Accusing other countries of "freeloading", US President Donald Trump has announced plans to make countries like New Zealand pay more for drugs.
Speaking at the White House this weekend, Trump accused foreign countries of extorting "unreasonably low prices from US drug makers" and forcing Americans to pay more to subsidise the research and development costs.
"America will not be cheated any longer, and especially will not be cheated by foreign countries," Trump said. "It's time to end the global freeloading once and for all." Trump had directed his trade representative Bob Lighthizer to "make fixing this injustice a top priority with every trading partner" by negotiating with other countries to pay more.
New Zealand, like the UK and Australia, has a national agency that negotiates with pharmaceutical companies to bulk-buy drugs. That agency, Pharmac, has successfully managed down prices by playing one drug company off against another.
Trump says such tactics are "bullying"; New Zealand experts like former Pharmac medical director Dr Peter Moodie suggest the drug companies are just lining their pockets.
Dunedin law student Hazel Heal, 51, was unable to pay the US$100,000 for a new medication to cure her of Hepatitis C and sourced a generic version from a doctor in Australia instead.
She is one of about 50,000 people in New Zealand with Hepatitis C, which can lead to liver cancer. Heal was cured by the generic treatment, for which she paid $3800.
Since then, Pharmac has funded another medication for people with genotype 1 Hepatitis C, but this would work for only about 25 per cent of patients. "That's because New Zealand as a country can't afford to pay the price demanded by the companies for the other pan-genic options on the market," Heal said. "The only option is to buy the expensive medications."
Pharmac did a good job in getting the best deals it could, she added. "It's an honourable institution for its efforts but it doesn't mean it has much bargaining power. We're a tiny player and if we get an advantage it's small and a drop in the bucket."
Trump has signalled he would like the US to rejoin negotiations with New Zealand and 10 other nations towards a Trans-Pacific trade deal. It that were to happen and the US insisted on giving drug companies more power to set high prices for longer, Heal said she would be "horrified".
Christchurch forensic psychologist and spokesman for Doctors for Healthy Trade Erik Monasterio said Pharmac negotiated lower prices with drug companies – which was outlawed in the US by the George W Bush administration.
"For almost any medication, we pay one-third to one-half of what they do in the States because Pharmac forces all the pharmaceutical companies to compete to get the cheapest possible price.
"In the US, money paid by Medicaid on behalf of the consumers goes directly into the pockets of the companies because they will pay whatever the companies ask."
Drug companies could charge extremely high prices for drugs while they were under a 20-year patent because they had no competition from generic versions. In recent years companies had sought to extend this period in trade deals by adding on additional time for data exclusivity in order to make further profits, Monasterio said.
Auckland University professor of law Jane Kelsey said if the US re-entered the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) deal it would demand extensions on patent periods as it was currently doing in the North American Free Trade Agreement (NAFTA) with Mexico and Canada.
She said the US was already demanding 12 years of exclusivity for biologic medicines, like Keytruda, up from five years in the TPPA.
"We can expect that if the US seek to re-enter that plus other attacks on the Pharmac process . . . will come back into play and the US terms for re-entry will be much higher than what was in the original deal."
The National Government increased Pharmac's annual budget by $60m last year to $870m. In 2016 the government gave the agency an injection of $124m over four years following an emotional battle over access to drug Keytruda, a new biological drug to treat advanced melanoma.
Kelsey said she did not support an increase in Pharmac's budget "because it just goes into the back pocket of the pharmaceutical industry."
"The objective of the industry has always been to bust the cap of Pharmac because it's the cap on the budget that gives Pharmac the bargaining power."
Image: EVAN VUCCI/AP