New Zealanders could get quicker access to new and expensive medicines - and the Government's drugs bill could go up - under a free trade deal with the United States.

The US will demand radical changes to New Zealand's anti-competitive drug-funding system as part of the price of a free trade deal, the pharmaceuticals industry says.

Doctors and patients have criticised the system since Pharmac was set up in 1993 as the state's medicines buyer.

Auckland heart specialist Dr Chris Ellis last night said Pharmac needed to be changed for the good of patients, but not for reasons of free trade.

Citing his own specialty, he said: "Pharmac doesn't allow New Zealanders to access new medicines for five to 10 years after they are widely used elsewhere in the world, and it waits until they are generic, until they are widely used."

Pharmac decides which drugs the Government health system will give patients and negotiates the prices with pharmaceutical companies, although public hospitals still decide on some of their own drugs.

For some classes of drugs, Pharmac will pay for only one medicine after running a "sole supply" tender.

The system keeps prices down for the Government but is criticised for restricting drug choices and delaying the arrival of some new medicines.

The Researched Medicines Industry association also partly blames the Pharmac system for New Zealand's low number of clinical trials and the shrinking number of NZ companies producing new medicines.

An RMI newsletter yesterday said the association expected any NZ-US trade deal would entail reforms at Pharmac, "to align practices in New Zealand with other trade agreements".

New Zealand has long sought a free-trade pact with the US, and an extension of New Zealand's agreement with Singapore, Chile and Brunei, to include the US, Vietnam, Peru and Australia is now being negotiated.

The RMI said changes needed at Pharmac could include independent clinical assessments of the benefits of medicines, divorced from financial considerations, and the introduction of timeframes to avoid "arbitrary delays" on funding applications.

The RMI's chief executive, Denise Wood, added last night that it would like sole-supply tendering to go too, "to allow for more competition".

A spokesman for Health Minister Tony Ryall said yesterday: "These suggestions are hypothetical and speculative and he won't be commenting."

Drug disputes

* Herceptin

Pharmac decided in 2006 the benefits of the new breast cancer drug were insufficient and its $100,000-a-year cost was too great. It offered a nine-week course. National overruled Pharmac on coming to office and made the year course available.

* Humira

In 2008, the Herald reported a man had started paying for $24,000-a-year for the drug, which halted his psoriatic arthritis. Until last year Pharmac had funded the drug only for rheumatoid arthritis.

* Influenza vaccine

Pharmac switched suppliers for the 2005 flu season from Glaxo to Sanofi Pasteur. But faults with the new supply meant other vaccines had to be obtained, including from Glaxo. Pharmac now contracts three suppliers.

* Ventolin

The asthma reliever was fully funded until 2005, when Pharmac decided to pay only for a generic version, Salamol. An outcry from doctors and from patients prompted a back-down allowing Ventolin to retain a subsidy.