Australia Details Post-US FTA Drug Review

Australian authorities have outlined measures to establish an independent review mechanism for drug approvals following the country's new free trade agreement with the US. The government now appears likely to accept recommendations from an industry and government working group set up in June 2004.

The panel's recommendations included the establishment of an independent review mechanism and improvements to the country's controversial Pharmaceutical Benefits Scheme (PBS), which operates the list of drugs approved for reimbursement by the country's Health Insurance Commission. A "convenor" to ensure the review mechanism's integrity is also likely to be appointed.

As Australia's drug prices are determined by complex negotiations between individual manufacturers and the government, which then sets prices on cost and public health criteria, any moves towards greater transparency are likely to be welcomed by the multinational sector. Nevertheless, authorities appear keen to avoid the possibility of US-approved drugs "leapfrogging" the powerful Pharmaceutical Benefits Advisory Committee (PBAC), which acts as the gateway to the PBS.

Senior health officials now claim that Australia's pharmaceuticals commitments under the US FTA are to be subjected to a 12-month review, but continue to insist that drug prices will not rise. The country's drug prices are already extremely low even by Asia-Pacific standards, despite the fact that with an estimated value of US$5.3bn in 2003, the size of the local market is second only to Japan in the region.