The Labour Party says the undermining of Pharmac in the Trans Pacific Partnership breaches one of its bottom lines on the trade deal.

Leader Andrew Little said Government had misled the public by not being upfront about the potential impact on the Government agency, which uses bulk-buying power to reduce the costs of medicine for New Zealanders.

He would not rule out removing New Zealand from the controversial TPP if Labour entered Government.

Prime Minister John Key conceded for the first time today that medicine costs could rise if New Zealand signed up to the TPP, which is expected to be finalised this week.


John Key admits New Zealand's drug bill will rise
TPP enters final negotiations

He expected drug patents to last longer under the TPP.

This would create bigger costs for Pharmac, but these costs would not be passed onto consumers and prescriptions would remain at $5.

Labour says it has five bottom lines for supporting any TPP agreement, one of which is protecting Pharmac's role.

Mr Little said: "We said Pharmac and its purchasing model had to be protected. Extending the patents doesn't protect the Pharmac model."

He said that if drugs remained under patent and cost too much, then Pharmac would not buy them and New Zealanders would miss out.

Asked whether that meant Labour could not support the deal, he said: "If that bottom line isn't met, then we don't support the TPP."

The TPP does not need Labour's support to be ratified, but Government may seek cross-party support on the legislation which would confirm the deal.


Mr Little said he could not comment on whether a future Labour government would pull out of the TPP because the contents of the deal were not yet known.

He said Labour had a number of options if it entered Government, which included "fixing" the agreement or leaving it altogether.

Labour's trade spokesman David Parker said he was confident that Labour could renegotiate the deal if it did not serve New Zealanders' interests.

Trade deals usually required a country to give six months' notice before pulling out.

Mr Key rejected Mr Little's claims that Pharmac's role would be undermined.

He said the agency would maintain its ability to bulk-buy and negotiate lower prices under the TPP.


He said the Government was likely to increase Pharmac's funding by "tiny amounts" to cover its new costs.

The Prime Minister also said the costs to Government of more expensive medicines would be outweighed by the increased exports which would result from the trade deal.