NCPA - National Center for Policy Analysis


September 29, 2004

In July, Congress passed and sent to the president the U.S. - Australia Free Trade Agreement. The legislation marks the first time two nations have discussed intellectual property rights and patents with regard to international trade of pharmaceuticals.

By entering into trade deals such as this, the costs of developing and producing drugs can be spread out to all who benefit from them, not just U.S. citizens. That, in turn, could decrease the cost to Americans, say the National Center for Policy Analysis' Devon Herrick and Russell Bennett.

According to the authors:

  • U.S. drug companies will be able to negotiate with the Australian government without fear of having their patented products produced by others without their consent.
  • Companies will be able to enter into enforceable contracts with the Australian government regarding resale rights of these same drugs in other markets, including the United States.
  • Tariffs will be eliminated from more than 99 percent of U.S. products, which will result in increased output and new jobs.

By giving companies the opportunity to negotiate the conditions of the sale and resale of their products, allowing them to protect intellectual-property rights, and making contracts enforceable by law, explain Herrick and Bennett, the U.S. - Australia agreement represents a giant step toward free trade. Such efforts will enable competition and entrepreneurship to thrive, and American citizens will benefit.

Source: Devon Herrick and Russell Bennett, "The U.S. - Australia Agreement is a Step Toward Free Trade in Prescription Drugs." Heartland Institute, September 1, 2004.


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