The Annex on Transparency and Procedural Fairness for
Pharmaceutical products and Medical Devicesfrom the Trans-Pacific
Partnership Agreement negotiations was posted on Wikileaks today
Memoranda by Dr Deborah Gleeson from La Trobe University in
Melbourne and Professor Kelsey from the University of Auckland
examine the implications for Australia and New Zealand
'Trade Minister Tim Groser has repeatedly assured New Zealanders
that Pharmac is not up for negotiation in the TPPA and the
government will protect its "fundamentals" conveniently without
saying what those fundamentals are. Wikileaks has shown us yet
again that we can't trust the government's word when it comes to
the TPPA,' Professor Kelsey observed.
Pharmac's regime for identifying which medicines and medical
devices are subsidised and for how much has proved highly
successful in making medicines affordable in New Zealand, saving
District Health Boards more than $5 billion over the past decade
according to Pharmac's own calculations.
Professor Kelsey says the real motivation behind the Annex is to
force changes in Pharmac to reduce its attractiveness as a
precedent for other countries.
'New Zealanders' health and our taxpayer dollars are being held
ransom in a much bigger game'.
The Annex sets out a series of principles and procedures by
which agencies like Pharmac must operate. They are designed to give
the pharmaceutical industry more influence over its decisions and
break down the procedures and budgetary cap that makes Pharmac so
According to Professor Kelsey, Pharmac is the most exposed of
any programme in a TPPA country, especially since it assumed
responsibility for medical devices as well as pharmaceuticals.
While the 'transparency' Annex is not enforceable by other
states, there are numerous ways the US and the pharmaceutical
companies can force New Zealand to make changes that would
seriously undermine Pharmac's effectiveness and workability.
The most immediate is the certification process, where the US
can refuse to bring the TPPA into force in relation to New Zealand
until Pharmac's regulations and procedures are changed to meet what
the US says the Annex requires.
'There is anger within the US Congress that the US Korea FTA was
certified without forcing the Koreans make further changes to their
pharmaceutical reimbursement scheme and they have sent a clear
signal they won't let that happen again with the TPPA', Professor
Assuming the agreement does come into force, a pharmaceutical
company could bring an investor-state dispute against the
government, claiming New Zealand has breached vague protections
such as 'fair and equitable treatment'. Australia clearly
anticipated this risk when it proposed an exclusion for its
Pharmaceutical Benefits Scheme in the leaked TPPA investment
chapter, dated January this year. New Zealand did not.
There are numerous other opportunities for the manufacturers and
their governments to put pressure on the Pharmac regime.
'This Annex is the second of the two-pronged assaults on Pharmac
under the TPPA', Professor Kelsey said. 'Leaked intellectual
property chapters have exposed US demands for more extensive patent
monopolies to restrict availability of much cheaper generic
'We know that the huge issue of new generation biologics remains
unresolved, with renewed pressure in the US Congress for twelve
years of data exclusivity, whereas New Zealand currently has five.
That would put intolerable pressure on Pharmac's budget.'
Professor Kelsey called on the trade, health and finance
ministers to 'reject the so-called 'transparency' Annex, as well as
the intellectual property and investment rules, and assure New
Zealanders they will put our right to decide how we provide
affordable health care for the nation before the profits of the big