US will seek to ram home their version of agreement, say Joshua Freeman and George Laking.

The cost and availability of expensive new medicines like Keytruda are still at risk from the TPP despite government assurances. That is the implication of documents released under the Official Information Act showing advice from the Ministry of Health to the Government.

One of the last and most controversial issues to be settled in the TPP negotiations was the length of monopoly protection given to these new medicines. It landed on a choice between eight years (what the US wanted) and five years plus "other measures" such as medical safety approvals to achieve a "comparable" delay before lower-cost equivalent medicines could be provided to patients.

The documents show that these medicines could be approved in NZ within a year after the monopoly ends - a total of six years. This is two years short of US expectations. If the US forces the issue as is expected, that would mean two more years of high prices and patients going without medicines they need.

Over the coming years ultra-expensive medicines like Keytruda are expected to take up a growing slice of the Pharmac budget. Keytruda is a "biologic" medicine, manufactured using biological rather than conventional chemical processes. A treatment course for a single patient can cost hundreds of thousands of dollars. Although more expensive to manufacture than conventional medicines, the main reason they cost so much is lack of competition from equally effective versions known as "biosimilars". Once a biosimilar comes to market, the price can drop by up to 50 per cent.


One way producers of biologic medicines prolong their monopoly is a law preventing market approval of biosimilars for five years after approval of the original biologic. The USA wanted to extend it to eight or 12 years. A standoff was resolved only during the final hours of negotiations using ambiguous legal wording. This ambiguity allowed governments like NZ and Australia to claim that requirements can be met under current practice, while also allowing US trade officials to claim the agreement guaranteed at least eight years.

However, the documents released under the Official Information Act reveal these interpretations can't both be true. The documents confirm that a biosimilar can be approved for market in NZ within six years of the original biologic, two years earlier than the US wants. Examples we have seen confirm that.

Who prevails could play out in a process known as "Certification". This is where the US Government refuses to ratify the agreement until it's satisfied that other countries' laws and practice are compliant with its interpretation of the agreement. It did this with the US-Australia FTA. The US forced Australia to rush additional amendments to its copyright laws, with only a few hours for public consultation and submissions.

It's ominous that the US pharmaceutical industry is intensively lobbying the US Congress about the importance of certification. Even more concerning is the support signified by influential Republican Senator Orrin Hatch, chairman of the Senate Finance Committee.

There's also support from the US administration. In November, White House Press Secretary Josh Earnest argued that "The agreement actually puts in place an effective standard of eight years". The same message was underlined by Deputy US Trade Representative Robert Holleyman during a recent speech to the US Chamber of Commerce.

So the pressure will come, and when it does, NZ mustn't give an inch. Spending on biologics in NZ has increased by 48 per cent over the last five years, currently making up roughly 25 per cent of the total spend on medicines, a proportion which the Government expects to increase. Even one or two more years without market competition from biosimilars would be a huge step backwards; either blowing out the Pharmac budget or keeping cutting edge medicines out of reach for longer.

As it is, if the TPP gets ratified, the Government will have locked in current monopoly times for biologics when their own documents argue that, if anything, monopoly times should be reduced rather than lengthened. So even if we hold our ground through certification, we would still be losing the freedom to explore ways to bring biosimilars on to the market more quickly. As biologics become more clinically important, and as New Zealanders become more concerned about access to biologic medicines such as Keytruda, this loss of policy flexibility would be arriving at exactly the wrong time.

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