"Washington insider reports that the Trade Minister is indeed discussing price rises under the Pharmaceutical Benefits Scheme give the lie to his promises that the price of medicines would not rise under the USFTA," Dr Patricia Ranald, convenor of the Australian Fair Trade and Investment Network, said today.

"The report in the reliable business trade bulletin Inside US Trade says the negotiators are discussing text on possible means of price rises for medicines listed on the PBS. The report interprets this as a signal that Australia is open to changes to allow price rises," explained Dr Ranald.

"Even worse, the same source reports that there would be a "side letter" agreement that only Australia, not the US, would make such changes. The letter would prevent the U.S. from having to change the few accessible medicines programs it has, run by the Veterans Administration, Indian Health Service and the Department of Defense," said Dr Ranald.

"The price of medicines for most Americans is three to ten times higher than in Australia. It is outrageous that our government could agree to higher prices for medicines in Australia while agreeing that similar changes are unacceptable in the few US programs which make medicines more affordable for some Americans," added Dr Ranald.

"The secrecy of the negotiations means that such shabby deals can be hidden in the details and will not be revealed until after the deal is done," explained Dr Ranald.

"We call upon the Minister to reject these proposals, to keep his commitment that the price of medicines will not be negotiated, and to publish the full text of any agreement, with any "side letters" before Australia is committed to it," said Dr Ranald.

The Inside US Trade Report is below.

Contact Dr Patricia Ranald (w) 02 9299 7833
After hours mobile 0419 695 841

Inside US Trade, Washington February 5.

On PBS, negotiators are now working off a common negotiating text that includes language on transparency and procedural provisions Australia would commit to add to the PBS, sources said. Most surprisingly, this text includes bracketed language on possible changes that Australia would agree to make to the way it prices drugs listed on the PBS, including adjusting prices to reflect inflation, congressional and industry sources said.

The bracketed language on pricing denotes disagreement, but the fact that it is contained in a text at all is a signal that Australia is open to making commitments on changing the pricing structure of the PBS, said a congressional source. Accepting this language would be a big change for Australia, which has long been reticent to negotiate changes to the way it prices drugs on the PBS. A previous U.S. proposal included similar language but Australia countered that proposal with an offer that included only language on new procedural and transparency disciplines (Inside U.S. Trade, Jan. 30, p.1).

Negotiators are also working on a side letter that would be read as an understanding that only Australia is obligated to undertake commitments changing the pricing structure of government procurement programs for drugs, sources said. The letter would thus prevent the U.S. from having to change healthcare programs run by the Veterans Administration, Indian Health Service and the Department of Defense, a congressional source said. House Democrats warned the

Administration last month against pushing for changes to Australia's PBS fearing that the U.S. would then have to make reciprocal adjustments to similar U.S. programs (Inside U.S. Trade, Jan. 23, p. 4).

On transparency, the U.S. is looking for Australia to publish and explain the methodology used to add drugs to the PBS and the price a drug would be listed at, the congressional source said. Additionally, the U.S. is looking for assurances that test data done in the U.S. is afforded equal status to data from tests done in Australia, said the source. Regarding procedural disciplines, the U.S. is looking for an independent arbitration process where the U.S. could appeal decisions

against adding a drug to the PBS and the ability to meet with the Australian official who conducted an initial review of an application to add a drug to the PBS, the source said.