Patents, Pills and Politics: The Australia-United States Free Trade Agreement and the Pharmaceutical Benefits Scheme

By Harvey, Ken | Australian Health Review, November 8, 2004 | Go to article overview

Patents, Pills and Politics: The Australia-United States Free Trade Agreement and the Pharmaceutical Benefits Scheme


Harvey, Ken, Australian Health Review


Abstract

There is tension between the need of the pharmaceutical innovator for intellectual property protection and the need of society for equitable and affordable access to innovative drugs. The recent Australia-United States Free Trade Agreement provides a nice illustration of this interplay between patents, pills and politics. This article provides a brief history of patent law as applied to pharmaceuticals, describes how the Pharmaceutical Benefits Scheme got caught up in AUSFTA negotiations, analyses the clauses that are likely to impact upon the PBS and describes the political process that reviewed and ultimately amended the AUSFTA.

Aust Health Rev 2004: 28(2): 218-227

WITHOUT PATENT PROTECTION it would not be in the interests of the pharmaceutical industry to invest the large amount of money needed for the research and development of new drugs. While there is controversy about the precise amount of money required to bring a new drug to market, the process has undoubtedly become more expensive, more complex and more time consuming (Goozner 2004). However, if patents were held in perpetuity there would be no price competition from generic manufacturers, and essential medicines might be affordable only by the rich. Thus, there is a tension between the need of the pharmaceutical innovator for intellectual property protection and the need of society for equitable and affordable access to innovative drugs. In a democratic society, legal and political processes provide the means for resolving this tension. The recent Australia-United States Free Trade Agreement (AUSFTA) provides a nice illustration of this interplay between patents, pills and politics. This article first provides a brief history of patent law as applied to pharmaceuticals; second, it reviews why the Pharmaceutical Benefits Scheme (PBS) got caught up in AUSFTA negotiations; third, it analyses the clauses that are likely to impact upon the PBS; and, finally, it describes the political process that reviewed and ultimately amended the AUSFTA.

A brief history of patent law relevant to pharmaceuticals

Conventional patent laws have a history of over 500 years, beginning with the Venetian Patent Law in 1474. The first international agreement, the Paris Convention, was agreed upon in 1883. The Paris Convention gave Member States considerable flexibility in enacting their national legislation on intellectual property rights. Both developed and developing countries used the provisions in the Paris Convention to enact their national legislation on patents to serve as policy instruments for developing and strengthening their pharmaceutical industry. One important provision was that countries could exclude pharmaceutical products from patent protection. France, Germany, Italy, Japan, Switzerland and Sweden used these provisions to refuse patent protection for pharmaceutical products until their industries had reached a certain degree of development and international competitiveness (Balasubramaniam 2002).

The Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement was negotiated in the Uruguay Round of GATT (General Agreement on Tariffs and Trade) talks from 1986 to 1994 and came into effect in January 1995 (World Trade Organization 1995). Before TRIPS, many developing countries provided no patent protection on pharmaceutical products, or they recognised patents on products but not process. Some developing countries had patent coverage as short as three years (Thailand) or as long as sixteen years (South Africa). This flexibility on patent laws facilitated the local production of cheap generic medicines long before patents had expired in developed countries.

Although the TRIPS Agreement was likely to have a substantial impact on the price and access to medicines there was no participation by the World Health Organization (WHO), public health experts or officials of health ministries during the negotiating process. …

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