New study shows TPP could cost PBS hundreds of millions

November 9, 2017: A new paper by leading health experts published in the Australian Health Review and summarised in Fairfax news and The Conversation  has found that the Trans-Pacific Partnership agreement could add up to $367 million to the cost of the Pharmaceutical Benefits Scheme if increases in data protection monopolies for biologic medicines proposed in the original TPP text are implemented.

Australia and 10 other countries are currently attempting to renegotiate the TPP, after the US withdrew earlier this year. Talks continued this week in Vietnam, and outcomes are expected on November 11. Australia and some other governments are hoping to ‘freeze’ contentious elements of the deal, anticipating that the US will re-join at a later date. This would include the increased monopolies for biologic medicines.

Right now, Australia provides five years of data protection for all medicines, in addition to twenty years of patent protection from competition. The TPP’s provisions give biologic medicines eight years of data protection, an additional three years of protection from competition. This could prevent Australia from ensuring cheaper medicines are available sooner, and would increase costs for the PBS.

The analysis of Australia’s Medicare expenditure data and PBS price data between 2015 and 2016 shows that Australia spent $2.2 billion on biologic medicines under the PBS. This could be reduced by 24 per cent once both patent and data protection monopolies expire. This means Australia could have saved up to $367 million per year if cheaper versions of biologic medicines (‘biosimilars’) had been available on the PBS in 2016. The extra three years of data protection in the TPP would delay these savings.

The study shows that there is no reason for agreeing to TPP proposals for increased monopolies that would cost hundreds of millions of dollars per year more on biologic medicines either now or in the future. Instead, the Australian government should be seeking to reduce such expenditure and redirect it to other areas of the health care system.