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Big pharma--bullies in the PBS: Hans Lofgren shows how US pharmaceutical companies are undermining the PBS.

Article Excerpt
The Pharmaceutical Benefits Scheme (PBS), one of the enduring legacies of the Labor social policy reforms of the 1940s, is administered by the Commonwealth Department of Health to allow 'equity of access' to necessary prescription drugs. In the past the PBS has weathered pressures for greater reliance on 'free markets' with considerable success. But persistent drug industry lobbying, boosted by the Australia-US Free Trade Agreement (which came into force on 1 January 2005) has led to a weakening of the program's core underpinnings.

At a joint press conference with the US Trade Representative in March 2006, Deputy Prime Minister Mark Vaile announced that 'the core principle that we both agree on in this area ... is recognising the value of innovation'. Using precisely this language, the pharmaceutical industry has for decades criticised the PBS for paying inadequate prices. What riles the industry is that the PBS is designed to extract relatively favourable drug prices through the application of government purchasing power. US trade negotiators--notoriously close to the major drug companies--are now attempting to use the Free Trade Agreement to push down price controls. A recent Medical Journal of Australia article notes that negotiators were explicitly instructed to achieve, through the Free Trade Agreement, 'the elimination of government measures such as price controls and reference pricing which deny full market access for United States products'. To date, this aim has not been achieved, and the PBS retains strong popular and political support. However, recent changes to PBS pricing procedures do appear to be headed in the direction of meeting international drug industry expectations.

The PBS eliminates the risk, in most circumstances, of major financial hardship ensuing from pharmaceutical costs in case of illness or injury. In 2005-06, pharmacists dispensed 168 million PBS subsidised prescriptions (about eight per capita),...

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