NZ cheap drugs policy criticised

By SIMON COLLINS in San Francisco

New Zealand's cheap medicines policy came under attack from the US biotechnology industry again yesterday, as the industry fights political moves to allow cheap imports into America.

US economist Patricia Danzon, a former consultant to the New Zealand Treasury and the Business Roundtable, told the Bio 2004 conference in San Francisco that countries that paid lower prices for medicines also missed out on more new treatments.

She studied how long it took for 85 new medicines to become available in 25 countries after they were released in the US, and found New Zealand, Portugal and Japan came last on the list.

After five years, New Zealanders had access to only 30 per cent of the new medicines that had become available in Britain, one of the countries with relatively high prices for medicines.

Portuguese people had access to only 20 per cent of the new medicines available in Britain, and Japanese people only 5 per cent.

"Portugal and New Zealand have some of the tightest price controls," Dr Danzon said.

She said the Japanese figure was an anomaly because Japan paid high prices, but took years to approve new medicines.

She was speaking at a conference session that was sponsored and chaired by the drug company Pfizer and focused on the dangers of letting cheap medicines into the US from other countries.

At present, despite its free-trade rhetoric, the US bans all imported medicines on the grounds that only US-made drugs can be guaranteed to be safe.

Trade figures show that Americans actually import US$650 million to US$700 million ($1 billion to $1.1 billion) worth of medicines from Canada every year, mainly via the internet.

But this is only 0.3 per cent of all medicines sold in the US.

However, both Houses of the US Congress voted last year for a bill allowing drug imports from Canada, where safety standards are just as strict as in the US.

President George W. Bush vetoed the bill, and instead pushed through a Medicare Bill which prohibited the Government from using its bulk-buying power to negotiate lower drug prices, as Pharmac does in New Zealand.

Dr Danzon said her survey showed that allowing imported medicines would cut prices to US consumers by no more than 5 to 10 per cent.

She said people in most European countries which operate bulk-buying schemes got new drugs at prices 30 to 40 per cent cheaper than in the US. Prices in New Zealand and Portugal were even cheaper.

But she predicted that Americans would miss out on such low prices, even if they were allowed to import drugs - because drugs were made at different concentrations for different countries, US manufacturers would limit supplies to cheap-market countries, and any benefit would be captured mainly by the importers.

Professor Panos Kanavos, of the London School of Economics, presented the results of a study showing that medicine distributors in the European Community were able to raise their profit margins by 53 per cent by importing, but consumer prices for chronic drug users dropped by only around 1 per cent.

President of the Canadian Haemophiliac Society Dr Durhane Wong-Rieger said drug sales across the Canada-US border risked contamination because the Canadian and US authorities disclaimed any responsibility for them.

She supported the drug companies' argument that they needed to charge high prices to fund continued research on new drugs.

But the founder of several leading biotech companies who was given this year's Biotechnology Heritage Award, Dr Leroy Hood, said the pharmaceutical industry had to find a way to reduce the $1 billion cost of new drugs to a level that people could afford.

"I think it can be fixed," he said.

"There are going to be biotech companies that will be able to make money and produce drugs for US$50 million to US$100 million ($79 million to $158 million).

"A company could emerge and go to the big pharma and say, 'We can handle this. Give it to us and let us try and produce a drug for a tenth of what you can'."

Chiron Corporation co-founder Bill Rutter said new drug manufacturers in places such as China and India would soon be able to get drugs to market much faster than the cumbersome US process.

New medicines

* New Zealand had the third-lowest rate of access to new medicines in a study of 25 countries.

* New Zealand had 30 per cent of the new medicines available in Britain.

* Only Portugal (20 per cent) and Japan (5 per cent) were lower.