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PHARMAC budget increase welcome news for Pharma

FRIDAY 12 MAY 2017
PHARMAC budget increase welcome news for Pharma

Trade Minister Todd McClay has said, correctly, that the legislation implementing the Trans-Pacific Partnership Agreement (TPPA) will not come into force unless and until the agreement does. On its face, the government’s move today to ratify the agreement seems a harmless display of its deep ideological commitment to the deal, according to Auckland medical oncologist George Laking.

‘But the Minister doesn’t say what will happen to the non-legislative changes the government has made to bring itself into compliance with the thirty-chapter agreement, such as Pharmac’s regime for buying pharmaceuticals’.

Dr Laking questioned whether this week’s announcement of another $60 million over the next four years for Pharmac was pure coincidence.

‘It is well-known that Big Pharma’s strategy was to use the TPPA to ‘bust the cap’ on the funds that Pharmac had to spend. That hard cap, combined with the availability of cheaper generic medicines, is what gave Pharmac its bargaining power. The proposed changes to Pharmac’s processes through the TPPA were as, or more, important to achieve that as the intellectual property rules that are in the legislation.’

Dr Laking acknowledged that many New Zealanders will welcome the availability of new medicines. ‘But it is important to know whether the bulk of this $60 million really is a windfall for the pharmaceutical industry to pay over-the-top prices for New Zealanders to access new generation medicines. The PHARMAC funding increase is a type of tacit admission that medicines will become more, not less expensive. It is likely to be a simple wealth transfer from the public purse to industry's pocket.’

Health professionals warned during the TPPA negotiations that the additional funding for Pharmac was likely to come from elsewhere in the health budget, with opportunity costs to meeting people’s needs in the other, less visible, parts of the health system. In addition, the four year funding increase can only provide a stop gap. If Pharmac’s bargaining power has been undermined, the costs of new generation medicines will mount exponentially in future years.

Dr Laking called on the ministers of trade and health to tell New Zealanders what non-legislative changes there have been in the process of ratifying the TPPA, and assure them that this increase has nothing to do with the implementation of the dead agreement.


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