Pharmac under fire ahead of US free-trade talks

17:00, May 14 2011

Is it restricting our access to new medicines? Is it causing us to fall  behind other countries? Or, is our drug-buying body simply doing a sterling  job?

SOME OF New Zealand's most prominent businesspeople are rallying to the support of drug buying body Pharmac as lobbying firm Saunders Unsworth mounts a campaign against the agency ahead of free trade negotiations with the US.

Mark Unsworth, a public relations consultant with Saunders Unsworth, which describes itself as New Zealand's "pre-eminent government relations and lobbying consultancy", has been distributing information on behalf of drug company industry association Medicines New Zealand, attacking Pharmac's performance.

The information, in a PowerPoint presentation, argues that New Zealanders' access to drugs is restricted and we are falling behind other comparable countries.

However, businessmen Gareth Morgan and Geoff Simmons have responded to the campaign in a letter this month to Health Minister Tony Ryall, describing the messages being spread by Saunders Unsworth as "misleading and dangerous to our health sector".

Written on the letterhead of Morgan's charitable foundation, the letter says other countries are "envious of the Pharmac model and the cost control it allowed for". In fact, they would like to see the model extended to the broader health system.

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The flurry of activity comes as New Zealand presses for a bilateral free-trade agreement with the US and enters multilateral negotiations called the Trans Pacific Partnership (TPP) with Pacific Rim nations.

In a submission to those negotiations, US drug industry association PhRMA has cried foul over Pharmac's stringent cost containment strategies and asked the US Trade Representative to put New Zealand on a trade watchlist.

The Medicines NZ document laments flat spending on medicines in New Zealand, with just a 3% increase in Pharmac's budget projected between 2010 and 2013. It says New Zealand's medicines budget growth is the second slowest in the OECD. It also argues new spending has gone on volume rather than in approving new drugs.

It adds that New Zealanders' access to a broad range of medicines is the lowest of 14 OECD nations.

However, Morgan and Simmons respond that no credence should be given to the claims. Slower budget growth is a sign of Pharmac's success and is the only part of the health budget growing at a sustainable rate. The businessmen, who co-wrote a book on the New Zealand health system in 2009, say Pharmac's ability to bid down prices has meant we buy statins, drugs used to control cholesterol, at a fifth of the price Australians pay.

"If there was a need to spend more, the Minister of Health could dedicate more of the Health vote to Pharmac," they write. "Getting rid of Pharmac would not be clever."

The pair say Pharmac funds tried-and-tested drugs rather than approving experimental ones.

In an article on the Pharma Times website, Pharmac spokeswoman Jude Ulrich pointed to cases where drugs declined for funding here have subsequently been withdrawn abroad.

"For example, if Pharmac had funded COX-2 inhibitors at the same rate as Australia, it would have had 330 – 1900 people die of heart attacks over a four-year period," she said, while its decision not to do so had allowed funding for 18 other drugs, saving 487 statistical lives a year.

Unsworth said the Medicines NZ campaign is open and transparent and referred further queries to Medicines NZ chief executive Kevin Sheehy, who said Medicines NZ is working for reasonable modifications to how Pharmac works.

Sheehy would like to see increased transparency into Pharmac's decisions, better timeliness in those decisions and the ability to present information directly to Pharmac's clinical committee. He would also like to see more independence between the committee and Pharmac.

"There is no intention to have Pharmac removed. We want to work with them and improve how they do things," he said.

Debate on the issue also erupted between investment banker Lloyd Morrison and Unsworth on Morrison's Facebook page. Unsworth wrote that Pharmac has led to hardly any clinical trials in New Zealand.

"Is that important to you or are you happy with NZ bludging off the rest of the world?" he asked.

"You're a paid lobbyist for the US drug companies Mark!" Morrison responded. "I'm very happy with the clinical trials being done in places where the hospitals are research hospitals working directly with the drug companies. Our hospitals are stretched and our ability to buy drugs is constrained by our small budget and lousy economic performance.

"Pharmac does an outstanding job using the pittance NZ can afford to get the best spread of drugs we can for our money."

Unsworth said NZ is second to bottom in the 23 OECD countries on drug spending as a proportion of GDP.

"As I've told you before Mark, I'm also able to purchase drugs here in NZ directly from your clients cheaper than they sell them to their fellow Americans – the US system is not a system we should seek to replicate in NZ. I'm afraid your lobbying doesn't wash," Morrison retaliated.

Sheehy said New Zealand has to decide whether our health system is there to deliver the best health outcomes. If it is, there is a cost to that.

He said there is insufficient measurement being done on those outcomes, saying New Zealand can easily do so.

"We do support the TPP and do believe the overall impact will be positive," Sheehy said.

A spokesperson for Trade Minister Tim Groser said the government supports Pharmac which "has worked well for New Zealanders".

"It produces good health outcomes. And we're not going to dismantle it or undermine the processes that make it most effective," they said.

Morrison sees Pharmac as a model for the broader public service.

"In my view, because Pharmac is so trustworthy and efficient the government could realistically set a higher budget for Pharmac and know money will be effectively spent."

Sunday Star Times