It’s time to fix the free trade bungle on the cost of medicines
Palombi, L. (2014) It’s time to fix the free trade bungle on the cost of medicines. The Conversation, 21 October 2014 .
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Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this Free Trade Scorecard series, we review Australian trade policy over the years and where we stand today on the brink of a number of significant new trade deals.
Negotiations for the Trans-Pacific Partnership present an opportunity to correct a mistake made a decade in the Australia-US Free Trade Agreement, which led to Australia paying higher prices for pharmaceuticals.
In July 2004, Tony Abbott, then health minister in the Howard government, issued this statement:
"The price of pharmaceuticals will not rise as a result of the AUSFTA…"
Contrast this to what the Abbott government’s first budget, in May this year, told Australians:
"Over the past decade the cost of the Pharmaceutical Benefits Schedule (PBS) has increased by 80%."
To be sure, the “price of pharmaceuticals” is not the same thing as “the cost of the PBS”. But since the PBS is responsible for providing medicines to the vast majority of Australians, it is reasonable to infer that a contributing factor has been a rise in the price of pharmaceuticals. It is also reasonable to infer that the AUSFTA is partially to blame for that rise.
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