The pharmaceuticals industry in New Zealand supports the continuation of Pharmac under the Trans Pacific Partnership free trade agreement, says Medicines New Zealand chairwoman Heather Roy.

And she believes the United States drug companies that once wanted it killed have accepted it is here to stay.

"Once upon a time, all they wanted to see was the demise of Pharmac in New Zealand but we have now, I think, got them to a point where they realise it doesn't matter what flavour of Government we have in New Zealand, the Pharmac model is here to stay," she told the Herald.

They had realised there was more to be gained from working within the boundaries.


Pharmac is the Government's bulk-drug buying agency and it is seen by critics as anti-competitive.

Mrs Roy, a former Act MP, is chairing Medicines New Zealand, the body that represents pharmaceutical companies based in New Zealand or with a presence here. Medicines New Zealand wants to see greater transparency in Pharmac rather than getting rid of it and she believes that United States pharmaceutical companies have changed their view.

The TPP is now in its 13th round of negotiations in San Diego, California.

Mrs Roy spoke in May at the 12th round of talks in Dallas in one of the sessions for "stakeholders" that allow interest groups to address negotiators.

She said the address was partly aimed at the US pharmaceutical industry. "Pharmac and industry might sometimes look like an odd couple," she said "but the reality is that divorce is not an option and we're quite used to living under the one roof."

But she said New Zealanders could have access to better and newer medicines if the Pharmac approval system for new drugs was improved.

The areas which could be improved included:

Requiring a decision on an application and having it made within a pre-determined timeframe.

Making the scientific information on which decisions are based more transparent between Pharmac and applicants.

Having the criteria for decisions applied consistently.

Giving applicants a chance to have input beyond the application.

Setting up a system of review to ensure consistency.

Mrs Roy said that it takes about 12 years for development of a drug, followed by about 3.6 years average for regulatory approval, totalling 15.6 years, and that meant that a medicine had just 4.4 years of effective patent life in New Zealand.

Medicines New Zealand did not have a beef with generic drugs, which were manufactured more cheaply once drugs came off patents.

"Everybody knows the generics are a good thing and they are here to stay because they do drop the price," she said.

What Medicines New Zealand wanted to see was the savings from the generics used to fund new innovative medication. "That's our message to Government."

About a third of the savings from the last Budget from drugs coming out of their patents went into innovative drugs but "the rest has just gone into the big black hole called health to prop up the system elsewhere."

New Zealand spent 6 per cent of the health vote on pharmaceuticals and the OECD average was 18 per cent.

The Government has made it clear that it would not give up Pharmac but it is open to negotiation on changes to it.