Trade winds

So it was in 2011 when negotiation of the Trans-Pacific Partnership Agreement (TPP), a trade liberalisation deal between 12 Pacific-rim countries which had been in the works for years, began generating significant public debate.

The TPP would grant New Zealand tariff reductions on major export commodities and more favourable market access to countries including the United States, Canada, Japan and Singapore. But as the name implied, there would be some trade-offs to ensure the deal worked for all member countries.

The trade negotiations were confidential, but leaked texts of the agreement, in particular the ‘health annex’ section of the documents, suggested that the treatment of pharmaceuticals across member countries would become a bargaining chip in negotiations.

In particular, a mooted five-year extension to drug patents outlined in some of the documents looked to have serious implications for PHARMAC, which relied on access to out-of-patent generic drugs to cost-effectively meet the needs of New Zealand medicines users.

But as the debate gathered intensity, fears emerged that the PHARMAC model itself may also be under threat, with the United States in particular considered likely to lobby for it to be dismantled to secure better terms for its pharmaceutical companies.

The headlines made disturbing reading for Carl Burgess and his colleagues on PHARMAC’s Pharmacology and Therapeutics Advisory Committee.

“The concern was that they’d make a deal where PHARMAC basically wouldn’t be able to exist,” he says.

“Funding of generics would vanish almost overnight; there’d be more ability for American companies to take the government to court about the pricing of drugs. The price of drugs, eventually, would rise.”

These concerns lingered through the following few years as diplomats shuttled around the world for successive rounds of TPP negotiations and more leaked documents emerged.

Prime Minister John Key had admitted that drug patents could be extended under the TPP, leading to higher costs in accessing medicines for the government, but publicly vowed to protect the PHARMAC model of drug funding. The opposition Labour Party listed PHARMAC’s continuation unimpeded as a condition of its support of the TPP.

Watching events from afar in Canada, where he was now working in the health sector, former PHARMAC chief executive Matthew Brougham was kept up to date on trade developments by friends and former colleagues.

One day he was forwarded a news clipping with the headline: ‘Hands off our PHARMAC!’

“There was a groundswell of opinion from New Zealanders that they didn’t want what PHARMAC did to be compromised by trading rights that were being negotiated,” he says.

While the public feared losing access to affordable medicines, those in the health sector knew well the impact trade-related changes could have on frontline health care.

“The staunchest advocate for this position was the medical profession,” says Brougham.

“It made me realise we’d come a long way from the days when we were having dust-ups with everybody.”

By 2016 the TPP negotiations were coming to a conclusion. But the election of President Trump that November would throw plans into disarray. The United States withdrew from the agreement, which was swiftly redrafted and agreed between the remaining 11 partner countries as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).

Crucially, the much-feared patent term extensions on the table during the TPP talks were not included in the new deal which went into effect in 2017. New Zealand’s maximum patent term would remain a non-extendable 20 years.

“The CPTPP will not change the PHARMAC model or its ability to negotiate the best price for medicines for New Zealanders,” the Ministry of Foreign Affairs and Trade noted in March 2017, in an explainer on the implications of the new trade agreement.

“Provisions in the TPP that would have required Pharmac to make administrative changes primarily of benefit to the pharmaceutical industry have been suspended in the CPTPP.”

In the end, despite years of uncertainty and heated public discussion of PHARMAC’s future, it continued to be business as usual for the agency. However, international trade remains a live issue and very relevant to PHARMAC’s operations as the agency weathers global forces to deliver the widest possible range of medicines and devices to New Zealanders at cost-effective prices.