Leak Of TPP Health Annex Shows New Zealand's Beloved Pharmac System Under Direct Attack

from the do-as-I-say,-not-as-I-do dept

After a rather quiet period, WikiLeaks seems to be back on form. After the big TISA leak last week, it's released the Healthcare Annex to the Transparency Chapter of TPP. The document itself is short (pdf), and fairly opaque, so WikiLeaks has helpfully provided some expert commentary from Deborah Gleeson (pdf) and Jane Kelsey (pdf), both well-known academics in this field. Here's a key part of Gleeson's summary: The inclusion of the Healthcare Transparency Annex in the TPP serves no useful public interest purpose. It sets a terrible precedent for using regional trade deals to tamper with other countries' health systems and could circumscribe the options available to developing countries seeking to introduce pharmaceutical coverage programs in future.



The Annex is clearly intended to target New Zealand’s Pharmaceutical Management Agency (PHARMAC) and some of its provisions will result in new obligations for PHARMAC that will involve transaction costs and could impinge on its flexibility and autonomy. This is particularly worrying given that PHARMAC provides a model pharmaceutical coverage program that is suitable for adoption by developing countries. Pharmac is New Zealand's system for buying medicines in bulk, which results in substantial savings for the country -- around $3.5 billion since 2000. US drug companies hate it for two reasons: it is able to negotiate lower prices in New Zealand by consolidating purchases for the whole country; and it represents a dangerously successful model that other countries might adopt. The latest leak is important because it confirms that Big Pharma is using TPP not only to strengthen drug patents, but also to attack Pharmac directly.

It has long been a fear that TPP would seek to undermine it, something that the New Zealand government has strenuously denied. The latest clear evidence that Pharmac is indeed under threat has forced the country's prime minister, John Key, to respond, reported here by the New Zealand Herald: Prime Minister John Key has promised that New Zealanders will continue to pay no more than $5 [US$3] for subsidised prescriptions, whatever happens to Pharmac under the Trans Pacific Partnership. Jane Kelsey is quoted in the new story as noting that there were only four possibilities: the Government could increase the health budget overall; the health budget could remain the same but more funding go from non-Pharmac costs to Pharmac; the price the public paid for prescriptions could rise -- which Mr Key ruled out today; and the fourth was that fewer medicines were bought by Pharmac. Any of the other options means higher taxes in New Zealand or cuts somewhere else to pay for the more expensive drugs TPP is almost certain to bring. That fact has led to a spate of articles in the New Zealand press, and a wider awareness about the negative consequences of the hitherto obscure TPP, albeit rather late in the day.

As a side note, it's worth noting one other interesting aspect, pointed out by Kelsey in her detailed analysis of the latest leak: The Annex applies very specifically to a 'national health care program' that makes recommendations/decisions about listing pharmaceutical products or medical devices for reimbursement, or the sum of that reimbursement, where these programmes are run by a 'national health care authority'.



The Annex does not apply to direct government procurement of pharmaceuticals and medical devices.



'National' is presumably chosen to preclude such programmes that are run by states and provinces, which are politically sensitive in the US and Canada. In effect, the US has excluded almost all its own programmes, while targeting New Zealand

Clever, no?

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Filed Under: drug pricing, health annex, new zealand, pharmac, pharmaceuticals, tpp