Will the Australia–United States Free Trade Agreement undermine the Pharmaceutical Benefits Scheme?

In January 2003, the Pharmaceutical Research and Manufacturers of America lobbied the US negotiators for the Free Trade Agreement with Australia (AUSFTA) to seek a commitment from the Australian government to “refrain from trade distorting, abusive, or discriminatory price controls” in relation to the operation of its Pharmaceutical Benefits Scheme (PBS).1 In October 2003, President George Bush allegedly told Prime Minister John Howard that raising Australian prices for pharmaceuticals manufactured in the United States was important for ensuring that consumers in all countries, not just US consumers, paid for the high research and development (R&D) costs.2 AUSFTA was signed by both governments in May 2004. If we presume at least some of this rhetoric influenced the provisions of AUSFTA, what implications will these provisions have for our PBS?