The drug monopolies' licence to print money

Anna Pha

Who had heard of "evergreening" before last week when Labor 
leader Mark Latham made Labor's vote for legislation on the US-
Australia Free Trade Agreement (FTA) conditional on the 
acceptance of two amendments?

These amendments related to local content rules on free-to-air TV 
and the Pharmaceutical Benefits Scheme (PBS).

Howard did not hesitate to accept the amendment on local content 
rules. But on the question of the PBS there was a strong rebuttal 
and for a period a political stand-off between Howard and Latham 
— each daring the other to hold up implementation of the FTA.

Latham swore that all he was doing was protecting the PBS and 
preventing higher prices for medicines. He said he was going to 
prevent "evergreening" by the US pharmaceutical corporations — 
some of the most profitable and powerful transnational 
corporations in the world.

He was not amending the FTA. The Bill before Parliament has 
nothing to do with changing the contents of the FTA. It is 
"enabling" legislation so that Australian laws comply with the 
terms of the FTA.

So why did Howard see red when Latham raised the question of 
pharmaceutical prices and evergreening?

Evergreening refers to the various practices used by the 
pharmaceutical corporations to block or delay the introduction of 
generic competition i.e. ensuring their drug patents "do not fall 
from the trees".

This is because patenting laws give the big brand names exclusive 
rights to sell their products for 20 years without competition. 
These monopoly rights enable the corporations to charge sky-high 
monopoly prices. They spend millions of dollars on promoting 
their latest products, including lavish gifts to specialists and 
doctors — many times more than was spent on the original 
research and testing of the medication.

Meanwhile many patients go without the medication they need 
because of the high prices.

Patents are a licence to print money.

When the patent expires and competitors can enter the market, 
prices literally plummet. "The first generic competitor usually 
drops prices by 30 percent, and full-fledged generic competition 
with five or six competitors typically brings down the charge to 
the consumer by 70 to 80 percent", writes Robert Weissman 
(Multinational Monitor, June 2002).

Twenty years of protected super-profits still do not satisfy the 
greed of these corporate monsters.

Public Citizen estimated that AstraZeneca would earn more than 
US$1.4 billion (A$1.9b) additional revenue from just a six-month 
patent extension on Prilosec, a gastric ulcer and anti-acid 
medication.

They pay generic makers to stay off the market; they take over 
generic companies; they stall the introduction of competition 
through prolonged court cases they know they cannot win — there 
is no end to the underhanded practices these corporations use to 
maintain their exclusive patents.

The PBS and the priority it gives to generic drugs curbs the 
monopoly prices and forces the big corporations to charge less. 
The FTA will considerably weaken the PBS, giving US corporations 
greater powers and involvement in the process of listing and 
pricing and manoeuvring to keep generic competition out.

This affects both the listing of medications on the Therapeutic 
Goods Register (indicating they are beneficial and can be 
prescription drugs) and on the PBS list. A PBS listing involves 
government negotiated lower prices and subsidies.

The PBS is anathema to the big corporations — medicine prices in 
Australia are a fraction of those in the US. Other countries use 
Australian prices as a guide.

Under Latham's amendment, which the government is considering at 
the time of going to press, a pharmaceutical corporation taking a 
generic competitor to court over a patent dispute would have to 
certify that it was taking the legal action "in good faith", that 
it had reasonable prospects of success and would conduct the 
proceedings "without unreasonable delay".

It provides for fines of up to $10 million for false or 
misleading certificates.

The provisions are a joke and the $10 million fine — if ever a 
corporation were convicted — is a farce. Compare a $10 million 
fine with the $1.9 billion profit! Stronger amendments would be 
no more effective as the FTA would override them.

Labor's amendments amount to nothing more than political 
posturing to give the appearance that they are providing a 
"safety net" and protecting Australian culture (which involves 
much more than TV) and the PBS. They do neither of these things.

The FTA is more far-reaching than is being portrayed by both 
major parties or in the mass media. The FTA will affect virtually 
every aspect of our lives. It hands over Australian sovereignty 
to US transnational corporations. It is the economic arm of the 
US-Australia alliance, complementing and strengthening the 
military and political integration and subservience of Australia 
to US plans for global domination.

In sharp contrast to the betrayal of Australia's interests by the 
two major parties, the Australian Greens have taken a strong 
stand in opposition to the FTA. They have moved several 
amendments to the legislation, but regardless of whether these 
have been carried, intend voting against the deal anyway.