[Ip-health] Letter from Rep. Allen to Robert Zoellick on US-Australia FTA negotiations

[Mike Palmedo]

http://www.cptech.org/ip/health/c/australia/allen12152003.pdf

December 15, 2003

The Honorable Robert B. Zoellick
United States Trade Representative
600 17th Street, NW
Washington, DC 20508

Dear Ambassador Zoellick:

Thank you for your reply to our letter to the President of October 17
about the Australian Pharmaceutical Benefits Scheme (PBS). I appreciate
your willingness to hear our concerns.

Your letter references the Australian government's own studies that show
that "there are many areas where the system could be improved to ensure
a more objective and transparent process for pharmaceutical companies
and better health outcomes for Australians." I am aware of one study,
the May 1996 report by the Industry Commission (now called the
Productivity Commission), which was cited by representatives of the
Pharmaceutical Research and Manufacturers of America during briefings on
the Hill about the PBS in November 2003. However, you used the word
"studies," implying there is more than one study. Please provide
references to other Australia government studies, preferably more
recent, that make the findings you cite.

It is possible that your reference included a study by the Australian
National Audit Office (ANAO) from November 1997, which was in part a
response to the 1996 Industry Commission study. I would like to make you
aware of it, if you are not already. Overall, the report concludes that
the PBS listing process was "efficient"(1) and
"administrativelyeffective."(2) Among its findings are that the
government could do more to "contain cost escalation in its purchasing
of drugs.(3)

Regarding the aspect you raise, making the process more transparent, the
ANAO recommended not only ways to improve the PBS guidelines for the
sake of industry, but also noted that there is "room for improvement in
industry compliance with the guidelines.(4) Given your stated interest
in promoting "better health outcomes for Australians" and reliance on
the Australian government's own studies, will u.S. proposals on PBS
transparency seek increased transparency measures from industry as well
as from the Australian government? lfnot, please explain.

I understand that USTR has offered Australian negotiators a proposal on
the PBS. Since your letter indicates that a basis for the U.S. proposal
is the Australian government's own studies, I respectfully request that
you provide me, as well as the Congressional Committees of jurisdiction,
citations from Australian government studies, if existent, that support
each of the aspects of the u.S. proposal.

Lastly, I question the assumptions underlying your statement that "the
United States must find ways to share more fairly with other countries
the cost of developing innovative medicines." The statement appears to
assume either that the prices Americans pay for innovative medicines are
fair (a position that my constituents would be shocked to hear), or that
drug makers would willingly lower their prices in the U.S. if allowed to
charge more overseas (a dubious proposition at best). Given that drug
manufacturers spend more on TV ads, marketing and administration than
they do on new drug research, perhaps we should first ask why the
domestic pharmaceutical industry won't spend more of its money on
developing new drugs, before we ask our trading partners to pay higher
prices for drugs.

I welcome the opportunity to discuss this matter with you as USTR and
U.S. health agencies put together their proposal on this issue. I hope
that the Administration is open to considering innovative mechanisms for
promoting new drug development, such as encouraging other governments to
increase budgetary allocations toward medical research. Such an approach
could net far more research spending, and create incentives for targeted
research on "neglected" diseases that afflict populations in other
countries, than simply forcing consumers in other countries to pay more
for existing drugs.

Thank you for your continued attention to this matter. I look forward to
your response to the three requests raised in this letter.

Sincerely,

Tom Allen
Member of Congress

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1 Australian National Audit Office, The Pharmaceutical Benefits Scheme,
November 1997, page xiv, fourth bullet point
2 Ibid., page xv, paragraph 4
3 Ibid., page xv, paragraph 4, third bullet point
4 Ibid., page xviii, paragraph 2