The US Trade Representative's latest Special 301 report's criticisms of New Zealand's drug agency PHARMAC have drawn angry responses in that country.

The UTSR's newly-published annual report on intellectual property rights notes that the US pharmaceutical industry "continues to express concerns regarding, among other things, the transparency, fairness and predictability of the PHARMAC pricing and reimbursement regime, as well as the overall climate for innovative medicines in New Zealand."

In its submission asking for New Zealand to be placed on the USTR's Special 301 Priority Watch List, the Pharmaceutical Research and Manufacturers of America (PhRMA) said that PHARMAC "continues to impose stringent cost-containment strategies and operate in a non-transparent manner, making unpredictable funding decisions and creating an unfavourable environment for innovative medicines."

"On average, the regulatory approval process for new drugs in New Zealand takes about three years after the date of approval in the country of first launch. This delay is exacerbated by the uncertainty and tardiness of PHARMAC funding which is necessary for effective market access," PhRMA tells the USTR.

The US trade group is highly critical of the methodology behind PHARMAC's reimbursement decisions, which it says is denying many of the most effective medicines to New Zealand patients. 

"Analysis has found that of the 83 innovative new prescription-only medicines listed on the Pharmaceutical Benefits Scheme (PBS) in Australia between May 2000 and October 2006, only 22 are currently reimbursed in New Zealand," says PhRMA. 

"Many of these 22 products have restricted reimbursement, such as reimbursement for limited indications. Funding for new medicines in New Zealand is also significantly delayed, such that some medicines are only funded after they come off patent, even where there is no funded therapeutic alternative," it adds.

However, critics in New Zealand claim that the industry's criticisms are "predictable" as it gears up for the next round of the Trans-Pacific Partnership (TPP) negotiations, a proposed regional trade agreement that also includes Australia, Brunei Darussalem, China, Malaysia, Peru, Singapore and Vietnam.

"US pharmaceutical companies strongly oppose PHARMAC and always have because they cannot come into the New Zealand drug market and extort top dollar for their latest wonder drug from sick and vulnerable Kiwis," said Maryan Street, trade spokesperson for the opposition Labour Party.

US drugmakers "are at liberty to sell approved medicines here, but if PHARMAC can provide a subsidised medicine at cheaper rates, why would Kiwis buy the more expensive option?" she said, and called on the government to "draw a line in the sand and tell New Zealanders it will not trade away a system that works in our favour."

"PHARMAC has saved New Zealand over NZ$700 million over its lifetime and ensures that all New Zealanders have access to affordable medicines. It works in the interests of ordinary Kiwis, not overseas businesses, and that's the way it should stay," added the Party's associate health spokesman, Iain Lees-Galloway.

PHARMAC spokeswoman Jude Ulrich points to cases where PHARMAC has decided not to fund drugs that have subsequently been withdrawn in other countries. For example, if PHARMAC had funded COX-2 inhibitors at the same rate as Australia, it would have had 330-1,900 people die of heart attacks over a four-year period, she said, while its decision not to fundthe COX-2 inhibitors had also enabled the funding of 18 other drugs, saving 487 statistical lives a year. 

Jane Kelsey, a professor of law at the University of Auckland and a strong critic of the TPP, says the drugmakers are "notorious for commercial blackmail, threatening to withhold access to certain drugs unless they get their way."

"When they refer to 'science-based decision-making,'  they mean that cost should not be a consideration. Basically they want us to low out the health budget by siphoning more money directly into their coffers," said Prof Kelsey.