Could the TPP weaken the PBS?

16 June 2015 | Latest leak reveals that pharmaceutical companies could dispute decisions made by independent experts if their drug isn't listed.

Big pharma to influence our government?

A new leak of the Trans-Pacific Partnership (TPP) has raised concerns that big pharmaceutical companies will be able to undermine the Pharmaceutical Benefits Scheme (PBS) by influencing government decision-making.

Broadly speaking, CHOICE's concern with the TPP is that negotiations are occurring in secret. Because of this, any public knowledge about the TPP is based on leaked drafts and statements made by those involved in the negotiations.

La Trobe University academic Dr Deborah Gleeson said this latest section of the TPP (the annex), which looks at transparency and procedural fairness for pharmaceutical products, "serves no useful public interest purpose. It is clearly intended to cater to the interests of the pharmaceutical industry".

What the annex does do is provide more avenues for the pharmaceutical industry to contest decision-making, Dr Gleeson said. While this latest leaked version of the annex has been watered down from previous versions, there are still a number of causes for concern.

Firstly, one clause in the annex allows pharmaceutical companies to object to recommendations and listings of drugs on pharmaceutical subsidy schemes such as the PBS. If this clause goes ahead it allows room for a pharmaceutical company, which hasn't had its drug listed, to seek a "substantive reconsideration" of its application.  

Decisions to list or not list drugs on the PBS are made by an independent expert body of doctors, health professionals, health economists and consumer representatives - the Pharmaceutical Benefits Advisory Committee.

"This could mean a recommendation of the Pharmaceutical Benefits Advisory Committee not to list a drug, or to list it subject to certain conditions, could be overturned," said Dr Gleeson.

The good news is that the annex no longer targets pricing of pharmaceuticals, which was a key issue with the previous version of the draft. However, because there are multiple sections to the TPP which are being negotiated in private, it doesn't rule out implications for the cost of medicines in another section. For instance, provisions in the leaked Intellectual Property chapter could result in extended delays in the release of generic drugs, leading to medicines costing more for longer. 

Also of concern in the annex is a consultation mechanism, which Dr Gleeson said could be used by US officials to apply ongoing pressure to countries so they make changes to their health programs that are in the interests of the US-based pharmaceutical industry.

Finally, there is also concern that the annex may introduce the ability for pharmaceutical companies to access the investor-state dispute settlement (ISDS) clause to contest policy decisions around pharmaceuticals. ISDS clauses outline situations where companies are able to sue foreign governments.

Australia has tried to exclude the PBS from ISDS clauses under the Investment Chapter of the TPP. However, Dr Gleeson said that "the carve-out appears in brackets, indicating that other countries have not yet agreed".

As is, the annex also limits the direction of pharmaceutical subsidy schemes (like the PBS) in the future as it tightly specifies how these schemes should operate. As it stands, New Zealand's scheme would be the most affected. In theory, Australia's scheme shouldn't be too implicated, as most of the measures outlined in the annex are already in place under the PBS.