Pharmac still a good model for NZ: Key

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Prime Minister John Key says the New Zealand Government would take "a fair bit of convincing" that Pharmac wasn't the best model to keep under the Trans Pacific Partnership agreement under negotiation.

He made his comment after 28 United States senators wrote to President Barack Obama expressing concerns about intellectual property aspects of the TPP, alluding to without naming Pharmac.

Pharmac is a state agency that bulk-buys medicines cheaply, often pricing competing medicines off the market.

Mr Key refused to say that keeping Pharmac was non-negotiable. But he took the view that it was not helpful to conduct negotiations through the media.

"We think Pharmac has been hugely successful. We think it makes money for New Zealand. It is the most cost efficient way of purchasing pharmaceuticals for New Zealanders and we'd take a fair bit of convincing that that wasn't the right model."

The Government's view was that a successful completion of a Trans Pacific Partnership would be beneficial "on balance" to the New Zealand economy.

"Now there are individual component parts of laws to be negotiated and I'm not going to set bottom lines on those today.

"What I can say is New Zealand won't sign up to an agreement unless it believes it's overall in New Zealand's best interests to do so.

"We are talking about access through a free trade agreement to arguably the largest economy in the world. That's the prize if you can complete a USFTA, which is what TPP is."

The senators' letter was dated May 17.

It follows one sent in March last year by 30 senators expressing explicit concerns about Fonterra and claiming it ran a virtual domestic dairy monopoly and was anti-competitive on the global stage.

This months's letter called for the TPP to contain "the highest standards of protection for intellectual property (IP) rights."

"They must be applicable to all TPP participants without exception."

It mentioned several industries including pirating of technology and biopharmaceutical innovators.

"The innovators ... gain little if the authorities responsible for pricing and reimbursement are able to set the terms of sale through arbitrary and non-transparent means."

The letter was promoted by two members of the senate finance committee, Republican Orrin Hatch of Utah and Democrat Maria Cantwell of Washington.

They said that IP-intensive industries in the United States employed more than 19 million workers and and supported more than 60 per cent of to US exports.

The countries negotiating the TPP are New Zealand, Singapore, Brunei, Peru, United States, Australia, Vietnam and Malaysia, and its framework is due to be concluded by the time of the Apec summit in November.

It is expected to be expanded in time to other Apec countries.