Malcolm Turnbull@TurnbullMalcolm
There are news reports today that Australian government officials are concerned that the Trump administration will pressure Australia over its monopsonistic Pharmaceutical Benefits Scheme which keeps drug prices in Australia lower than they otherwise would be - the PBS does not make drugs eligible for government subsidy unless the price is agreed.
This is not news. big pharma has never liked our PBS. This piece of history from the Obama years and the negotiations over the Trans Pacific Partnership is from my memoir “A Bigger Picture”
“I became prime minister just as the negotiation of the TPP was concluding in Atlanta and we came under enormous pressure from the Americans to agree to amendments to patent protection for biologics, a new and increasingly important type of drug created by complex biological, as distinct from chemical, processes. The amendments would benefit the immensely influential US pharma lobby but would inevitably be politically damaging for us as an increase in the cost of some drugs in Australia was a likely outcome.
“We were only just getting the China Australia Free Trade Agreement through the parliament in the teeth of furious opposition from the unions and we simply didn’t have the political capital available to have a fight over the TPP too. President Obama called me to press the case and did so with his characteristic quiet charm. But I couldn’t help him; we wouldn’t change our law relating to data protection for biologics. It was political kryptonite for us.
Barack said that meant the TPP could fall over and we’d be blamed. I took a deep breath and quietly replied, ‘Well, Mr President, like you, I think the TPP is vital for our region. But you know, nobody is marching in the streets here saying “Sign the TPP”, but they sure will be marching if they think we’re going to put up the price of drugs on our Pharmaceutical Benefits Scheme. Those pharma companies hate our PBS because we use our monopoly buying power to force down prices – but that’s not my problem. Sorry, no can do.’
Barack Obama entirely understood the politics. And he acknowledged he was an unlikely advocate for big pharma. We just moved on to talking about Syria and other security issues. I then gave Andrew Robb (our Trade Minister) authority to stonewall on the issue. ‘Just say “no” to drugs, Andrew,’ I told him.
Our ambassador in Washington, Kim Beazley, reported to me on 3 October that, following my call with the president, Obama’s National Security Council trade adviser was trying to elevate the issue to one of national security, and was arguing that our standing our ground wouldn’t just put the whole deal but the alliance at risk. We were warned that the atmospherics with the Americans would likely be poisonous if talks collapsed.
Peter Varghese, secretary of DFAT, Julie Bishop our Foreign Minister , Andrew Robb and I talked. We resolved that we would not be spooked by the US pressure and concluded the idea that Australia was standing in the way of the US rebalance in the Asia Pacific was self-serving bunkum. The USA was trying to knock us off one by one on biologics, and Australia was by no means the only TPP party that could not accept eight years. We recognised that if we failed in Atlanta it wouldn’t be because of Australia. So, concluding our position on biologics was both entirely defensible and in our national interest, I instructed our negotiators to hold firm. And we did.
The deal was signed in Atlanta – only to be abandoned a year later by President Trump. But it was a reminder that, especially when it comes to trade, nations – particularly big ones – will ruthlessly pursue their own interests. It was important that at our first encounter, Obama saw that I was just as committed to Australia’s interests as he was to America’s.“
