28 Jul 2015

Govt promises to help Pharmac if needed

5:28 pm on 28 July 2015

The Prime Minister has promised the Government will give Pharmac extra money if the Trans-Pacific Partnership (TPP) deal pushes up drug prices.

This morning John Key conceded the price of some medicines was likely to rise under the deal, although by the afternoon he was downplaying that prospect.

Caucus run 21/07/15

John Key said that New Zealand stood to gain far more than it lost from the TPP. Photo: RNZ / Alexander Robertson

Trade ministers from the 12 ministers negotiating the TPP will meet in Hawaii this week to try to put the finishing touches on the deal.

Mr Key said there was a high probability patents on medicines would be extended under it.

"That means the Government will have to pay for the original drug rather than the generic for a little bit longer.

"But for consumers that won't make any difference, because, you know, on subsidised drugs, you pay $5 for your prescription, so the Government may incur slightly more costs there."

But this afternoon, Mr Key, in face of Opposition criticism, had a slightly different story.

"I'm not even really convinced Pharmac'll 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.

"But for consumers there would be no change."

But Labour Party leader Andrew Little said it would drive up drug costs.

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Labour leader Andrew Little Photo: RNZ / Alexander Robertson

"This Government now wants to put itself and the New Zealand taxpayer to more cost on this issue alone.

"Who knows what else is going to happen in the TPP that's going to cause more cost to the New Zealand taxpayer?" he said.

Labour health spokesperson Annette King said the deal would have serious implications for Pharmac as the Government's drug buying agency.

"They're going to have to pay out more for drugs, or not provide them, and already we have many people in New Zealand who are paying for some of the new biologic cancer drugs because we can't afford them.

"Just imagine if the patent is extended - it'll be a lot longer before New Zealand can afford first world drugs," she said.

Greens co-leader James Shaw was also worried.

"It means that we may have to wait longer.

"It means that there may be some medicines that simply aren't available, that won't become available, or if they do become available that they're available at the market price, which is eye-wateringly expensive," he said.

The Prime Minister dismissed those worries and said the Government would give more money to Pharmac if it needed it.

"If there was a small change we'd put that in, but the counter-argument of course is we will receive so much more tax revenue, because if the economy is so much more active through the access to these very big markets, we earn a lot more tax.

"Which is why we always say - we always look at these things on the balance of benefits. All the advice I've had so far, remembering the deal hasn't been completed yet, is on the balance of benefits.

"New Zealand gains a lot more than it loses," he said.

Mr Little was not reassured by Mr Key's comments.

"We said Pharmac and its purchasing model has to be protected. Extending the patents doesn't protect the Pharmac purchasing model."

Mr Little said if medicine patents were extended under the deal Pharmac's negotiating strength would be undermined, and Labour would not support the Trans-Pacific Partnership on that basis.

Labour also remains worried the TPP will hobble a future government's right to restrict foreign investment in the residential property market.

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