patents constitutes an uncompensated expropriation, in violation of Article 1110 of NAFTA.” Furthermore, the drug company maintains that “Canada’s measures violate its obligations to afford ‘fair and equitable treatment’ to Lilly’s investments under Article 1105 of NAFTA”. The government rejected the contention and called for the case to be dismissed. The case is ongoing, but the controversy has raised concerns about whether pharmaceutical drug companies will bring similar investor actions against nation states like Australia that sign onto the Trans-Pacific Partnership.

There’s another troubling section for healthcare in Australia, the “Transparency for Health” Annex (also revealed by WikiLeaks). Deborah Gleeson of La Trobe University says this section is “clearly intended to cater to the interests of the pharmaceutical industry”. In her view, the deal does nothing to promote high-quality healthcare or free trade.

Professor Jane Kelsey of the University of Auckland commented that “this ‘transparency’ annex seeks to erode the processes and decisions of agencies that decide which medicines and medical devices to subsidise with public money and by how much”. She highlighted the significant implications of the regime for New Zealand’s Pharmaceutical Management Agency (Pharmac). Likewise, Peter Maybarduk of Public Citizen was concerned that the pact could expose Medicare in the United States to attacks by pharmaceutical companies. He was also concerned that the agreement would “limit Congress’ ability to enact policy reforms that would reduce prescription drug costs for Americans”. And of course, it would have a similar chilling effect on our own Pharmaceutical Benefits Scheme.

Public health advocates are also worried about the still-secret chapter on trade services, with many fearing it  will promote deregulation and privatisation of public health care systems throughout the Pacific Rim. The Trade in Services Agreement (TISA) has certainly shown a push towards promoting the privatisation of services — including health services. Dr Patricia Ranald of Australian Fair Trade & Investment Network has expressed concern that the TPP will “further encourage more commercialisation and foreign investment in all services, including human services such as aged care and childcare, and will limit the ability of future governments to regulate these services in the public interest”.

Gleeson and public health researcher Ruth Lopert warn that the TPP could force Australia to adopt an American-style health system. The pair cautioned that Australian policy-makers should reconsider the consequences of signing up to the trade agreement, observing: “At stake is the potential for the TPP to seriously derail our healthcare system.” The public health researchers fear: “Once derailed, getting it back on a track that reflects the values and priorities of Australian voters, rather than transnational corporations, may not be possible.”

The Productivity Commission has highlighted that the Department of Foreign Affairs and Trade has too often engaged in boosterism in respect of trade agreements and warns that policy-makers need to engage in a rigorous assessment of preferential trade agreements — particularly where there are provisions relating to intellectual property, investor-state dispute settlement, and public health.

Australia should not trade away its public health system in the Trans-Pacific Partnership negotiations, and adopt a costly model of private health, like the United States.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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