Impact of the Australia—US Free Trade Agreement on Australian Medicines Regulation and Prices

Abstract

The Australia—United States Free Trade Agreement (AUSFTA) came into force on 1 January 2005. Before and subsequently to the AUSFTA being concluded, controversy surrounded the debate over its impact on Australia's health policy, specifically on regulation of pharmaceutical patents and Australia's cost-effectiveness system relating to prescription medicine prices known as the Pharmaceutical Benefits Scheme (PBS). This article examines the expectations of both parties in the pharmaceutical sector with regard to the AUSFTA, as well as how successfully they were achieved. It seeks to analyse important relevant outcomes for regulators, the public and pharmaceutical industry, as well as lessons about how trade negotiations relating to health and medicines policy should be approached in future. To investigate whether AUSFTA-related regulatory changes may lead to higher medicines prices in Australia, we looked at recent PBS Public Summary Documents to discover examples of PBS-approved FI (patented) drugs, over the period from July 2008 until June 2009, that failed to establish cost-effectiveness over F2 (generic) comparators (with mandated price cuts) and were thence cost-minimised. This period was chosen because the major price effects of the potentially AUSFTA-related National Health Amendment ( Pharmaceuticals Benefits Scheme) Act 2007 (Cth) came into effect from August 2008.