John Key says NZ's drug bill set to rise under TPP, but patients protected
The Government will face a higher medicine bill under the Trans-Pacific Partnership (TPP) trade deal, Prime Minister John Key warns.
Talks on the 12 nation deal are in their final stages in Hawaii this week and a successful outcome would likely see patent protection for some drugs extended beyond the current period - effectively about five years from introduction to the market - pushing up the cost.
"It's possible and in fact highly probably that patents will run for a little bit longer and that means the Government will have to pay for the original drug as opposed to the generic for a little bit longer," Key said on Tuesday as he headed into National's mid-morning caucus meeting.
But he said patients would not have to pay more for prescriptions as a result.
However, Key later tried to down play the likely cost to the Government and drug buying agency Pharmac.
"I'm not even really convinced Pharmac will end up having to pay a little bit more even if patents are longer because ultimately they have such buying power in the way they do things it would be really at the margin," he said as he headed into Parliament's Question Time.
There might be a small increase in funding for Pharmac as a result but that would be far outweighed by the extra income from taxes that the Government would receive. It would mean New Zealand was highly likely to subsidise more drugs, Key said.
"For consumers there will be no change. They won't get more expensive."
Labour leader Andrew Little said one of his party's bottom lines to support the TPP was to protect Pharmac and its model of purchasing.
"We do not agree to the extension of patents."
He said the NZ taxpayer would end up paying for it.
"Pharmac's purchasing power has saved New Zealanders more than $7 billion dollars since 2000. Multi-national pharmaceutical companies will be cheering at this news and New Zealand taxpayers are the ones losing out."
It was disingenuous of Key to say consumers would not be affected.
"Who does he think taxpayers are? Any extension of drug patents will inevitably lead to less medicines being available to New Zealanders including biologics, the latest in cancer drugs."
"Kiwis deserve to know what is in the TPP before it is signed. Anything else is a sell-out," Little. said.
Key had earlier said drugs not on the subsidised list now were generally a lot more expensive, but under the Pharmac model "they always make sure there are a variety of drugs and not just one".
So in the case of drugs for a common condition the Pharmac state drug agency often had three medicines on the subsidised list.
"The question for New Zealanders is as simple as this: Do you think if we have access to the massive United States and Japanese markets with our exporters having a level playing field, will they do better or worse, will it create more jobs or less, will the country be more prosperous as a result?"
All the evidence showed that the country would be better off.
He said a lot of elements of the TPP, such as investor-state disputes resolution clauses that allow investors to take action against Governments, had been dressed up by opponents as a sort of "bogey man to undermine confidence in it".
The US wanted to protect intellectual property but New Zealand generated a lot of intellectual property as well, and it was a two-way street.
Meanwhile, Key repeated he believed bans on foreign buyers, such as those proposed by Labour on residential property, did not work.
"A property tax, if you had an ongoing one, would go quite a big way in deterring people if that's what you really want to do. Personally I don't favour it at the moment."
But Little said the stamp duty or property taxes Key had mentioned would not meet Labour's concerns about non-resident buyers of houses.
"We don't want them competing for existing houses. We must be able to legislate in our own best interests."
Asked if a Labour government would pull out of the TPP, he said he did not yet know what was in the deal.
But Labour would "go to the ends of the Earth" to ensure a Labour government and future governments had the right to act in the best interest of New Zealanders.
He reiterated Labour was in favour of free trade, but said the TPP went much further than improving trade access.