Big pharma the real winner in TPP plan

New leaks on the Trans-Pacific Partnership reveal Australia could be signing up to provisions that bolster the power of pharmaceutical companies and weaken our safeguards.

Last night, WikiLeaks released a close-to-final draft of the Trans-Pacific Partnership's (TPP) annex on pharmaceuticals and medical devices.

The supposed aim of this part of the TPP is to achieve "transparency" and "procedural fairness" in programs that subsidise these products, such as Australia's Pharmaceutical Benefits Scheme. But like the TPP negotiations themselves, it is anything but transparent. And it's certainly not fair.

It's been more than three-and-a-half years since the public last saw a draft of the annex.

The first version, leaked in 2011, was tabled by the United States and closely reflected the interests of the powerful pharmaceutical lobby in the US. It included rules about how drugs should be priced. It sought to establish new avenues for drug and device companies to participate in decision making, and to provide them with an independent appeals process to contest decisions. And it would have legalised advertising pharmaceuticals direct to consumers over the internet, which is prohibited in all but two of the TPP countries.

This proposal was heavily criticised for its onerous and intrusive provisions. The non-US countries unanimously opposed it, and the US retreated to reconsider its options.

Around the end of 2013, a leaked memorandum revealed that Australia, Japan and the US had worked together on a revised version of the annex, to the great annoyance of some of the other countries. Now, thanks to WikiLeaks, the public gets to see this draft for the first time.

The revised draft is significantly watered down in comparison with the original US proposal. It no longer targets pricing, instead focusing on the processes for listing medicines and devices for reimbursement. The appeals process has been dropped, and the clause mandating direct-to-consumer advertising now indicates that this is subject to "the Party's laws, regulations and procedures" - which should allow countries that prohibit this type of advertising to continue to do so.

But while the revised draft is certainly better than the first, it still has major problems. The annex is now closely modelled on the provisions in the Australia-US Free Trade Agreement. In theory, it should result in few if any changes to our PBS. But small changes that have been made to the legal wording may end up having big effects on the way the rules are implemented.

There are two alternative review processes outlined in the leaked text. While one of these seems to reflect the limited review process already in place in Australia, the other requires a more substantive reconsideration of applications to list a drug for subsidy.

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. And there is a consultation mechanism that could be used to apply ongoing pressure to countries to make changes to their health programs in the interests of the US-based pharmaceutical and medical device industries.

Even more worrying, pharmaceutical companies will be able to sue governments directly over their pharmaceutical policies in international tribunals using the investor-state dispute settlement mechanism (ISDS) - and the terms of the annex may bolster their claims. This is the same type of legal avenue that tobacco giant Philip Morris is using to sue Australia over our plain packaging laws, and US pharmaceutical company Eli Lilly is using to sue Canada over its decisions on medicine patents.

Australia has not yet agreed to the investor-state dispute settlement in the TPP, but has indicated it is prepared to agree to it under certain conditions (which are secret). A previous leak showed that Australia is trying to exclude the PBS, along with several other Commonwealth programs, from being the target of investor-state disputes - but the other countries have not yet agreed to this, and it seems unlikely that they will.

The annex appears to be mainly intended to target New Zealand's Pharmaceutical Management Agency (PHARMAC). Some of its provisions - such as adhering to specified timeframes for assessing applications and disclosing rules used to assess them - will impose substantive new obligations on PHARMAC that could reduce its effectiveness by limiting its flexibility and autonomy, and allowing the industry to frustrate its decision making.

These threats to New Zealand's drug program are particularly worrying given that PHARMAC is highly effective in containing costs while ensuring affordable access to medicines. This makes it a model pharmaceutical coverage program suitable for adoption by developing countries.

The Healthcare Transparency Annex is clearly intended to cater to the interests of the pharmaceutical and medical device industries. It tightly specifies the operation of countries' schemes for subsidising these products with the aim of providing greater disclosure of information, more avenues for industry influence, and more opportunities for industry contestation of pharmaceutical decision making.

The annex serves no public interest purpose and provides a negative precedent for future regional trade agreements. It could also constrain the options of developing countries in introducing pharmaceutical coverage programs in future. The negotiating countries should not agree to its inclusion in the TPP.

Deborah Gleeson's full commentary on the leaked TPP annex is published on the WikiLeaks site.

This article first appeared on the ABC's Opinion website The Drum

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