The Trans-Pacific Partnership (TPP) and the cost of medicines in Australasia

The Trans-Pacific Partnership (TPP) Free Trade Agreement (FTA) was agreed overnight in Atlanta.  Involving 12 countries and potentially affecting up to 40 per cent of the world’s population, the TPP is the largest free trade agreement in history.  As parties to the agreement, Australia and New Zealand participated on a cost-benefit basis – gaining in some areas whilst conceding ground in others.

While the stated aim of the TPP is to bring down trade barriers and facilitate mutual recognition of standards throughout the region, there had been concern in some quarters that the TPP may push up the price of medicines throughout Australia and New Zealand.

It now appears as though Australia and New Zealand have invoked the ANZAC spirit, bandied together and refused to cede ground on the key issue of clinical data exclusivity for biologic drugs – clinical data, of course, being a significant and costly hurdle that generics manufacturers must clear before they are able to launch their generic version of a drug following patent expiry.  Presently, both Australia and New Zealand provide 5-year data exclusivity periods for all pharmaceuticals.  The US had, on the other hand, sought a 12-year exclusivity period for biologics under the TPP.

Although the final agreed text of the TPP has yet to be collated and released (this could take up to a month), indications are that Australia and New Zealand have been successful in refusing to budge on a 5-year data exclusivity period for all pharmaceuticals.  Accordingly, whereas there had been fears that the Pharmaceutical Benefits Scheme (PBS) and Pharmac, the respective cornerstones of the Australian and New Zealand healthcare systems, had been under threat from the TPP, such concerns now appear to have been allayed.  Indeed, New Zealand’s Prime Minister, John Key, was this morning quoted as saying:

“Many concerns raised previously about TPP are not reflected in the final agreement. For example, consumers will not pay more for subsidised medicines as a result of TPP and the Pharmac model will not change.”

Like many others, we had previously feared that the TPP and the Australasian healthcare system were on something of a collision course.  News this morning that the two can apparently coexist is both surprising and welcome in equal measure.  Intellectual property – and in particular, patent protection for lifesaving pharmaceuticals, had been cast as somewhat of a villain throughout the negotiating process.  However, with text of the TPP now agreed upon, and with the apparent facility for the PBS and Pharmac to remain as is, it appears as though such a reputation may have been unwarranted.

Shelston IP has been following the TPP negotiations for the best part of five years.  We will continue to keep readers apprised of developments as they relate to IP.