"We prosecute both, obviously," he told reporters at his weekly press conference. But most of the Government's energy went into cutting off the source of the drug.
Key said the National-led Government's policies had worked "on one level". The number of people using the drug had fallen from 2.2 per cent to 1.1 percent of the adult population since new measures were introduced in 2009.
The remaining 1.1 per cent were "more intense", frequent users of the drug, Key said, and could benefit from a less punitive approach.
"Rehabilitation is certainly a way of working through that," he said.
Key said it was important to get the balance right in drug policy because P "destroys lives".
Radio New Zealand reported that serious dealers and people who sold P to children were still being prosecuted in the Waitemata policing district. Decisions about prosecuting low-level offenders was made on a case by case basis, Brown said.