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US drug makers pressure Canberra

The Australian, Canberra

US drug makers pressure Canberra

Sid Maher

29 December 2004

US drug manufacturers are planning a New Year’s push to pressure Canberra to unwind initiatives to cut medicine prices.

A senior US pharmaceutical industry source told The Australian American drug companies would ask the US Government to use a mechanism in the free trade agreement — which takes effect on Saturday — to pressure Australia to retreat on two decisions affecting patented drugs in the FTA.

Labor amendments that impose penalties on "evergreening" patents, and a Coalition election promise to cut the cost of patented drugs by 12.5 per cent once an equivalent generic comes on to the market, have generated significant US opposition.

The drug manufacturer will ask Washington to call an early meeting of the Medicines Working Group, a forum of senior US and Australian officials.

Senior US Republicans have become increasingly outspoken about the effects of pharmaceutical price controls outside the US.

Following the release last week of a US government report attacking controls in Western countries, including Australia, Republican senators Rick Santorum and Jon Kyl argued that forcing pharmaceutical prices below market rates denied those countries access to the latest drugs.

"There must be a reasonable return on investment, or investment simply won’t occur," they said.

"We should be adopting policies that enhance this progress, not racing toward the status of lowest common denominator and eliminating incentives for such research."

The US Department of Commerce report argued US citizens were paying more for their drugs because of price controls in other member countries of the Organisation for Economic Co-operation and Development.

It said Australia, through the Pharmaceutical Benefits Scheme, had some of the lowest drug prices in the world.

The price paid by Australian consumers is about 40 per cent of the cost of patented drugs in the US.

US drug industry representatives believe the Australian measures cannot be allowed to stand, despite Australia representing a tiny proportion of the global pharmaceutical market.

"Australia is a large part of the policy environment," the source said.

"It represents a precedent that can’t be allowed to stand."