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New leaks show PHARMAC “fighting for oxygen” under TPPA

New leaks show PHARMAC “fighting for oxygen” under TPPA

Media release: Doctors for Healthy Trade, 11 June 2015

The Annex on Transparency for the Trans-Pacific Partnership Agreement (TPPA), published by Wikileaks yesterday, reveals changes that could make PHARMAC “largely unworkable” and lead to “less affordable medicines” according to oncologist, health economist and PHARMAC advisor Dr George Laking.

“Superficially, the language in the leaked text seems benign, but the underlying changes would give pharmaceutical companies a combination of new levers to undermine PHARMAC processes,” says Dr Laking. “What we see in the text is a variety of small changes – every one favouring pharmaceutical companies ¬– that multiply their force when added together.

“One thing is certain – don’t expect the industry to play by gentleman’s rules – under the proposed changes, PHARMAC would be pressured to make important decisions within shorter time frames and under more intensive input and scrutiny from industry. There would also be more onerous requirements to release information which could then be used to challenge its decisions through a review process.

“But even more worrisome is that the leaked text leaves PHARMAC decisions open to challenge through the investor-state dispute process – that is pharmaceutical companies could respond to PHARMAC decisions by filing law suits against the tax payer in off shore trade tribunals.

“The threat of an expensive law suit hanging over every decision would have an intimidating effect and would tend to make PHARMAC more hesitant about fighting to get the best deals for New Zealanders. The Australians have tried to close the investor-state loophole by explicitly excluding their equivalent of PHARMAC from being subjected to these lawsuits under the TPPA, but for some reason New Zealand has not done the same with PHARMAC.

“It turns out that ‘keeping the fundamentals of PHARMAC intact’ (as Minister Groser promised) is only part of the story. The thing that will actually change is that PHARMAC’s operating environment will get a whole lot more hostile. When you catch a fish, you don’t change its fundamentals, you just change its environment from water to air. In the same way, with the TPPA, PHARMAC will be fighting for oxygen.

“The net result for New Zealanders would be more expensive medicines, leading to greater pressure on the health budget. This would be a boost for the profits of multinational pharmaceutical companies, but a blow for the New Zealand health system, and a threat to affordable medicines for New Zealand’s most vulnerable citizens.

“You really have to ask, why would the TPPA’s authors go to the trouble of writing an ‘Annex on Transparency and Procedural Fairness for Pharmaceutical Products and Medical Devices’? Why pharmaceuticals, and why not mobile phones, or tractor tires, or instant coffee? For this, New Zealanders can take credit, because the obvious answer is PHARMAC and its current freedom to purchase cheaper generic medicines for New Zealanders, undermining pharmaceutical industry profits.”


For more information contact Dr George Laking: 021 211 4510 | George.laking@gmail.com

Doctors for Healthy Trade

Doctors for the Protection of Health in Trade Agreements (known as Doctors for Healthy Trade) is a growing informal coalition of New Zealand doctors and colleagues in health in New Zealand and elsewhere with over 150 supporters.

The members of our core group are predominantly full-time clinicians, although some of us have university attachments that have allowed a little scope for research and writing on this topic. The doctors who support the protection of health in trade are clinicians in all medical specialities, with strong representation from paediatricians, public health specialist and psychiatrists. For more information see https://www.facebook.com/DrHealthyTrade.

Background on the relationship between PHARMAC and the pharmaceutical industry

PHARMAC is NZ’s national agency that negotiates with pharmaceutical companies to get the best possible prices for medicines in NZ, and decides which ones to subsidise. The principal objective of PHARMAC is enshrined in legislation (The Health and Disability Act 2000) as:

“…to secure for eligible people in need of pharmaceuticals, the best health outcomes that are reasonably achievable from pharmaceutical treatment and within the funding provided”.

The PHARMAC model has saved NZ more than $5 billion dollars since 2000 and its success is recognized internationally. An Australian report indicated that if the Australian government had used the same model then it could have saved 1.6 billion dollars / year.

However the public interest model of PHARMAC is directly at odds with the profit maximising imperative of the pharmaceutical industry. According to the US pharmaceutical industry’s 2011 submission to the government on the TPPA, PHARMAC was singled out as an “egregious example” whose “sole focus is to drive down costs (of pharmaceutical products)”.

Moreover, the US annual Report on Special 301 (a report dealing with intellectual property issues) showed that PHARMAC remains a target for the US pharmaceutical industry:

“With respect to NZ, US industry has expressed serious concern about the policies and operation of NZ’s Pharmaceutical Management Agency (PHARMAC), including, among other things, the lack of transparency, fairness and predictability of the PHARMAC pricing and reimbursement regime, as well as the negative aspects of the overall climate for innovative medicines in NZ”

Background on the Trans-Pacific Partnership (TPP)

The TPP is a trade deal in the very final stages of negotiation between NZ, Australia, The USA and nine other Pacific Rim countries. If completed, the deal would cover 40% of the global economy and 10% of The World’s population. The TPP is considered a “new generation trade deal” or “investment treaty” that encompasses areas of domestic policy beyond import tariffs and quotas. The focus is rather on eliminating “behind the border barriers” or “technical barriers to trade” which in many cases equate to domestic regulations intended to protect the environment, labour conditions and health. The negotiations have been conducted in secret and for the general public, negotiating documents will be kept confidential for four years after the agreement is signed. However, in the USA, hundreds of corporate advisors have already been granted privileged access to those same texts, raising strong criticisms from health, labour, environmental and human rights agencies.


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