There’s more than a little irony in the fact that the least transparent trade deal in history contains an “Annex on Transparency”. After all, before Wikileaks published it last Wednesday, the plan was to keep this draft (along with all the others) from the public for four years after the deal was signed.
But the apparent double-standard makes more sense when we consider the annex isn’t intended to apply to political leaders or profit-driven corporations, but rather to national agencies responsible for brokering the best deals possible on pharmaceuticals for the public. In other words, lack of transparency appears to be a real concern when it gets in the way of pharmaceutical industry profit, but not so much when it gets in the way of informed public debate.
Among different nations’ purchasing agencies, Pharmac stands out as being particularly effective. It’s estimated it saved NZ $5 billion dollars between 2000 and 2012 – money made available to reinvest in health that would have otherwise been pharmaceutical industry profits. But the major concern for industry – and the reason Pharmac has been described as “an egregious example” of bad practice – is that it sets a precedent for other countries to follow. For example it’s been estimated that if the Australians adopted the Pharmac model they would save $1.6 billion dollars a year. All of this has led the US trade representative to report: “With respect to NZ, US industry has expressed serious concern about the policies and operation of NZ’s Pharmaceutical Management Agency (Pharmac), including among other things the lack of transparency, fairness and predictability of the Pharmac pricing and reimbursement regime…”
So on the face of it, the main purpose of the Transparency Annex is to undermine Pharmac, but what does the annex actually show?
On superficial reading it looks relatively benign. The “Principles” section contains lots innocent-sounding expressions like “high quality health care”, “competitive markets” and “accountable procedures”. But when all the underlying changes are added together, the picture becomes more concerning. To sum it up: Pharmac would be forced to make decisions within shorter time frames, with more intense input from industry and with more onerous requirements to release information that could then be used by industry to challenge its decisions, either through a beefed up review or appeal process or more worryingly, an investor state dispute.
Each of these changes may not seem like game changers when used alone but when systematically used in combination they have the potential to neutralise many of the features of Pharmac that have made it so successful. It would be naïve to assume that industry would not systematically leverage any new powers in order to undermine Pharmac and maximise profits. In other words, as a colleague closely familiar with Pharmac processes said to me: “don’t expect the industry to play by gentleman’s rules”.
Particularly concerning is the threat of investor state disputes (that is the initiation of multi-million dollar lawsuits against the government in an off-shore tribunal). Although state to state dispute processes have been expressly excluded by the annex, the investor to state process (ISDS) would still apply. The Australians are clearly concerned about this because they’ve proposed a clause that expressly excludes their equivalent of Pharmac from being subjected to ISDS (although it hasn’t yet been accepted). Yet for some reason NZ has not done the same, which means the threat of ISDS would loom heavily over each Pharmac decision. This would have an intimidating and restraining influence, particularly when contentious decisions are hanging in the balance.
So while it could be argued that the fundamental structure of Pharmac would remain intact, on a practical level it would make Pharmac’s operating environment much more challenging. When combined with changes in the Intellectual Property Chapter, the net result would be more of the health budget spent on medicines and more financial pressure on the NZ health system. Even if, as the Prime Minister promised, co-payments for medicines did not increase, the increased cost nationally would very likely have to be offset by cutting other areas of health spending. As a result, real patients would suffer, in particular those with the greatest health needs. This would lead to existing health inequities becoming more deeply entrenched.
It’s not too difficult to imagine that if the Transparency Annex (along with the rest of the TPP) comes into force, then before long we would be hearing that the growing cost of healthcare is making our public health system financially unsustainable. Perhaps we would be told that our expectations have become unrealistic and that we need to settle for less. Perhaps we would then be told that we need to allow multinational medical insurers to come to our rescue and cover the shortfall, opening up the way for a “two tier” health system in NZ.
That’s why it’s so important to anticipate where all this is heading before it’s too late. But in order to do this we need informed public debate. In fact, we need the same kind of “transparent … and accountable procedures” from our political representatives that the leaked annex reveals they are quite willing to concede to the Pharmaceutical Industry.
Doctors for Healthy Trade
Doctors for the Protection of Health in Trade Agreements (known as Doctors for Healthy Trade) is a growing informal coalition of New Zealand doctors and colleagues in health in New Zealand and elsewhere with over 150 supporters.
The members of our core group are predominantly full-time clinicians, although some of us have university attachments that have allowed a little scope for research and writing on this topic. The doctors who support the protection of health in trade are clinicians in all medical specialities, with strong representation from paediatricians, public health specialist and psychiatrists. For more information see https://www.facebook.com/DrHealthyTrade.