US not strong enough to castrate Pharmac

US Trans Pacific Partnership negotiating strength not strong enough to demand Pharmac changes, Labour leader Goff says

30th May 11, 3:25pm by Alex Tarrant

The Labour Party says government-run Pharmac should be non-negotiable in any free trade deal with the United States, but does not believe the US has the negotiating strength to impose changes to the pharmaceutical product subsidiser under Trans Pacific Partership (TPP) talks.

Prime Minister John Key has refused to name government bottom lines in the media, saying any deal reached to include the US in the TPP would have to produce net benefits to New Zealand.

Concerns are mounting in New Zealand that Pharmac could be on the block after 28 US Senators wrote to President Barack Obama saying the US should pressure governments about drug-buying bodies in any free trade deal with other nations.

But Labour leader Phil Goff said on Monday afternoon he did not think the US has the strength to make New Zealand change the Pharmac model.

“Pharmac is an absolute bottom line. We should not be trading Pharmac off for a free trade agreement for the United States and the wider [TPP] group," Goff, who is a former Trade Minister, said to media in his weekly press conference.

"I don’t believe, actually, that there is the negotiating strength by the United States to impose that on us. It is crazy - it [demanding changes to Pharmac] is not about free trade at all, it’s something that the big pharmaceutical companies want," Goff said.

"That is a bottom line, New Zealand should not be trading it away.”

Goff said he was very proud of his achievement of signing up to the TPP when he was Trade Minister.

“I am in favour of the free trade partnership that is being negotiated [with the US]. But every country has bottom lines. There are things that the United States will not do, equally there are things that New Zealand will not do, and trading off Pharmac is one of those things," Goff said.

“There’s no philosophical justification for it, there’s no requirement or precedent in terms of negotiating trade agreements,” he said.

Weakening or getting rid of the Pharmac model was something the big US pharmaceutical companies held as important to them, and therefore the United States would have to go through the gesture of supporting their claim, Goff said.

“But for New Zealand, the value of Pharmac is very clear: We should not be trading it away, and I don’t believe that it’s the requirement of a free trade agreement to do that.”

From time to time, American interest groups had complained about Pharmac, as well as “what they they say is Fonterra’s monopoly position,” and a range of other things, Goff said.

“Those are negotiating positions. You expect sides to take a negotiating position. But they know that they won’t be getting everything they’re asking for, and that’s one thing they should not get,” he said.

It would also be very hard to reverse a decision once a free trade deal had been negotiated without unravelling the whole agreement.

"That’s why a bottom line of this government, and Labour has made its viewpoint very clear, [should be] that Pharmac should not be traded off in the interests of the free trade agreement,” Goff said.

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5 Comments

by Alex Tarrant | 30th May 11, 4:59pm 1306731550

Updated with video of Goff on Pharmac

by Plan B | 30th May 11, 10:05pm 1306749950

My understanding is that the US has managed health organisations that buy drugs in much the same way that Parmac does. And they are much bigger than Pharmac. So it is fine for them to collectively buy drugs but not us. Pharmac is a case of NZ acting smart. We should not loose it.

by Wolly | 31st May 11, 6:34am 1306780452

Bernard...the notification box is missing....

by steven | 31st May 11, 7:16am 1306783012

The US has few organisations such as this, mostly its private buying....at one stage Americans close to the Canadian border apparantly used to drive over to save a packet....

Its not about just the cost of the drugs anyway, there are a lot of "me too" drugs, and these are dangerous / poor in many cases....So what happens is a company designs drug A to do something and in fact quite often these drugs are marginal, ie statisically they might help by 4 or 5% yet cost a great deal of money and have side effects. Anyway what happens next is another company see's this and counter-develops a similar drug but one thats not to close to avoid a legal bun fight, it also costs a lot but might have one or even more nasty negative side effects.

Take Hereceptin, its only useful for about 12 weeks, after that its positive effects are negligable or at best marginal...yet the drug companes wnat women to take it for a year at the cost of $100K....but guess what its side effect is the increase in a heart attack greater % than it would cure cancer....so statisically its not good to take past 8 or 12 weeks.....

Neuatering Pharmac would see such more often used to nil effect.

regards

by Plan B | 30th May 11, 10:58pm 1306753093

Re protecting our asses

That really is not the point. The point is that in the US to keep costs under controll, Managed health Organisations through their relationships with the the health insurance companies look after far more people than the total population of New Zeland. To control costs they buy drugs, hospital care and other services in much the same way as Pharmas buys drugs for New Zealand. In the same way as large organisations buy almost everything. Trying buying health care as an individual in the US and it will cost you a furtune. The Managed Health Organisations use their buying power to keep costs down. New Zealand only looks a little different because of our size we do it via the state. That is all. It is not a bad thing, we are not ripping off the US drug companies. Pharmas does pay, They are willing buyers and the drug companies are willing sellers. US corporates often seem to try and have a different set of rules outside the US in small countries like New Zealand vs a more competitive situation you get when your country is the size of a continent.

I think you would not find much support for the idea that New Zealand sat back in WW1 and WW2 and let the US save us. People think New Zealand did it's bit, including people in the US.