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Issue of ballooning future medicine costs

Trade Minister puts up smoke screen on the real issue of ballooning future medicine costs

“Minister Groser has once again avoided the real issue of the health costs of the TransPacific Partnership (TPPA) investment deal” says Dr Erik Monasterio, a specialist in psychiatry, speaking on behalf of Doctors for the Protection of Health in Trade Agreements.

This weekend the Minister said that: “I don’t think you’re going to see anything dramatic (in terms of increased medicine prices) that’s going to flow through as a consequence of TPPA.”

“Talking about dramatic changes in the price of today’s medicines avoids the problem entirely.” said Dr Monasterio.

“One of the big issues is the price of the new medicines. All the new medicines from their original manufacturers are incredibly expensive and under the TPPA they would stay expensive for longer. For one particular new class of super-expensive drugs (known as biologics) the real question is the extra seven years that the United States drug manufacturers want us to wait before similar, less expensive versions(known as generics) are let into the country.“

For the seven most expensive biologics in New Zealand, every year of delay in getting virtually the same but less expensive versions would cost us at least $25-50 million every year. To put this figure in perspective, that higher cost more than wipes out the estimated best case scenario gains from the TPPA for New Zealand of roughly $23 million dollars.*(see below for reference and further information)

Minister Groser also said:

“…the one thing that could flow through here is through slight changes in patent law. It's conceivable they could flow through, though not in any dramatic way into pharmaceutical costs

According to a recent leak of the draft Intellectual Property chapter of the TPPA, the “slight changes in patent law” would prevent TPPA countries approving generic drugs whenever there are any unresolved patent issues. This means drug companies could prevent competition with generics by claiming a patent infringement and to make a legal case that issues were ‘unresolved’.

“Minister Groser is correct in saying that the consequences of this kind of change would not be felt immediately. But this hides the fact that over time the effects would be substantial. The effects would be compounded over time as more drugs are affected, and the responsibility to cover the cost would be deferred to future NZ governments. To talk of the cost of current medicines is just a smoke screen to avoid the real issue.” said Dr Monasterio.

“It sounds reassuring while distracting attention from where the real problem lies - like the junk food that advertises itself ‘fat free’ when it is just full of sugars. It’s the same as the highly public reassurances about ‘protecting the fundamentals of PHARMAC’. Of course we believe Mr Groser when he says that PHARMAC will continue. What he is not talking about, however, is the legal basis for the lower cost medicines being available to buy in New Zealand in the first place. It’s a smokescreen.”

Contact Dr Erik Monasterio

027 2188 497

Further information

I. Doctors for the Protection of Health In Trade Agreements (Drs for Healthy Trade)

Doctors for the Protection of Health in Trade Agreements is seeking to develop a broad medical voice for the protection of health in trade and investment agreements. In the first instance we support, in relation to international investment and trade agreements across the world:

• Open, fair participation when forming agreements;
• Fair and equal terms of the countries participating
• Proactive independent assessments of the potential health impacts at an early stage in negotiations;
• Equitable, impartial and transparent disputes processes that give priority to health
• Ensuring countries can maintain and strengthen policies and laws for good health and for universal, effective and affordable health services, as each country sees appropriate.

Within those broad principles details will differ for particular countries and individual proposed trade and investment agreements.

II. Costs of recently developed medicines

Pharmac’s 2014 Annual Review indicates it saved more than $1.2 billion dollars in that year alone, due to its ability to negotiate competitive prices for medicines [1]. Pharmac is able to buy medicines at about a 2/3 average discount on the un-negotiated price [2]. Currently 7 of Pharmac’s 20 highest-expenditure medicines are biologicals (adalimumab, trastuzumab, etanercept, insulin glargine, rituximab, pneumococcal vaccine, epoietin beta), with a total annual expenditure of $163 million [3]. The discount available for biosimilars is smaller, about 1/6 to 1/3, mainly because they are more expensive to make than standard generics [4]. Pharmac could expect to forgo at least $25-50 million in discounts for every year in which access to biosimilar versions of just these seven agents was delayed. The actual loss is probably greater. Biosimilars, by their mere presence in the market, will exert a downwards effect on price. Demand for biologicals is increasing, for example with the arrival of new immune-based anticancer treatments such as the PD1-targeted monoclonal antibodies.


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