E-drug: USA Trade Representative and New Zealand
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[copied from PHARM-POLICY with thanks]
[Moderator comment: maybe some of our New Zealand colleagues can
comment? It looks like the USA language changes over the years. It
this based on a change in New Zealand patent protection or merely a
different perception from the USTR? WB]
Case study: USTR and New Zealand
(Conflict of interest disclosure (I was a witness for PHARMAC in a
1998 New Zealand patent case)
This is an important and interesting case of USTR running amok.
Among the "barriers to trade" in New Zealand is this item: In general,
PHARMAC will not apply a subsidy to a new medicine unless it is
offered at a price lower than currently available subsidized
medicines in the same therapeutic class or unless the producer is
willing to lower its price on another medicine already subsidized in
another class. Pharmaceuticals can also be delisted if a competing
product is selected to serve the market as the result of a tender or
if a cheaper alternative becomes available and the manufacturer of
the original product refuses to discount its price to that of the
lower-priced alternative. PHARMAC's use of reference pricing, the
practice of doing trade-off deals between classes of drugs, and
tendering practices can negatively affect a company's revenue return
on its intellectual property.
Jamie
(Shivan Mehta provided the research)
USTR Reports about New Zealand and Pharmaceutical Drug Policies
USTR's 1999 NTE Report
Access for Pharmaceuticals -Pharmaceutical Management Agency
(PHARMAC)
PHARMAC was established in 1993 as a limited liability company to
manage the purchasing or funding of pharmaceuticals for the
Health Funding Authority (HFA). The HFA is responsible for
purchasing health services and supplies for all New Zealanders.
PHARMAC administers the National Pharmaceutical Schedule on
HFA's behalf. The Schedule lists medicines subsidized by the
government and the reimbursement paid for each pharmaceutical.
The schedule also specifies conditions for prescription of a
product listed for reimbursement. At its creation, PHARMAC was
exempted from New Zealand's normal competition laws, an exemption
upheld in a 1997 High Court ruling in an umbrella court case
brought against PHARMAC by New Zealand's Researched Medicines
Industry (RMI) association. While New Zealand does not per se
restrict the sale of non-subsidized pharmaceuticals in New
Zealand, private medical insurance companies will not cover
unsubsidized medicines. Thus, PHARMAC effectively controls what
prescription medicines will be sold in New Zealand and, to a
large extent, at what price they will be sold.
Pharmaceutical suppliers complain that it is difficult to list
new chemical entities and line extensions on PHARMAC's schedule.
In general, PHARMAC will not apply a subsidy to a new medicine
unless it is offered at a price lower than currently available
subsidized medicines in the same therapeutic class or unless the
producer is willing to lower its price on another medicine
already subsidized in another class. Pharmaceuticals can also be
delisted if a competing product is selected to serve the market
as the result of a tender or if a cheaper alternative becomes
available and the manufacturer of the original product refuses to
discount its price to that of the lower-priced alternative.
PHARMAC's use of reference pricing, the practice of doing trade-
off deals between classes of drugs, and tendering practices can
negatively affect a company's revenue return on its intellectual
property. The United States and New Zealand governments have
begun a dialogue with the aim of alleviating impediments to
market access from PHARMAC's practices.
USTR's 1998 NTE Report (same language in 1997 report)
Pharmaceutical Management Agency (Pharmac)
Pharmac was established in 1993 as a limited liability company to
manage the purchasing or funding of pharmaceuticals for the four
public regional health authorities (RHAs). Replacing the RHAS in
1996, the single Transitional Health Authority (THA) is
responsible for purchasing health services and supplies for all
New Zealanders. Owned by the THA, Pharmac administers the
national pharmaceutical schedule on its behalf. The schedule
lists medicines subsidized by the government and the
reimbursement paid for patients for each pharmaceutical. The
schedule also specifies conditions for prescription of a product
listed for reimbursement.
. . .
In 1997, Pharmac suggested that it might try to control its
escalating costs by tendering for a sole national supplier in
some pharmaceutical classes.
The government and individual pharmaceutical firms have begun a
dialogue to discuss Pharmac practices. The firms are promoting a
transparent subsidies decision-making process based on sound
medical evidence -- designed to divorce pharmaceutical pricing
decisions (left to the market) from government decisions on how
to distribute its public health budget. Some are also suggesting
a type of appeal mechanism so that firms denied a Pharmac listing
can bring to the government's attention additional research
proving a new medication's specific effectiveness. In general,
Pharmac may become part of a growing public and political
discussion of health care reform and whether New Zealand's
universal pharmaceutical subsidization (regardless of the ability
to pay) is an efficient or sustainable use of public funds.
USTR's 1996 NTE Report
LACK OF INTELLECTUAL PROPERTY PROTECTION- Pharmaceuticals
The New Zealand government adopted amendments to its Medicines
Act in 1989 which significantly weakened patent protection for
pharmaceutical products. In response to international concern,
New Zealand passed the Medicines Amendment Act in 1990 to replace
the 1989 legislation. However, the 1990 Act waived government
liability for trademark or copyright infringement related to the
importation, sale or distribution of medicines for which the
patent has expired. Consequently, materials under copyright or
trademark that are used in connection with an "off patent"
medicine imported by the government (e.g. pamphlets) now may be
imported, reproduced, translated, or adapted without permission
from the holder of the copyright or trademark. In practice, the
government has not actually imported such "off patent" medicines
since the enactment of the 1990 Medicines Amendment Act. The
Copyright Act of 1994 preserves the ability of the government to
parallel import printed materials associated with parallel
imported medicines for which the patent has expired.
ANTI-COMPETITIVE PRACTICES- PHARMAC
Another issue which adversely affects both New Zealand and
foreign pharmaceutical companies is the monopsony purchasing
practices of the Pharmaceutical Management Agency (PHARMAC).
Established in 1993 by New Zealand's four government-owned
regional health authorities to manage the purchasing or funding
of public medical services, PHARMAC is effectively exempted from
New Zealand's normal competition laws. PHARMAC controls a
pharmaceutical schedule on which all government-subsidized
pharmaceuticals are listed. Private medical insurance companies,
furthermore, will not cover unsubsidized medicines. Thus, PHARMAC
effectively controls what prescription medicines will be sold in
New Zealand and, to a large extent, at what price they will be
sold.
Pharmaceutical suppliers, domestic and foreign, complain that it
is difficult to list new chemical entities and line extensions on
PHARMAC's schedule. As PHARMAC tries to restrict the growth of
New Zealand's pharmaceutical budget, suppliers must be prepared
to offer substantial discounts to be listed. Pharmaceuticals can
be de-listed if a new, cheaper alternative becomes available, and
the manufacturer of the original product refuses to discount its
price to that of the new lower priced alternative.
USTR's 1995 Report
INTELLECTUAL PROPERTY PROTECTION- Pharmaceuticals
In July 1989, the New Zealand government adopted amendments to
its Medicines Act which significantly weakened patent protection
for pharmaceutical products. In August 1990, in response to
international concern, New Zealand passed the Medicines Amendment
Act, which replaced the 1989 legislation.
The Medicines Amendment Act of 1990 was accompanied by the
Trademark amendment Act and the Copyright Amendment Act, which
waive government liability for trademark or copyright
infringement related to the importation, sale or distribution of
medicines for which the patent has expired. Consequently,
materials under copyright or trademark that are used in
connection with a "off patent" medicine imported by the
government (e.g. pamphlets) now may be reproduced, translated, or
adapted without permission from the holder of the copyright or
trademark. The completely revised Copyright Act of 1994 preserves
the ability of the government to parallel import printed
materials associated with parallel imported medicines for which
the patent has expired. In practice, the government has not
actually imported such patented medicines since the enactment of
the legislation.
In August 1992, New Zealand repealed Section 51 of the Patents
Act of 1953, which contained permissive rules for the grant of
compulsory licenses of pharmaceutical products. This repeal
brought New Zealand's Patent Act into conformity with the
pharmaceutical product provisions of intellectual property
legislation in other industrialized countries.
--
James Love, Director, Consumer Project on Technology
I can be reached at love@cptech.org, by telephone 202.387.8030,
by fax at 202.234.5176. CPT web page is http://www.cptech.org
--
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