TPP deal heralds soaring cost of medicines

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As the Abbott Government moves towards signing the controversial Trans Pacific Partnership, health authorities warn that the hike in the price of medicines could see vulnerable Australians stop taking them, reports Claudia Slegers.

MEDICINE PRICES will climb and some vulnerable Australians could stop taking their medicine according to critics of the Trans Pacific Partnership Agreement (TPP). These are among the impacts predicted by public health and consumer advocates if the Australian government signs the TPP.

The historic deal could be reached within a fortnight, as the United States marshals support behind President Barack Obama’s centrepiece trade policy.

Public health experts are concerned that the TPP will particularly impact Australians with chronic illnesses, many of whom rely on a range of life-sustaining medicines. Changing lifestyles and an ageing population are prompting an epidemic of chronic non-communicable diseases, including diabetes, cancer, and heart disease. Indeed, chronic diseases are the leading cause of illness, disability and death for Australians, according to a recent report by the Australian Institute of Health & Welfare.

Twelve Pacific Rim nations are negotiating the trade deal in secret, including the United States, Japan and Australia. Other signatories are Brunei, Chile, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Partner nations hope that the regulatory and investment treaty will enhance trade in the Asia Pacific region.

The United States is pushing for the deal, partly driven by fear that China would move into the economic void the US would create were it not to negotiate a trade deal with Asia.

Cost of medicines

The price of medicines is a key concern identified by a public health review of the TPP, conducted by the Centre for Health Equity Training Research and Evaluation at the University of NSW and other Australian universities.

According to the review, the TPP’s proposed intellectual property guidelines are likely to lengthen monopolies over new medicines by allowing pharmaceutical companies to lock up their clinical trials data from cheaper generic manufacturers for longer, and delay access to generics. Escalating costs to the Pharmaceutical Benefits Scheme (PBS) would force consumers to pay higher co-payments and reduce access to expensive new treatments.

Under existing arrangements, Australia already provides 5 years of data protection. In the current trade negotiations, the U.S. is seeking at least 3 extra years of data protection for new uses of existing drugs and 12 years for so called biologic drugs and vaccines (that is, drugs and vaccines derived from biological, DNA containing, material, rather than chemicals).

A handy example of the costs of delaying market entry of competitors for biologics is a medicine called adalimumab (Humira), a drug for rheumatoid arthritis. This drug cost Australian taxpayers $272.7 million in 2013-2014, representing the third-highest cost to government via the PBS. When the first generic or biosimilar version is listed on the PBS, it will trigger a 16 per cent statutory price reduction on all versions of the product.

This means savings to tax payers of $43.6 million in the first year (based on 2013-14 expenditure data), and with flow-on effects resulting from price disclosure likely to lead to further savings in subsequent years, according to public health expert Dr Deborah Gleeson.

TPP provisions will also further entrench a pharmaceutical industry practice known as “evergreening” that extends monopoly periods for medicines. Secondary patents are patents of extremely low ingenuity based on an original inventive patent for a new molecule. Evergreening patents are secondary patents held by the owner of the original patent.

The practice has been shown to delay generic competition for 19 years and beyond the date from which generic entry would have been anticipated, according to a U.S. study cited by Gleeson. Evergreening consumes large chunks of the PBS budget, preventing other new drugs being listed. It is particular problem in countries such as Australia and the U.S. that have low patentability standards.

Heidelberg pensioner, Noel Smith, 66, has lived with various forms of arthritis almost his entire life. As an adolescent, Noel Smith experienced an unusual condition called slipped capital femoral epiphysis, which severely restricted his movement, and he spent two years in treatment at the Austin hospital. He has had multiple hip replacements and other orthopaedic surgery over the years.

After a second heart attack in his mid 40s, he was forced to retire from his job as administrator in a finance sector union. Mr Smith lives with early onset diabetes, and recently developed pulmonary fibrosis, a thickening and scarring of the lung tissue caused by his arthritis and by some of his prescribed medicines.

Over coffee, Noel Smith handed the writer a printed page listing the medicines he currently takes each day: Eighteen different medicines are listed. One drug he was taking previously, Imuran for rheumatoid arthritis, was costing the PBS approximately $850 per injection each week. According to Noel,

“From a consumer perspective, evergreening affects the governments’s ability to put as many drugs as possible onto the PBS. … If we weren’t spending so much [PBS] money on the thousands of other drugs that are being evergreened by a lot of the large pharmas, we would have more money to put into … expensive new drugs.”

Smith’s husky voice sounded world-weary as he remarked that anyone with a chronic illness expects that they should be able to access medicines for their condition.

Australians may stop taking their medicines

Higher costs to Australians for medicines may result in consumers and patients not taking their medicines, or prioritising health costs over other necessities such as food and housing. These issues could particularly impact disadvantaged Australians such as those from low socioeconomic backgrounds, people with chronic conditions, elderly Australians, and Aboriginal and Torres Strait Islander Australians, said the public health review of the TPP.

Consumer Noel Smith explained,

“People not taking their medicines is a real concern. My wife’s parents, both 90, are on a few different medications. They’ll say, ‘Oh, these things aren’t doing me any good, I’ll stop taking them. It’s all getting too expensive.’ ”

Mr Smith is anecdotally aware of many others who cease taking their prescribed medicines, or take them intermittently. “And it’s often cost-driven,” he said.

Dr Gleeson’s research has found increased out of pocket expenses flowing from the TPP could make this behaviour more common. Dr Gleeson told the writer,

“One of the ways people cope with [increased costs] is not getting prescriptions filled or skipping medicines to make the prescriptions last longer. Sometimes they go without other necessities if they really need the medicines, things like food and so forth.”

This is a particular concern, she said, for people on relatively low incomes but who do not quite qualify for the concession amount so who are still paying that higher amount for prescriptions.

Secrecy of the trade talks

So far, the TPP negotiations have been conducted in secret behind closed doors. This means that none of the concerned parties can be sure of the full extent of the agreement’s outcomes. Consumer advocates, public health researchers, the Australian pharmaceutical industry, and the public have been heavily reliant on documents leaked in March 2015, October 2014, and late 2013 by Wikileaks to gain any insight into what the outcomes might be.

Sarah Agar from consumer-watchdog group Choice told the writer:

 “It is difficult to make a definite statement about the impact of the TPP because the consultative process has been so opaque, there’s been no transparency, which has made it very difficult to ask questions.”

A breath-taking exception to this secrecy has occurred with hundreds of “cleared advisors” – a group comprising US pharmaceutical industry lobbyists – having had access to the full drafts of the TPP, according to Choice. Indeed, a recent article by Techdirt reveals a U.S. Freedom of Information Act lawsuit filed by William New at IP Watch exposing emails between lobbyists and U.S. government officials that express delight that the TPP guidelines are "our rules" (i.e., the lobbyists').

It is quite clear that the lobbyists wrote the rules. The TPP agreement will not be made public until after it is signed, possibly within a fortnight.

Speaking from her compact office at Melbourne’s La Trobe University, Dr Gleeson said, What we see in those leaked [TPP] drafts is very worrying”.

Sometimes, countries can agree to conditions that “don’t make a whole lot of policy sense,” but which can be offered in exchange for concessions in other areas.

“The Australian government has also said that its negotiating position is that it won’t accept any of these provisions [that would increase medicine costs to the government or consumers] but of course trade negotiations are negotiations, and the Prime Minister has referred himself to the horse trading that goes on over different issues.”

Recalling an example of this horse-trading, Dr Gleeson added:

“Earlier in the negotiations there was a leaked US proposal for the intellectual property chapter of the TPP that showed that the US was pushing for very extreme IP protections for pharmaceutical companies that would provide a whole lot of different routes for keeping medicines under monopoly for longer periods.”

A group of nations strongly opposing these provisions banded together and tabled a counter proposal, about two years ago.

“Now the most recent draft suggests that the US has backed off some of the worst elements that they were proposing in the face of the opposition from the other countries. But there are still some provisions that create real problems for other countries, including Australia.”

Medicines Australia, a lobby group representing the Australian pharmaceutical industry, declined the writer’s request for an interview. The industry generates some $3.5 billion in exports each year, making it Australia’s largest exporter of manufactured goods. Medicines Australia stated via email that the industry sees the TPP as a vehicle to strengthen Australia’s (and partner nations’) IP laws so that companies can recover the cost of research and development.

‘The process of bringing new medicines to market involves an extraordinary degree of risk. Only a small proportion of ‘promising research’ yields safe and effective products, of which only a fraction are profitable enough to make the initial investment … worthwhile. On average, the cost of bringing a new medicine to market is approximately US$2.6 billion, and it can take between 12 and 15 years to complete the process.’

Running to at least several hundred pages, the Trans Pacific Partnership Agreement will contain very specific clauses set to powerfully impact laws and regulations of sovereign nations, not least those of Australia.

“The TPP is an enormous beast,” concluded Sarah Agar.

“If [Australia is going to sign this trade deal] then we need an open debate. The leaks we’ve seen are alarming.”

You can follow Claudia Slegers on Twitter @DrClaudiSlegers.

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TPP deal heralds soaring cost of medicines

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