Australia-United States Free Trade Agreement (AUSFTA)

Details on the pharmaceutical aspects of the Australia-United States Free Trade Agreement, as well as some links to other useful information.

Page last updated: 23 March 2008


The Australia-United States Free Trade Agreement (AUSFTA) came into force on 1 January 2005. The obligations in this agreement in relation to the Pharmaceutical Benefits Scheme (PBS) relate to issues of timeliness, transparency and process. These obligations have been fully implemented.

The PBS pricing and listing arrangements that ensure access to quality medicines that are affordable for Australian consumers and the community were not altered as a result of the AUSFTA.

The commitments made under the AUSFTA do not inhibit Australia’s ability to protect critical elements of public policy, or deliver fundamental policy objectives in pharmaceuticals.

Pharmaceuticals and the Pharmaceutical Benefits Scheme

The relevant text consists of an Annex (Annex 2-C – Pharmaceuticals) to Chapter 2 (National Treatment and Market Access for Goods) of the Agreement that reflects some joint obligations and common principles. In addition there is an Exchange of Letters (a “side letter”) on pharmaceuticals that sets out some specific commitments that Australia made in relation to processes for the listing of medicines on the PBS. There are also some provisions relating to pharmaceuticals in Chapter 17 – Intellectual Property.

Common principles

Australia and the United States have agreed on some common principles and objectives that are important in managing our respective federal healthcare programs. The two countries recognise:
  • the importance of innovative products in delivering quality health care;
  • the importance of government support for pharmaceutical industry research and development including patent protection;
  • the need to promote efficient and transparent processes for the public to gain access to those innovative products; and
  • the need to ensure that those processes recognise the health benefits of innovative products.

These are statements of general principle which are consistent with the operation of the PBS.

Transparency and Process

Australia agreed to some improvements in process and transparency in relation to the operation of the PBS.
  • The Annex and side letter largely reflected standards and practices that already applied, and continue to apply, when the Pharmaceutical Benefits Advisory Committee (PBAC) considered applications for new medicines to be added to the PBS. These include:
- ensuring that applications from companies seeking to have products added to the PBS are considered by the PBAC within a specified timeframe;

- publishing the procedural rules and guiding principles that govern the PBAC's consideration of those applications;

- providing applicants with an opportunity to discuss their application with technical staff of the Department of Health and Ageing prior to lodgement and to consult with the PBAC during its consideration of applications; and

- providing companies with detailed explanations of the PBAC's consideration of their application.
  • More detailed information is now made publicly available about the outcomes of the PBS listing process, including through the release of public summary documents on PBAC recommendations.
  • An opportunity for hearings before PBAC has been instituted.
  • The other key transparency provision is the establishment of an independent review process. The independent review does not have the authority to overturn a recommendation of the PBAC or to reconsider the price of a drug on the PBS.
  • The Independent Review is not an appeal process. Under the National Health Act 1953, the Minister for Health and Ageing cannot list a medicine on the PBS that has not been recommended by the PBAC. It was not necessary to change this legislation to implement the independent review process as part of Australia’s AUSFTA obligations.

For more information please see the 'Independent Review (PBS)' website.

Australia also agreed to streamline some of the administrative steps that are required following a positive recommendation by the PBAC.
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Medicines Working Group

Australia and the United States agreed to establish a Medicines Working Group (MWG), with the objective of promoting discussion and mutual understanding of issues relating to the Pharmaceuticals Annex of the AUSFTA.

The Medicines Working Group provides a forum for discussion between officials of federal government agencies responsible for healthcare programs and other appropriate federal government officials. No industry representatives attend these meetings.

The framework in which the Medicines Working Group operates is detailed in the agreed [Standard Operating Procedures (SOPs)] which cover the group’s composition, chair arrangements and meeting procedures.

The first meeting of the Medicines Working Group was held in Washington, DC on 13 January 2006. The second meeting was held in Sydney on 30 April 2007. The discussions at both meetings were on issues relating to the pharmaceutical provisions of the AUSFTA. The Agendas and the Joint Statements for these meetings may be found below.

2007 Meeting Joint Statement

2007 MWG Agenda

2006 Meeting Joint Statement

2006 MWG Agenda

Intellectual Property and Generic Medicines

Under Article 17.10.4 of the Agreement, Australia is required to provide measures in its marketing approval process to prevent a person from entering the market with a generic version of a patented medicine before a patent covering that product has expired.

To implement this requirement, the AUSFTA Implementation Act 2004 included amendments to the Therapeutic Goods Act 1989. The amendments provide that an applicant seeking to include therapeutic goods in the Australian Register of Therapeutic Goods (ARTG) must provide one of two certificates to the TGA. The TGA must receive a certificate from the applicant prior to listing the therapeutic good on the ARTG.

The applicant must certify, in good faith, either:
    (i) That they do not propose to market the therapeutic good in a way or circumstances that would involve an infringement of a patent covering the product; or
    (ii) That they intend to market a generic version of a patented product before the patent expires, because they believe the patent is invalid, and they have notified the patent owner of their application to include the therapeutic good in the ARTG.

A person is guilty of an offence if the person gives the TGA a certificate that is false or misleading.

Amendments were also made to the Therapeutic Goods Act 1989 which impose penalties and damages on pharmaceutical patent owners if they take unreasonable legal action against generic manufacturers. A patent owner must also notify the Attorney-General of the Commonwealth, State or Territory before it can apply for an interlocutory injunction against a generic manufacturer who has notified the patent owner of its intention to enter the market before the end of the patent.


For further information please telephone (toll free) 1800 020 103.
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