Lex Henry - getting the prescription right

BY CATHERINE HARRIS

The man now chairing New Zealand's top-end pharmaceutical industry runs down his CV and jokes that his friends might argue he could not hold down a job.

A global citizen, he has served or serves on an eclectic range of boards, from arts festivals to Ontrack, from a top-end hotel company to an iwi assets board.

He's a banker who has worked as a diplomat, and a man who loves his country, yet isn't afraid to criticise it, or even leave it.

However, it's his latest role as chairman of the RMI, the Researched Medicines Industry, that has him chatting.

He has nothing but praise for Health Minister Tony Ryall and the stocktake that is going on in the sector. "Health is one area where I think huge progress has been made in the last 12 months. I don't think we've actually recognised how far we've moved forward."

It hasn't always been that way for prescription drug companies in New Zealand, where Crown-owned Pharmac selects which medicines get a government subsidy and effectively sets their price.

"Big Pharm" companies have argued against New Zealand's fiscal approach to healthcare and what it believes is a hostile environment for innovative medicines, particularly when only a limited number of people would benefit.

Mr Henry says Pharmac tends to favour generics or medicines close to the end of their patent protection because a 10-year commitment is required to buy cutting-edge pharmaceuticals.

"The answer's been, `they're too expensive, we'll wait for something cheaper'.

"Well, they're expensive because the intellectual property that is embedded in them has cost billions of dollars to create and we're looking for, to my mind, cheap options – one would say, cost-effective options."

However, Mr Henry believes there's a change in the air, with more clinicians involved in decisions and ministerial appointments. He is hopeful they will take a closer look at whether better prescribing of medicines at a primary level is a more efficient way of using the health budget.

"Take asthma. We should be saying for prescribing for asthma, `what do we really need to do to create a primary health solution using smart drugs that are available which ensures that people who suffer from asthma during the winter don't end up being hospitalised' ... The economic benefits of that are huge.

"That isn't self-interest. That's basically saying, `take a look at this, why are we not doing it this other way?"'

Mr Henry got involved in the RMI through his directorship of health software company MedTech, which provides software solutions for GPs and specialists.

"First and foremost" a banker, he chairs New Zealand-based merchant bank Cranleigh, as well as being special counsel to law firm Minter Ellison Rudd Watts.

Describing himself politically as a centrist – "firmly to the right in economic policy, centre-left on social policy" – he switched as a young man from law to banking in the hopes of getting away from the Muldoon regime he disliked.

After several years in Australia and London with Lloyds, he switched to Hong Kong and New York as a senior vice president with Bear Stearns ("and I'm proud to say that," he notes in wry reference to the Wall Street bank's demise).

In all he was in Asia for 13 years, the last five in Singapore where he oversaw Asian investment banking and corporate finance for Credit Suisse and then with the Foreign Affairs Ministry as an Asean adviser.

His diplomatic posting came after a brief sojourn back home with the BNZ, where he found he was still frustrated with New Zealand, for different reasons.

"What I saw post-84, my frustration was although we were doing a lot of good things, we weren't necessarily doing much more than many other economies were doing.

"For example, Malaysia was actively involved in privatisations of things such as its water assets and doing PPPs [public private partnerships] on highways.

"And we were believing everything that was written in the Economist about us.

"My frustration was, we were not making enough of the opportunity that we have in terms of a reform dividend."

HE FINALLY did return to New Zealand in 1996 for the oldest of reasons: his children.

"I still enjoy the excitement of a Hong Kong or a New York, but we've got two sons – 22 and one's just turned 21.

"The things that they have done they would never have ever had the opportunity if they had remained as expatriates and therefore we have no regrets whatsoever about coming back to New Zealand."

Mr Henry retained his Asian business interests as a trustee of the Asia NZ Foundation and as deputy chairman of the Trans Tasman Business Circle.

An art lover, he was the inaugural chairman of the Auckland Festival Trust and is now a trustee on the Christchurch equivalent.

"[Alan] Gibbs, to use his great expression, he likes to be around artists because when he's around art and artists, he thinks differently.

"And for a lot of business people, I think that's what it's actually about."

On his return to New Zealand, he worked as a lawyer and did a trouble-shooting stint as director-turned-Australasian managing director for Singapore-owned hotel and investment firm CDL Group, where he arrested a five-year pattern of declining earnings.

A slew of directorships followed, including chair of the now-defunct Tourism Research Council, and a place on the board of Landcorp.

He was also deputy chairman of rail track owner Ontrack until he resigned in protest over the amount which the Labour Government paid Toll to buy back the rail business.

An association with fellow director Linda Constable has now led to his involvement with Ngai Tahu Properties, which manages the iwi's $450 million of assets.

There's always been a personal connection to his directorships, he says.

"You know you can argue just like siblings argue, but I think on boards you need to have an affinity with the people that are there to be successful. Because the responsibilities are so great you have to know and trust the people."

Despite his wary outlook on New Zealand's political direction, Mr Henry says he is as positive at the moment about this Government as he was "12 months into the first Labour administration".

And it's not, he maintains, because Pharmac has been given more money, it's about making New Zealand's spending more efficient.

He has strong views on where the country should place its energies, with more focus on assisting small business than trying to produce "another Nokia".

He would love to see greater sharing of applied research between universities, between Crown research institutes and the private sector, and a greater recognition of our research efforts.

"We do a lot more research, science and technology than we actually recognise.

"We are not as far behind the rest of the world as we like to beat ourselves up about."

That perception lingers because the New Zealand tax system encourages a lot of research and development to be recorded as maintenance or operating expenses. "The rest of the world calls it research and development."

Mr Henry would also like to see state-owned enterprises listed, mainly to increase the investment options for superannuation.

Funds management needs to grow "dramatically and very quickly, and I think the SOEs are ideal candidates for that, and present very good investment opportunities because they are well run".

He rests big hopes on this week's talks to extend the Trans Pacific Partnership (New Zealand, Chile, Brunei and Singapore) to the United States.

It's a deal that could not only open doors for this country's fledgling drug industry but would also probably have implications for the intellectual property issues surrounding pharmaceuticals.

HE HOPES the fresh look at our health system will lead to greater transparency about whether New Zealand's total health spending is as effective as countries like Australia.

But is it fair to make comparisons with a much bigger health system and tax base?

"Yes, we can. Health is a capitation model so you're looking at what the percentage spend is, relative to the total spend on health.

"Are we arguably building triage centres and accident and emergency centres for respiratory problems when in fact it could have been dealt with at the primary end, and which is the best spend?

"At the moment we don't know what the best spend is, and you can only do that with transparency around the information that's available as well as having a strong patient bias, not solely an economic assessment."

- © Fairfax NZ News