Australia in trade fantasy world

Comment

It appears an Australian Government has once again underestimated the importance to the US of intellectual property protection for pharmaceuticals.

The Abbott Government is digging in to resist demands from the US for an extension in data exclusivity periods for biologic medicines.

It took the same approach to the inclusion of the PBS during negotiation of the bilateral US-Australia Free Trade Agreement ten years ago.

As was the case then, the public debate in Australia underestimates the strength of feeling in the US to the issue, and worse appears to fundamentally misunderstand the difference between data exclusivity and patent terms.

In New Zealand, the Government led by John Key is working to shift public debate on the TPP to an appreciation that a pharmaceutical trade-off will be required if the country is going to secure expanded access to the US dairy market.

New Zealand's political leaders appear to appreciate that trade negotiations require precisely that, trade offs.

It is not easy. Yet in the face of political opposition, both Prime Minister John Key and Trade Minister Tim Groser appear to be standing firm on the need to accept change.

In contrast, Australia's political leaders continue to live in a fantasy world, in which they secure wider access to US agriculture markets, notably sugar and dairy, while not conceding anything on intellectual property.

Access to large agriculture markets is important for Australian farmers, just as strong protection for intellectual property is important to the US.

The level of public debate is risible given the constant assertions in Australia that extending data exclusivity periods will increase increase patent terms, thereby delaying the entry of biosimilars.

It is deeply concerning that this false assertion is not being corrected by the Abbott Government, a failure that is only serving to feed political opposition in Australia, and incredulity in the US.

The Abbott Government's decision to dig in, by obviously leaking the details of a private conversation between the Prime Minister and President Obama, will only make a concession more difficult, and humiliating.

The Howard Government made the same mistake in the US-Australia FTA, publicly refusing to countenance the inclusion of the PBS until the last moment, which only fed political opposition.

Their mistake was to underestimate the strength of feeling in the US. The Abbott Government might be making the same mistake.

Just as Trade Minister Andrew Robb argues Australia will not sign on to a deal without securing significant benefits, the US administration is arguing the same. What a surprise.

There is no doubt that a concession on data exclusivity will be hard to sell to the Senate. Yet digging in hardly seems a clever strategy.

We can only guess the Abbott Government had decided to fan the flames of opposition domestically so they can use that as evidence to the US that a concession on data exclusivity would put the entire TPP at risk.

The frustration is that data exclusivity operates in complete isolation of patent terms.

Yet a sensible and considered argument on the subject is being lost in a sea of incorrect assertions.

The current data exclusivity in Australia is five years, compared to 12 in the US. Patents in the two countries are identical - 20 years with an additional five year patent term extension for pharmaceuticals in recognition of the long timelines for development and regulatory approval.

There is no real evidence to suggest a concession by Australia on data exclusivity will increase the cost of medicines, because in the vast majority of cases data exclusivity periods expire a long time before the end of a patent term.

Even if extending data exclusivity periods did delay the entry of biosimilars, as the New Zealand Government has calculated, the potential net benefit of the TPP significantly outweighs any cost.

In the words of New Zealand Trade Minister Tim Groser, "This is not some goddamn binary, zero-sum game. It is a manageable quantitative issue."