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New Zealand's drug agency is under threat from a trade deal with the US and other nations which is currently being hammered out behind closed doors, according to an expert.
About 20 US senators have put pressure on US President Barack Obama to take a hard line on drug buying agencies such as Pharmac during TransPacific Partnership (TPP) trade talks, because they claim they hurt the big US drug companies.
Prime Minister John Key has said the government will not sign any trade deal that would disadvantage the country, but he has not committed to retaining Pharmac as a bottom line.
Trade and intellectual property expert Professor Susy Frankel from Victoria University Law School says New Zealanders should be concerned, adding that the developments could definitely affect the price the public pays for medicines.
Frankel told TV ONE's Breakfast that Pharmac's role in New Zealand was important because it kept the prices of medicines down by bulk buying and negotiating.
"Pharmac buys pharmaceuticals on behalf of New Zealanders, the New Zealand government and subsidies them."
She said there was however no barrier for international pharmaceutical companies to sell direct, "if anyone can afford that price".
Frankel told Breakfast that pharmaceuticals were the number one issue for the US trade negotiators and that the industry was a very persuasive and powerful one.
Higher prices
She said that the US drug companies wanted Pharmac out of the way so they could charge higher prices.
However the senators pushing for the crackdown accuse TPP countries' drug-buying agencies of practices which harm US firms.
While it does not name Pharmac, trade sources say it is a clear reference to the New Zealand agency, which is on track to deliver savings for the health system in the country of $1 billion this year.
Frankel also told Breakfast she dismissed claims of weak intellectual property laws in New Zealand, something which the US companies say Pharmac will exploit to keep drug prices low, adding that New Zealand had very high standard intellectual property laws.
It has also been claimed that Pharmac lacks "time lines, transparency and accountability".
Obligation
However Frankel says she doesn't think Pharmac owes an obligation to pharmaceutical companies.
"They owe an obligation to be transparent the New Zealand public, so that seems to be why they want them out of the way."
Key will not set a bottom line on what New Zealand will and won't let go in the negotiations, but he acknowledges Pharmac has been successful.
He said New Zealand will not sign up to an agreement that is not beneficial to the country overall, but there has to be some give and take.
The countries negotiating the TPP are New Zealand, Singapore, Brunei, Peru, United States, Australia, Vietnam and Malaysia, and its framework is due to be concluded by the time of the APEC summit in November.
It is expected to be expanded in time to other APEC countries.
- with Newstalk ZB
