Medicines forecast to cost taxpayers millions more in secret TPP trade deal

Medicines will cost Australian taxpayers hundreds of millions of dollars more each year if measures in a leaked draft of the secretive Trans-Pacific Partnership Agreement are implemented, a new report says.

The most recently leaked draft of the international trade deal includes provisions proposed by the US that would further protect the monopoly pharmaceutical companies hold over drugs, and delay cheaper versions from entering the market, the Medical Journal of Australia report says.

The draft agreement sets in stone low patenting standards which allow drug companies to practice “evergreening” – when a pharmaceutical company tries to maintain its market monopoly on a drug for longer by applying for extra patents.

This prevents other companies entering the market with cheaper versions of the same medicine and imposes large and unnecessary costs on the health system and consumers, the report, published on Monday, said.

The report’s authors gave the example of Efexor, produced by Pfizer, an antidepressant which had major side effects. Pfizer subsequently developed slow-release versions of the drug, called Efexor-XR, which significantly reduced its side-effects and which became much more widely prescribed than Efexor.

Pfizer claimed the slow-release versions were different enough from the original to be granted new patents. Its claim was rejected, but the legal battle delayed cheaper generic versions of the drug from entering the market for two and half years.

“By the time this patent was eventually declared invalid, the delay to the generic market had cost taxpayers $209m,” the authors wrote.

“The three greatest concerns for Australia in the recent draft include provisions that would further entrench secondary patenting and evergreening, lock in extensions to patent terms, and extend monopoly rights over clinical trial data for certain medicines.”

The lead author of the report and a public health lecturer at La Trobe University, Dr Deborah Gleeson, said the consequence was the extra cost of medicines could get passed on to the consumer through increasing the co-payment on government-subsidised drugs, or by restricting access to expensive drugs to those who could afford them.

“For example, a new hepatitis drug is available now which is much more effective than previous drugs, but a 12-week course costs $84,000 and for that reason, the drug hasn’t yet been subsidised by the government through the Pharmaceutical Benefits Scheme [PBS],” Gleeson said.

“In future we could see more expensive drugs like this not made widely available to Australians because of an expenditure blowout, and delays through evergreening will delay cheaper versions from entering the market.”

Provisions in the draft trade agreement would further entrench and extend costly monopolies, with serious implications for the budget and the sustainability of the PBS, she said.

A co-author of the report and patent expert from the Australian National University, Dr Hazel Moir, said powerful lobbying by drug companies meant there had been little resistance from the Australian government on patents.

Australia already granted 20-year patents, Moir said, more than enough time for a drug company to recoup the costs of producing the drug and to make a substantial profit.

“The patent system has been made complex, which is a standard way to disguise rorts and rent-seeking, which means profiting beyond what you’d get in a normal commercial market,” Moir said.

“Patent systems are also off-budget, which means they are never reviewed, and in fact I have never found an economic review of any patent system in the world.”

The government should urgently reconsider signing the trade deal, she said, which would further entrench patent laws.

Evergreening could delay generic competition for up to 20 years, the report found. In 1998 five-year delays were introduced allowing patents to be extended. The cost of these extensions to the PBS in 2012-13 was estimated at $480m in the long-term, the report said.

The secretive provisions within the Trans-Pacific Partnership agreement have other health professionals concerned. Earlier this year, health experts from around the world wrote to the Lancet calling for greater transparency around the trade deal.

“Although USA-based industry advisers have been granted privileged access to negotiating documents, health agencies have been forced to rely on leaks for information,” the signatories wrote.

“Rising medicine costs would disproportionately affect already vulnerable populations, obstructing efforts to improve health equity within and between countries.”

A spokeswoman for the Department of Health said the government could not comment on the accuracy of the leaked draft documents referred to in the report.

But Australia was taking a clear position in the TPP negotiations that it would not accept an outcome that would adversely affect the Pharmaceutical Benefits Scheme or Australia’s health system more generally, she said.

“As is normal practice in trade negotiations, parties have agreed to keep documents related to the negotiations, including text, confidential,” she said.

“The substance and text of the agreement are the subject of ongoing negotiations, and neither has been settled yet; both are changing through the negotiation process. The text has no status until all parties agree to it.”

The TPP negotiations were at an advanced stage, she said, “with only the most difficult issues yet to be resolved”.