A flurry of newspaper columns and editorials in the last few months have looked at New Zealand’s efforts to strike a free trade deal with the United States and the impact that might have on our drug-buying Government agency Pharmac.

You see, the US apparently considers Pharmac as anticompetitive and limiting the ability of US drug companies to sell their products in New Zealand.

According to University of Auckland law professor Jane Kelsey writing recently in the Herald:

The challenge to our pharmaceutical purchasing agency is an obvious second crunch point. The big-pharma lobby in the US and here has declared Pharmac ‘an egregious example’ of what it considers unfair practices. Leaked US and New Zealand texts reveal an initial standoff between the two parties. Yet the Key government has refused to take Pharmac off the table, raising concerns about what Trade Minister Tim Groser means by protecting the ‘fundamentals’ of our affordable medicines regime. Significantly, the Labour Opposition has broken the previous bipartisan consensus on free trade agreements and made Pharmac a red line issue.

Writing in the Herald, seasoned trade commentator Fran O’Sullivan puts it a bit more bluntly:

…we would have to sacrifice Pharmac before the United States will let our dairy farmers in.

This morning I received a letter from Medicines New Zealand, which represents the likes of Pfizer, GlaxoSmithKline, Roche and Merck Sharpe & Dohme – some of the biggest drug companies in the world.

“The medicines industry is NOT advocating for the abolition of Pharmac”, writes Medicines New Zealand general manager Kevin Sheehy.  Our industry works with agencies similar to PHARMAC all around the world. The central approval or funding agency model is fast becoming the norm”.

So what do the drug companies actually want if it isn’t seeking an end to Pharmac? “Some reforms to the Pharmac model,” writes Sheehy.

“These reforms stem from a long held and on-going concern that New Zealanders are not gaining access to best-in-class and first-in-class medicines.”

He then goes on to list what exactly the industry does want:

- Better transparency around funding applications and the Pharmacology and Therapeutics Advisory Committee (PTAC) as well as for the scientific evidence on which decisions are made. More transparency? Seems reasonable.

- Establish a timeline for processing applications and make decisions (“don’t sit on PTAC recommendations for many years”). Again, fair enough.

- Clear definition of decision criteria and how they are applied. Yep, makes for better decision making and transparency.

- Direct stakeholder representation to the clinical committees. Hmm, could be problematic – not sure about that, surely the clinical research should speak for itself and input should be independent?

- All health technology investment decisions made on similar grounds. Assuming that it is reasonable to make health technology investment decisions on the same terms, sounds reasonable.

- Intellectual property regime brought up to international best practice. This is the big unknown – what exactly does this mean? The IT and creative sectors are already struggling with this on copyright and software patents and it is a hugely factious issue. It could be enough to undo everything listed above. More info from the industry is needed here.

Sheehy goes on to claim that a free trade agreement with the US would not result in price hikes for drugs.

“Following Australia’s Free Trade Agreement with the US, Australia has benefitted from access to more innovative medicines, a flourishing generic market and the growth of their medicines expenditure has reduced. Any changes are highly unlikely to result in increased costs for medicines currently available in New Zealand.”

So, if not totally reassuring to proponents of the Pharmac model, certainly a different stance to what has been implied in the media – that the dismantling of Pharmac is a condition of us getting a FTA with the US and is a high priority of the drug companies.