Wikileaks Reveals US Attack on Pharmac in ‘Transparency Annex’ Wednesday, 10 June 2015

The Annex on Transparency and Procedural Fairness for Pharmaceutical products and Medical Devicesfrom the Trans-Pacific Partnership Agreement negotiations was posted on Wikileaks today (https://wikileaks.org/tpp/healthcare/)

Memoranda by Dr Deborah Gleeson from La Trobe University in Melbourne and Professor Kelsey from the University of Auckland examine the implications for Australia and New Zealand respectively.

'Trade Minister Tim Groser has repeatedly assured New Zealanders that Pharmac is not up for negotiation in the TPPA and the government will protect its "fundamentals" conveniently without saying what those fundamentals are. Wikileaks has shown us yet again that we can't trust the government's word when it comes to the TPPA,' Professor Kelsey observed.

Pharmac's regime for identifying which medicines and medical devices are subsidised and for how much has proved highly successful in making medicines affordable in New Zealand, saving District Health Boards more than $5 billion over the past decade according to Pharmac's own calculations.

Professor Kelsey says the real motivation behind the Annex is to force changes in Pharmac to reduce its attractiveness as a precedent for other countries.

'New Zealanders' health and our taxpayer dollars are being held ransom in a much bigger game'.

The Annex sets out a series of principles and procedures by which agencies like Pharmac must operate. They are designed to give the pharmaceutical industry more influence over its decisions and break down the procedures and budgetary cap that makes Pharmac so effective.

According to Professor Kelsey, Pharmac is the most exposed of any programme in a TPPA country, especially since it assumed responsibility for medical devices as well as pharmaceuticals.

While the 'transparency' Annex is not enforceable by other states, there are numerous ways the US and the pharmaceutical companies can force New Zealand to make changes that would seriously undermine Pharmac's effectiveness and workability.

The most immediate is the certification process, where the US can refuse to bring the TPPA into force in relation to New Zealand until Pharmac's regulations and procedures are changed to meet what the US says the Annex requires.

'There is anger within the US Congress that the US Korea FTA was certified without forcing the Koreans make further changes to their pharmaceutical reimbursement scheme and they have sent a clear signal they won't let that happen again with the TPPA', Professor Kelsey said.

Assuming the agreement does come into force, a pharmaceutical company could bring an investor-state dispute against the government, claiming New Zealand has breached vague protections such as 'fair and equitable treatment'. Australia clearly anticipated this risk when it proposed an exclusion for its Pharmaceutical Benefits Scheme in the leaked TPPA investment chapter, dated January this year. New Zealand did not.

There are numerous other opportunities for the manufacturers and their governments to put pressure on the Pharmac regime.

'This Annex is the second of the two-pronged assaults on Pharmac under the TPPA', Professor Kelsey said. 'Leaked intellectual property chapters have exposed US demands for more extensive patent monopolies to restrict availability of much cheaper generic medicines.'

'We know that the huge issue of new generation biologics remains unresolved, with renewed pressure in the US Congress for twelve years of data exclusivity, whereas New Zealand currently has five. That would put intolerable pressure on Pharmac's budget.'

Professor Kelsey called on the trade, health and finance ministers to 'reject the so-called 'transparency' Annex, as well as the intellectual property and investment rules, and assure New Zealanders they will put our right to decide how we provide affordable health care for the nation before the profits of the big pharmaceutical companies'.

ENDS