US envoy targets trade issues

29 August 2006, Australian Financial Review, By Tracy Sutherland

The new US ambassador to Australia, Robert McCallum, has signalled he will renew a push to improve access for American pharmaceuticals into Australia through the free-trade agreement.

In his first Australian press conference yesterday, Mr McCallum nominated the FTA among his top three priorities and revealed he was lobbied by American pharmaceutical companies before he even left the US.

"I can certainly say that I have had pharmaceutical companies - after I was confirmed by the Senate - contact me and say 'we are very interested in the innovation of pharmaceuticals or the accessibility of innovative pharmaceuticals to an Australian market'," Mr McCallum said.

"So it is something about which I have had contact by American companies, raising that issue on my radar screen as something that they wish for me to discuss," he said.

The issue of US access to the Pharmaceutical Benefits Scheme dominated the initial FTA negotiations. US drug companies argue that the PBS keeps drug prices too low.

The FTA, which came into effect 20 months ago, had "tremendous potential" for both countries and the region generally, Mr McCallum said.

He nominated pharmaceuticals, sugar, intellectual property rights, recognition of professional qualifications and financial regulation requirements as issues to be negotiated further.

"All of those are issues that are going to be at some point discussed and debated and negotiated between Australia and the United States as we focus on the implementation of the free-trade agreement - where those negotiations ultimately come out, where the implementation ultimately occurs, is again a matter of speculation," he said.

US drug makers won greater rights through the FTA to ask for a pricing review under the $4.5 billion Pharmaceutical Benefits Scheme, but the government insists the PBS is largely out of bounds to US infiltration.

A spokesman for Trade Minister Mark Vaile said: "Australia supports innovative pharmaceuticals through the PBS and other mechanisms - the PBS was fully protected in the US FTA and is certainly not up for negotiation."

Australian Medical Association president Mukesh Haikerwal said he was "very worried" by any renewed push by US pharmaceutical companies who in the short term "want to be able to bypass some of the PBS review mechanisms and ultimately want to undermine the PBS with the view to getting rid of it".

"I'll be raising it with the Trade Minister - we'll want them to redouble their commitment that the integrity of the PBS will be maintained," Dr Haikerwal said.

He predicted Canberra would continue to be lobbied to drop the FTA's "evergreening" amendment, which stops drug companies extending patents to keep out cheaper generic brands.

Medicines Australia, which represents drug companies, said any discussions on the PBS were a matter for governments.

Mr McCallum also said Washington had not given up on the stalled World Trade Organisation Doha talks. He said it was "yet to be determined" whether the US would make any new offers to revitalise the negotiations at next month's Cairns Group meeting - to be held in Cairns - which will be attended by US Trade Representative Susan Schwab.