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Issue #1533      1 February 2012

Don’t trade away health

The Australian government is negotiating a Trans-Pacific Partnership (TPPA) free trade agreement with the US, New Zealand, Chile, Peru, Brunei, Singapore, Malaysia and Vietnam.

But the agenda on health issues is being set by giant US pharmaceutical and tobacco companies. They have made submissions stating that they want to use the negotiations to:

  • Impose US intellectual property laws which give pharmaceutical corporations more rights to charge higher prices for longer periods for medicines;
  • Restrict the ability of governments to provide medicines at affordable prices through systems like the Australian Pharmaceutical Benefits Scheme (PBS);
  • Give corporations like Philip Morris the right to sue governments for millions of dollars when they try to protect public health through negotiation like the tobacco plain packaging legislation.

We need to ensure the Australian government stands by its policies and does not agree to these proposals.

US pharmaceutical companies want more intellectual property to charge high prices for longer

Intellectual property law already gives the inventor of new medicines the right to a patent, which means they can charge monopoly prices for 20 years before anyone else has the right to produce a cheaper generic form of the same medicine.

US pharmaceutical companies want to use the TPPA to get other countries to agree to changes that give more rights to patent holders. This would mean more than 20 years of monopoly prices, and would delay cheaper generic drugs from becoming available. This is not about free trade, but about greater rights for these corporations to charge high prices for a longer time. This would also be a disaster for the developing countries in the TPPA, as it would make many medicines completely unaffordable for them.

In April 2011 the Australian government responded to public pressure and announced in its new trade policy that it would not agree to increase intellectual property rights in trade agreements. But US corporations and the US Trade Representative are still pushing for these rights in the TPPA negotiations. The Australian government should stand by its policy not to agree to increase intellectual property rights and should not sign an agreement that is not consistent with this policy.

US companies want to reduce access to affordable medicines through the PBS

In the US, where the government does not have the same control over the price of medicines as the Australian government does, the wholesale prices for medicines are three to ten times the prices paid in Australia, and many people cannot afford to buy medicines.

In contrast to the US, the Australian PBS is based on the principle that everyone should have access to affordable medicines. Under the PBS, the wholesale price of medicines is lower than in the US because health experts compare the price and effectiveness of new medicines with the price of cheaper generic medicines with the same health effects. This results in a lower wholesale price for the pharmaceutical companies, which is why they oppose it. The government then subsidises the retail price we pay at the chemist, currently $5.60 for pensioners and $34.20 for others. As well as keeping the prices of medicines low for consumers, the lower wholesale price reduces the cost to the taxpayer. This makes the PBS more sustainable in the long term.

US pharmaceutical companies argue that the PBS is a barrier to trade. They want to be able to charge higher wholesale prices for new medicines, which would increase the cost of the PBS and lead to higher retail prices at the chemist. They want changes that would enable them to appeal against PBS decisions more easily and argue for higher prices for some medicines.

They also want to advertise their products direct to consumers. But health experts generally agree that that this leads to over-prescribing, and it is not an accepted practice except in the US. Australian government policy says that it will not agree to changes that would weaken the PBS, but the companies and the US Trade Representative are pushing for them in the TPPA negotiations. The Australian government should not agree to these changes.

US Tobacco companies want special rights to sue governments for damages

US corporations like the Philip Morris tobacco company want special rights in the TPPA for individual companies to sue governments for damages if their investments have been harmed by a particular law or policy. These disputes, known as investor-state disputes, are heard by international investment tribunals, which give priority to the interests of the corporations, not to the public interest. There are no health experts involved in these tribunals.

Using these special rights in the North American Free Trade Agreement, US corporations have sued governments for millions of dollars over health and environmental legislation.

International corporations can use their subsidiaries to find a forum which allows them to sue. For example, Philip Morris is an international company based in the United States. However, it recently claimed to be a Swiss company in order to use a Swiss investment agreement with Uruguay to sue the Uruguayan government over restrictions on tobacco advertising. It has also claimed to be a Hong Kong company in ordered to sue the Australian government for its proposed tobacco plain packaging legislation, using an obscure 1993 Hong Kong-Australia bilateral investment treaty.

Australian trade policy states that Australia will not support these special rights for investors to sue governments and will not seek them from other trading partners. But US companies and the US Trade Representative are still pushing strongly for them in the TPPA. The Australian government should not agree to investor-state dispute processes being included in the TPPA.

What you can do

The TPPA negotiations are continuing through 2011 and a framework agreement is expected in November. The negotiations are held in secret and the danger is that the Australian government could agree to some of these policies in return for access to other US markets. We must hold our government accountable and ensure that this does not happen.

The Australian Fair Trade and Investment Network has a website (www.aftinet.org.au) with resources that you can use to:

Send a message to the Trade Minister and the Health Minister and get your organisation to do so;

Raise the issues with your local member of parliament.

Beacon, Dec/Jan 2012  

Next article – The world war on democracy

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