Pharmac TPP fears dismissed

Tim Groser says the Government will not sign up to an agreement that undermines pharmaceutical purchasing agency Pharmac. Photo / File

US economist says TPP deal concerns likely to be unfounded.

Leading American trade economist Professor Peter Petri is optimistic that the Trans Pacific Partnership will turn out to be less damaging to Pharmac than people fear.

Trade Minister Tim Groser on Tuesday said the Government would not sign up to an agreement that undermined the pharmaceutical purchasing agency which kept the cost of medicines affordable for New Zealanders.

Petri said the most recent leak of TPP text he had seen, albeit a year old, embodied a set of rules much weaker than the United States had initially sought.

"The idea is to make the process of drug selection transparent and the US had initially proposed a formal appeal process which was then subject to the agreement's dispute resolution mechanism [one of TPP's most contentious provisions]," he said.

"The most recent leak suggests that it will be an appeal process up to the country itself to shape ... and my guess is it won't be subject to the dispute resolution mechanism."

Petri argues that at present a disproportionately high share of the cost of the research and development which delivers new drugs falls on Americans and Europeans. But he also acknowledges the risk that an agreement which locks in US standards of intellectual property protection could go beyond what is necessary to fairly and efficiently apportion those costs.

"We know that there is an awful lot of patenting going on in the United States and many people are worried that ... the US has gone too far in providing intellectual property rights so that instead of generating innovation it might be stifling it," he said.

"The risk is that there is so much protection that someone who is wanting to build on some past innovation is not able to use that innovation -- so much protection that it is counterproductive."

TPP opponents fear that measures to increase the amount of information made available to drug companies about the processes by which Pharmac apportions its finite budget and decides which pharmaceuticals to subsidise will enhance their ability to stir up public concern that New Zealanders will be denied access to this or that life-saving medicine. The effect would be that the companies make more money and New Zealand taxpayers bear more cost.

"No doubt they [the pharmaceutical companies] will make those sorts of arguments," Petri said. "That's the price of transparency, that you get people making arguments you don't like."

But it was odd, he suggested, for people to deplore a lack of transparency in the TPP negotiations but oppose more of it in Pharmac's deliberations.

Petri is professor of international finance at Brandeis University in Boston, named after the US Supreme Court justice Louis Brandeis, who is famous for the saying that sunlight is the best disinfectant.