US senators want drug-buying agency crackdown

Political pressure is mounting on United States president Barack Obama not to do a trade deal with New Zealand which leaves the drug-buying agency Pharmac untouched.

Twenty-eight US senators have written to Mr Obama calling for a crackdown in the TransPacific Partnership (TPP) trade talks on drug-buying bodies, warning of dangers to American business interests from such a deal.

The senators say American pharmaceutical companies will gain little from the nine-country deal, which includes the US and New Zealand, if national drug-buying agencies' current practices are maintained.

The senators want changes which better protect US companies' intellectual property in the trade talks.

Their letter accuses other TransPacific Partnership countries' drug-buying agencies of arbitrary and non-transparent practises which harm American firms.

While it does not name Pharmac, trade sources say it is a clear reference to the New Zealand agency, which is on track to deliver savings for the health system in the country of $1 billion this year.

The senators say strong protections for US firms' intellectual property in the talks are important, as such firms account for 60% of its exports.

Earlier in May, the US pharmaceutical lobby called on its trade negotiators to include changes to Pharmac in the talks.

A fortnight ago, the US Trade Representative's office for the first time included New Zealand in a list of countries with poor intellectual property protections.

That report labelled Pharmac as a hurdle for US pharmaceutical companies selling to New Zealand.

Listen to Radio New Zealand's economics correspondent ( 4 min 47 sec )

Pharmac best model for NZ - Key

Prime Minister John Key says Pharmac has saved the Government a lot of money and he would need convincing that it is not the best drug-buying model for the country.

Mr Key says the Government will only sign the nine-country trade deal if it benefits New Zealand.

"We think it (Pharmac) makes money for New Zealand, it's the most cost-efficient way of purchasing pharmaceuticals for New Zealanders and we'll take a fair bit of convincing that wasn't the right model.

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

"There will always be some give and take in every agreement and every relationship that we have."

Senators have 'no part in process'

Kevin Outterson, an Associate Professor of Law at Boston University who has testified before a senate committee on global drug pricing, says the senators have no part in the trade agreement process.

"This is a negotiation handled, not by the US Senate, but by the executive office of the president's United States trade representative.

"When an agreement is reached, it goes back to the Congress, but it's not ratified; it's not a treaty under US law. The TPP will not be ratified by the US Senate."

Listen to Checkpoint interview with Kevin Outterson ( 3 min 49 sec )

Increased lobbying

An advisor from Singapore's Nanyang Technological University, Dr Deborah Elms, says pharmaceutical companies want stronger patent protection.

She says they want Pharmac to be clearer about its assessment process, and are worried about the level of information they have to provide. Dr Elms says the firms are increasing their lobbying of the US Congress.

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