The Impact of the Australia-United States Free Trade Agreement on the Provision of Health Services in Australia
50 Pages Posted: 31 May 2005
The negotiations for an Australia-United States Free Trade Agreement (AUSFTA) sparked much debate in Australia on the potential impacts of the agreement on many important areas, including the sensitive issue of health services. Throughout the negotiations, the Australian government vehemently and repeatedly stated that it would not allow the AUSFTA to compromise its capacity to deliver key objectives in health and other domestic policy areas. At the outset of the health issues and, conversely, Australian negotiators worked hard to uphold Australia's position that some areas, including the structure of the Pharmaceutical Benefits Scheme (PBS), would not be lost or otherwise bargained away for a gain in another area, such as agriculture or services.
Nevertheless, the agreement contains specific provisions relating to the PBS, pharmaceutical intellectual property, plasma fractionation arrangements and professional services, and appears to be the first free trade including measures affecting a country's pharmaceutical scheme that have been specifically included in a trade agreement. Speculation that the agreement will weaken Australia's ability to regulate for public purposes, including in relation to areas such as health, is rife in both the media and the political opposition. The importance of the issue in Australia cannot be understated. In fact, the Final Report of the Australian Senate Select Committee on the Free Trade Agreement between Australia and the United States of America stated that the impact of the AUSFTA on the PBS "has been a critical issue" in its inquiry.
With that background in mind, this article sets out to evaluate the provisions in the AUSFTA regarding what can broadly be described as health services. Part II introduces the reader to Australia's Pharmaceutical Benefits Scheme. Part III forms the main part of this paper by detailing, evaluating, and critically analyzing the eight provisions relating to health services and the PBS in the AUSFTA. Part IV concludes the paper by reminding readers that the AUSFTA is the product of complex negotiations and by stating that while the agreement may result in uncertainty and discontent among some in the Australian academic and health services professions, there is nothing in the AUSFTA that will lead to the dismantling of the PBS. The paper also concludes that it is unlikely for a dispute resolution panel convened under the AUSFTA to restrict Australia's ability to make key public health decisions.
Keywords: free trade agreement, intellectual property, pharmaceuticals, drugs, socialized medicine
JEL Classification: K32, K33, F13, O34
Suggested Citation: Suggested Citation