Thomas Alured Faunce BA LLB Hons ANU B Med Newcastle PhD ANU' Senior Lecturer in Health Law, Ethics

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AFTER THE FTA. CAN WE PROTECT THE PBS?

• Thomas Alured Faunce BA LLB (Hons) (ANU) B Med
  (Newcastle) PhD (ANU).Senior Lecturer in Health
  Law, Ethics and Human Rights Faculty of Medicine
  and Lecturer Faculty of Law, Australian National
  University.

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Overview

• Basic Principles of PBS
• Elements of AUSFTA impacting on PBS
• Likely US strategies on the PBS
• Possible Australian strategies to protect the PBS

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US Views on the PBS in the AUSFTA

• For the first time, a trade agreement negotiated
  by the US has addressed the worldwide problem of
  prescription drug price controls Senator Kyl
  July 15 2004
• While market access for US goods is important,
  we shouldnt be in the business of bullying the
  world and potentially undermining a countrys
  ability to provide prescription drugs to its
  citizens Congressman Udall 16 July 2004.

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Basic Principles of PBS

• Part VII section 85 of the National Health Act
  1953 (Cth) the Minister may declare a drug
  listed on the PBS,
• but only after Australian Drug Evaluation
  Committee (ADEC) approval and under s101(4))
  after the Pharmaceutical Benefits Advisory
  Committee (PBAC) recommends it. Pharmaceutical
  Benefits Pricing Authority (PBPA) negotiates
  price with manufacturer.

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Basic Principles of PBS

• Section 101 (3A-3C) requires PBAC to base
  recommendation on the effectiveness and cost of
  therapy involving the use of the drug,
  preparation or class, including by comparing the
  effectiveness and cost of that therapy with that
  of alternative therapies, whether or not
  involving the use of other drugs or
  preparationsif substantially more
  costly..shall not recommend
• unlessprovides a significant improvement in
  efficacy or reduction of toxicity over the
  alternative therapy or therapies

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Pfizer v Birkett 2000 FCA 303 (Viagra)

• Matthews J it is impossible to consider the
  effectiveness and cost of individual units of
  therapy without having regard to over-all costs
  issues.
• In drugs that are vulnerable to overuse to
  proportion of successful users (in efficacy) must
  include those using it outside the medical
  indication

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Glaxosmithkline v Anderson 2003 FCA 617 (Zyban)

• Ryan J The PBAC was obviously required to weigh
  the perceived benefits of reduced waste and
  improved counseling against the cost to the
  patient and community of a second consultation.

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• AUSFTA Annex 2C on Pharmaceuticals. Interpretive
  Principles (Part of Chapter Two)
• The Parties are committed to facilitating high
  quality health care and continued improvements in
  public health for their nationals. In pursuing
  these objectives, the Parties are committed to
  the following principles
• a)the important role played by innovative
  pharmaceutical products in delivering high
  quality health care
• b)the importance of research and development in
  the pharmaceutical industry and of appropriate
  government support, including through
  intellectual property protection and other
  policies

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• c)the need to promote timely and affordable
  access to innovative pharmaceuticals through
  transparent, expeditious, and accountable
  procedures, without impeding a Partys ability to
  apply appropriate standards of quality, safety,
  and efficacy and
• d) The need to recognize the value of innovative
  pharmaceuticals through the operation of
  competitive markets or by adopting or maintaining
  procedures that appropriately value the
  objectively demonstrated therapeutic significance
  of a pharmaceutical

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Non-Violation Nullification of Benefits Article
21.2(c)

• the dispute settlement provisionsshall
  applywherever(c) a benefit the Party could
  reasonably have expected to accrue to it under
  Chapter Two which includes Annex 2C on
  pharmaceuticals is being nullified or impaired
  as a result of a measure that is not inconsistent
  with this agreement

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Non-Legislative US Strategies

• Buddhi Lokuge Use Medicines Working Group to
  effect
• 1)structural changes to PBPA reference pricing
  system (esp. continuation of referencing after
  expiration of reference compound patent)
• 2)challenge to PBAC choice of comparitor in cost
  effectiveness evaluations

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Non-Legislative US Strategies

• 3)challenge to PBAC determinations using
  potential overuse or wasteage or leakage to
  evaluate effectiveness
• 4)challenge to PBAC determinations based on
  overall cost to the community
• 5) Martyn Goddard resubmit Viagra, then if PBAC
  makes same refusal to list, initiate trade
  dispute proceedings for failing to recognise
  innovation

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Non-Legislative US Strategies

• Lodge with Australian Patent Office (APO) with
  multiple, complex, evergreening patents over
  each high sales volume blockbuster medicine
  soon to come off patent
• Maintain statistics on number of evergreening
  patents rejected by APO

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Legislative US Strategies

• Use 21.2(c) in 5-7 years time to threaten trade
  cross retaliation or damages unless PBAC starts
  to operate more in accord with its legitimate
  expectations established by the interpretive
  principles at the beginning of Annex 2(c)
• Pressure to change 101(3) of National Health
  Act.Was its continuance a legitimate expectation,
  or continuance with greater importance
  increasingly given to the interpretive principles
  in Annex 2C??

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US Evergreening Strategies

• Pressure Australia to remove anti-evergreening
  amendments as removing its legitimate
  expectations under article 17.10.4
• Refusing to sign on to AUSFTA until
  anti-evergreening amendments removed
• Keep statistics for AUSFTA Joint Committee on
  injunctions, then threaten trade sanctions unless
  Australian law changes

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Protect the PBS

• Ensure Joint Committee and Medicines Working
  Group has Pro-PBS officials
• Ensure all their meetings and documents of are in
  public domain
• Ensure they cannot discuss or make
  recommendations on changing PBS
  cost-effectiveness pricing system
• Ensure definition of innovative pharmaceuticals
  is time limited and related to community value
  (is a drug with not overall community benefit
  truly innovative?)

17
Protect the PBS

• Legislation to grant first generic to lodge
  certificate the incentive of 180 days of market
  exclusivity (same as US, so harmonisation and
  consistent with AUSFTA)
• Qui tam legislation to obtain insider
  information on pharmaceutical company strategies
  to dismantle PBS
• Freeze PBS at current level.
• Delist drugs not for significant medical
  conditions (PBAC Guidelines for listing)

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Protect the PBS

• Specialist evergreening oversight body with
  combined TGA-Patent Office expertise with
  dedicated evergreening register (all patents
  lodged over particular drug to simplify generics
  certifying in their certificate)
• Ensure Patent Office able to evaluate and reject
  evergreening patents speedily (one month
  maximum). Early declaratory relief consistent
  with evergreening solution in s1101 of MPDIMAct
  2003 (US)

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Protect the PBS

• New 26B requires notice by generic to brand name
  mfg and certificate that brand name patents no
  infringed (implementing article 17.10.4 AUSFTA)
• New 26C of TGAbrand name manufacturer must lodge
  certificate if contesting generic entry
• New 26D TGA brand name mfg must give notice of
  injunction against generic to Cth Att-Gen who can
  join as a party and claim damages for losses to
  the PBS from delayed generic entry arising from
  the injunction.

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Protect the PBS

• Legal burden of proof should be on brand name
  company to show generic companys certificate of
  non-infringement is not justified
• Courts apply high standard of irreparable harm
  before issuing interlocutory injunction against
  generic pharmaceuticals market entry and limit
  it to brief period.

21
Protect the PBS

• Reservation to AUSFTA on PBS
• Interpretive Declaration on constructive
  ambiguities in AUSFTA related to PBS
• Amendment to AUSFTA under Ch 23
• Termination of AUSFTA under Ch23

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Interpretive Declaration

• AUSFTA Article 21.9.2 Dispute Panel can utilise
  articles 31 and 32 of the Vienna Convention on
  the Law of Treaties
• Art 32 VCLT recourse may be had to supplementary
  means of interpretation, including the
  preparatory work of the treaty and the
  circumstances of its conclusion

23
Interpretive Declaration

• Implicit in interpretive principles of Annex 2C
  on pharmaceuticals is first and primary principle
  of our National Medicines Policy universal
  access to affordable, essential medicines
• Also implicitly there included is the Doha
  declaration on TRIPS and public health
• Clarify independent review process for PBAC
  decisions
• Clarify prevent and claimed in evergreening
  17.10.4
• Clarify that the ruling purpose of the AUSFTA is
  free market access and increased competition with
  equal respect for social justice, not IP
  protectionism

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KEY POINTS

• Central role of non-violation, nullification of
  benefits article 21.2 (c) when coupled with
  interpretive principles on pharmaceuticals in
  Annex 2C that overwhelmingly emphasise reward of
  pharmaceutical innovation and research and
  development
• Value of Australian unilateral interpretive
  declaration, reservation or amendment of AUSFTA,
  for protecting the PBS