How the Australia-US Free Trade Agreement Compromised the Pharmaceutical Benefits Scheme

Abstract

Australia’s Pharmaceutical Benefits Scheme (PBS) has unquestioned democratic legitimacy as a piece of public health policy. The PBS was approved by a majority of people in a majority of States in the 1940’s Constitutional referendum that added s 51 xxiiiA to the Constitution. Legislation based on that power to establish the PBS was deemed constitutional by the High Court of Australia after a series of challenges against it by the professional association representing Australian medical practitioners. The PBS has since been operating for over half a century to provide evidence-based, cost-effective and equitable access to healthcare for Australians. The scheme’s success can partly be appreciated through lower average pharmaceutical prices for the government compared with other developed countries. The PBS is also popular with the public as listed medicines are available for a relatively low co-payment. Without the scheme, it is hard to imagine how the three main objectives of Australia’s National Medicines Policy would be met: (1) timely access to the medicines that Australians need, at a cost individuals and the community can afford; (2) medicines meeting appropriate standards of quality, safety and efficacy; quality use of medicines; and (3) maintaining a responsible and viable medicines industry. Yet the PBS has been so chewed over as a result of interference from US pharmaceutical companies gaining leverage through trade deals that its future efficacy has been called into question. In the paragraphs that follow, I briefly explain how the PBS works before explaining how it was compromised in the AUSFTA negotiations.

Keywords: Access to Medicines; Reference Pricing; AUSFTA; Pharmaceutical Benefits Scheme; Trade Agreements

JEL Classification: H51, I18, L32