Annex 26-A: Transparency and Procedural Fairness for Pharmaceutical Products and Medical Devices
Dr Deborah Gleeson | December 12, 2015 | Full Text (PDF)
School of Psychology and Public Health, La Trobe University
Introduction and Background: The intent of Annex 26-A of the Trans Pacific Partnership Agreement (TPP) is to discipline national pricing and reimbursement schemes for pharmaceutical products and medical devices.
While the language of the Annex is framed around principles of transparency and fairness, the objectives of the pharmaceutical and medical device industries clearly go much further than this. The ultimate objective of the industry is expanded market access at monopoly prices dictated by industry: the target is mechanisms that impact on both market access and prices. The Annex was intended to achieve this objective through greater disclosure of information, greater industry participation, and ultimately more leverage for the industry in decision making regarding pricing, reimbursement and other decisions that impact on market share, such as the range of therapeutic indications for which a product is subsidised.
It is unlikely that the final Annex will go very far, at least in the first instance, towards achieving these industry objectives. The contents of the Annex have undergone quite a transformation since the first proposal, tabled by the United States, was leaked in 2011.
The initial US proposal was based largely on text from the trade agreement between South Korea and the US (KORUS). A later leaked draft from 2014 showed a significant ‘watering down’ of the original US proposal due to opposition by the non-US countries,3 and some of the remaining concerns of public health and access to medicines advocates have been further mitigated in the final text.
Annex 26-A in its final form is in many respects closely modelled on Annex 2-C of the Australia-US Free Trade Agreement. In contrast to KORUS, AUSFTA contains no provisions directly relating to pricing: it only pertains to the listing of pharmaceuticals for reimbursement.
There are some important differences between AUSFTA Annex 2-C and TPP Annex 26-A. Unlike Annex 2-C, the TPP Annex covers medical devices, although Australia and New Zealand have succeeded in carving out medical devices from their obligations. Interestingly, the TPP Annex includes some additional flexibilities that did not appear in AUSFTA Annex 2-C. But the inclusion of an investor-state dispute settlement (ISDS) mechanism in the TPP, which AUSFTA did not contain, raises new risks that the Annex may lend weight to ISDS claims by pharmaceutical and medical device companies that countries have breached the obligations of the Investment Chapter. The TPP Annex also includes a consultation obligation which may be not be circumscribed in the same way as the mechanism established under the AUSFTA.
