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In recent weeks we have received a number of enquiries about New Zealand's Pharmaceutical Management Agency, or PHARMAC, and the TPP. Some of this interest has stemmed from a letter [PDF 923KB] that 28 United States Senators sent to the US President in May. While the letter focused primarily on intellectual property issues in the TPP, it did generate some interest in New Zealand for its reference to pharmaceutical issues.
Media reporting in response has included editorials in the New Zealand Herald, the Dominion Post and the National Business Review. [external links]
Trade Minister Tim Groser recently addressed the question of pharmaceutical issues in the TPP in a speech to the New Zealand Institute of International Affairs that you can find in a previous TPP Talk column as well as in a response to an open letter [external link] from Gareth Morgan and Geoff Simmons. The substance of the Minister's reply to that letter is copied below:
"...The goal of TPP is to negotiate a deal that will reduce the barriers our traders face and improve their competitiveness in the region. The longer-term vision of the TPP is that it will eventually be expanded beyond the current group of nine countries to create an Asia‑Pacific regional marketplace. Our goal, as with previous trade initiatives undertaken by New Zealand governments, is to achieve stronger economic performance so that we can generate more jobs and higher incomes for New Zealanders.
TPP as a regional integration initiative presents New Zealand with big opportunities, but also some significant risks. New Zealand’s record on the negotiation and implementation of free trade agreements shows that it is possible to negotiate deals that maximise net benefit to New Zealand without making unacceptable policy compromises. In TPP we shall likewise hold out for a result that offers clear net benefit and that minimises the impacts on current domestic policy settings.
The Government values the contribution that PHARMAC makes to New Zealand’s ability to manage the health budget and to give New Zealanders access to a range of effective pharmaceuticals within the funds we have available. The confidence the Government has in PHARMAC can be seen through the decisions to substantially increase funding for community medicines, including in the last three budgets, and to extend PHARMAC’s responsibilities to cover hospital medicines and, over time, further categories of medical devices.
We have long known that a number of pharmaceutical manufacturers have concerns about elements of PHARMAC’s operating model. Their arguments often fail to appreciate the universal nature of the New Zealand healthcare system and the challenges of administering limited resources within that context. They are also made in isolation to the many similar processes that are used by other healthcare providers in major first-world economies. But as the TPP negotiation intensifies, I expect that the pharmaceuticals industry will continue to publicly express its concerns with reference to the TPP process.
Some in the media have asked that I rule out any discussion of PHARMAC in the TPP. That is difficult for two reasons. A natural part of any negotiating process is for negotiators to raise issues that are of interest to their stakeholders, whether or not they can be resolved. But more fundamentally, a text on pharmaceutical issues has not yet been tabled in the TPP. As a result, we don’t know what might be proposed or what implications it might have for PHARMAC. I have, however, been very clear in establishing some fundamental markers: PHARMAC has produced outstanding outcomes for New Zealand and the Government is not prepared, through TPP, to dismantle it or the processes that make it most effective.
In the meantime, we are seeking to make it very clear to the pharmaceutical industry that PHARMAC’s operating model does not impact on the industry’s ability to protect intellectual property rights or access the New Zealand market. The concerns being raised about PHARMAC relate solely to an issue about access to New Zealand Government subsidies in a willing buyer/willing seller market environment..."
