Turei and a Pharmac fallacy

There’s been a lot of speculation about Pharmac in relation to the Trans Pacific Partnership Agreement. And misinformed comment and misinformation.

In a column (MP’s View) in Dunedin’s The Star Metiria Turei wrote:

Is the TPP agreement good or bad?

There are many questions about what it means, largely because we have been kept in the dark. The agreement has been negotiated in secret and that has made it hard for everyone on both sides of the debate to really understand the impact of it.

Until the Agreement was agreed on of course it was difficult to know what the impact might be. But it was finalised and the full text was made available last year.

So now the text has been released, we can all, for the first time, really look at what is negotiated and make our own judgements.

Let’s look at Pharmac for example. There are many people who are concerned about maintaining access to free and cheap medicines.

So, we are seriously concerned about then increased cost of medicines, especially the new and better ones emerging called biologics. As more of these become available in New Zealand the cost will rise.

It’s unclear what she means by that. Of course if there are more of a group of medicines the cost of that group will probably rise.

The Government estimates a $1 million annual cost to Pharmac but says nothing about increased costs of new medicines.

It’s likely new medicines will be more expensive with or without the TPPA. Medine costs have been rising for decades.

The Government also estimates $4.5 million for the set-up cost and a $2.2 million annual cost of a process to allow Pharmac decisions to be reviewed by other agencies.

Even the most conservative analysis from MFAT shows costs rising but little benefit to sick New Zealanders needing help.

I don’t think anyone expected there would be definable benefits to sick people from the TPPA. I doubt MFAT made an emotional ‘analysis’ like that.

What they do say in Cost to PHARMAC of Implementing the Transparency Annex of TPP :

The analysis below outlines the estimated costs of operating new administrative procedures required under TPP. While these procedures will not change the PHARMAC model or its ability to fund, prioritise, approve or decline applications for funding pharmaceuticals, they do involve some cost to implement.

The actual operating cost to PHARMAC of implementing TPP is likely to be less than the estimates below, partly because PHARMAC may be able to absorb some of the activities required by the Annex within existing resources.

Estimated costs are then detailed, coming to the totals cited by Turei. But Turei doesn’t say that MFAT said that the operating costs are likely to be lower. And MFAT doesn’t say anything like “little benefit to sick New Zealanders needing help”.

And we have listened carefully to the arguments on both sides of this debate.

Medicines is just one example where the details give us all better information about the effects of the TPP agreement.

I encourage you to look a little deeper into it.

This exchange on Facebook has been circulating:

PharmacTPPAMueller

Pharmac director Jens Mueller said:

Any PHARMAC cost increases will be absolutely negligible in comparison to the total PHARMAC budget and the additional export revenues from the TPPA.

An MFAT Fact Sheet says:

Consumers will not pay more for subsidised medicines as a result of TPP. Most prescription medicines are fully subsidised and, with few exceptions, New Zealanders pay no more than $5. TPP does not change this in any way.

I wonder how carefully Turei and the Greens have listened to both sides of the argument. Turei is playing on people’s fears with little justification and only vague assertions.

Reports I’ve seen in media show little concern about the effects of the TPPA and medicine costs.

It looks like Turei is playing on a Pharmac fallacy.

 

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31 Comments

  1. Oliver

     /  8th February 2016

    TPPA will bring stagnation on actions to control the products that make people sick in the first place – tobacco control, managing junk food advertising to children and cutting down on fossil fuels being turned in to carbon emissions and climate change.

    We’ve had curious double-speak from Ministers on this issue. On the one hand is their appalling slow-down on tobacco plain packaging, because they’re worried about the risk of being sued in a trade dispute.

    On the other hand is the recent statement by the Prime Minister that New Zealand has always been safe from trade law claims. Of course we’ve not been sued under existing agreements – the few agreements we have to date are only with countries that hardly ever sue.

    The TPPA now catapults us into agreements with more countries, one of which is the most trade litigious country in the world. According to United Nations Conference on Trade and Development, 98 countries have been on the receiving end of trade law suits from disaffected companies.

    Most of the claims have come out of just a handful of countries. The USA tops the list, with twice as many cases being brought by US-based transnational companies than by those based in any other country.

    So if the current low risk of being sued has produced this “chilling effect” in tobacco control, then joining an agreement with serial litigant USA means we’re heading for the freezer.

    Are we reassured by ministerial spin? No.

    Reply
  2. Blazer

     /  8th February 2016

    ‘Consumers will not pay more for subsidised medicines as a result of TPP. Most prescription medicines are fully subsidised and, with few exceptions, New Zealanders pay no more than $5. TPP does not change this in any way.’…if the govt pays more ,consumers/taxpayers ..pay more..thats the reality.

    Reply
    • Rob

       /  8th February 2016

      There is only so much money for pharmac, so what drugs are we going to lose out on as these laws come into place.

      Reply
    • kittycatkin

       /  8th February 2016

      I was very shocked when I saw what my medicines actually cost as opposed to what I paid. I wouldn’t be able to have them if I had to pay for them, my life savings would be gone in a fairly short time-so I might as well use the money for my bucket list.

      Reply
    • Oliver

       /  8th February 2016

      True. John Key has already said there will be an increase in the cost of medicine. There’s a limit to how much can be subsidised and then then the consumer will have to pay x amount. Has the director of Phamac read all 7000 pages of the TPP? I doubt it, the woman who threw the dildo probably knows more about it.

      Reply
      • Oliver

         /  8th February 2016

        Also this so called director of Pharmac is saying that revenue from exporting will cover the cost of an increase in the price of medicine. So basically all the hyped up economic benefits of the TPP won’t be going to NZ, instead they will go to the fat pockets of offshore pharmaceutical companies. Yeah that makes me feel less worried, not!

        Reply
        • Oliver

           /  8th February 2016

          And then this so called director of Pharmac says “as the director of pharmac I have a basic understanding of how pharmac operates”. Really? Just a basic understanding? That’s reassuring.

          Reply
          • kittycatkin

             /  9th February 2016

            The things I’m on are fairly standard, nothing extremely obscure or rare, but they still cost the taxpayer thousands every year. I was appalled to see how much, and I certainly didn’t complain when it went up to $5-I wouldn’t have had the nerve to !

            Reply
      • Alan Wilkinson

         /  8th February 2016

        What kind of drivelling idiocy is that? This guy chairs the audit/ forecasting section of Pharmac, was undoubtedly responsible for producing the information for MFAT both during negotiations and after the final agreement and you think he knows nothing about it? Go bury your stupid skull in a compost heap and it might at least serve some purpose in helping the weeds grow.

        Reply
        • Rob

           /  8th February 2016

          Poor Wilkinson, reduced to purile abuse again.

          Reply
          • Alan Wilkinson

             /  8th February 2016

            I thought it was quite good abuse and nost thoroughly earned. 😃

            Reply
        • Oliver

           /  8th February 2016

          No, I know he has a basic understanding because he said so himself. Yes that’s right basic, the same level of your home school education.

          Reply
          • Alan Wilkinson

             /  8th February 2016

            Like everything else, sarcasm passed stratospherically over your head,

            Reply
          • jamie

             /  8th February 2016

            Oliver, he was obviously aping the patronising language in the question as put to him.

            Reply
  3. jamie

     /  8th February 2016

    Pete, I’m finding your line of critisism a little hard to follow here.

    Turei is talking about the TPP adding cost to our health system, which you do not dispute except to say the administrative increase might be less than MFAT’s estimate. But either way, it’s an increase.

    I don’t understand why you think she should be critisised for bringing up a cost increase.

    You also critisise her for asking what we get for this cost increase, and imply that questioning it is “emotional analysis”. Why?

    Don’t you want to know that when the govt spends our money, we get something of value for it? What’s “emotional” about that?

    I have always thought of you as quite fiscally conservative compared to someone like Turei, but this post seems to indicate otherwise.

    Reply
    • It’s a fairly minor increase in costs, and won’t result in increased costs to people getting drugs on prescriptions, so she is laying it on and misleading talking about people “would really struggle if their medicines rose”.

      Reply
      • Oliver

         /  8th February 2016

        “It’s a fairly minor increase in costs, and won’t result in increased costs to people getting drugs on prescriptions”

        Any hard evidence to back up this statement.

        Reply
        • Oliver

           /  9th February 2016

          No evidence = checkmate

          Reply
          • Pantsdownbrown

             /  9th February 2016

            It is up to you Oliver (and other disbelievers) to disprove the govt/PHARMAC statement, not the other way around – so where’s your hard evidence the costs will increase for everyday people? Yep – you have none – touché!

            Reply
            • kittycatkin

               /  9th February 2016

              After so many prescriptions, the person pays nothing as it’s high use and they have a little card to this effect.

      • jamie

         /  8th February 2016

        With respect Pete, I think you’re laying it on a bit thick critisising an opposition MP for questioning government spending. I think your post could be seen as “emotional analysis” as I can’t see anywhere that you actually dispute the substance of her claim: An increase in cost for no appreciable benefit.

        And what makes you think it won’t result in increased costs on people’s prescriptions? It’s only John Key’s word that he won’t put the extra cost on to prescriptions, but he isn’t going to be PM forever.

        It is often said that a politician is lying when their lips are moving, but I think this is a little unfair. The real telltale sign is when they tell you something won’t cost you any extra.

        Reply
        • kittycatkin

           /  9th February 2016

          That is cheap, unoriginal and inaccurate. Politicians have an extremely thankless job; blamed when things go wrong but seldom praised when they go right. If you voted, why did you vote for people whom you believed to be liars ? Or didn’t you vote ? If not, you can’t complain as you did nothing to change a situation which you believe to be so flawed.

          Reply
          • jamie

             /  9th February 2016

            I honestly have no idea what you are on about. Why would I vote for someone I thought was lying?

            Reply
    • Alan Wilkinson

       /  8th February 2016

      Pharmac’s,budget is $800M. The estimated cost of the TPP changes is 0.25% of that.

      Our exports are $67B. If the TPP adds 1.1% to that it will pay for Pharmac’s entire budget, let alone the miniscule 0.25% of additional costs.

      I know I promised not to repeat the mistake of talking to an idiot but I have.

      Reply
      • Rob

         /  8th February 2016

        If.

        Reply
      • Oliver

         /  8th February 2016

        All those figures are speculative. Try again Wilky.

        Reply
        • Alan Wilkinson

           /  8th February 2016

          Idiot, they are not. The only speculative figure is the 1.1% which simply puts everything in perspective – at least for people who have one.

          Reply
          • Oliver

             /  8th February 2016

            I think the anti TPP guys are winning this argument.

            Reply
            • Alan Wilkinson

               /  8th February 2016

              You got it wrong on the second word.

            • kittycatkin

               /  9th February 2016

              I can’t believe that the TPPA would only add 1.1 %, so the antis aren’t winning. But even if this speculative figure was right. 1.1% of $67 billion is a lot of money. In reality, I would imagine that it would be much more than that, and that Alan is thinking of the least impressive figure-which would still be a large sum.

      • Good context Alan. The cry from the Left and Anti TPPA people during negotiations was Pharmac would be wiped out by signing up to the TPPA. Key And Groser said no it would its a bottom line for us. But Big Pharma doesn’t want it said the Anti mob… Key and Groser said no change to Pharmac or we won’t sign up.

        And the outcome. Pharmac remains, it has a review process tacked on which is not great but does meet the NZ legal concept of Natural Justice and a fair hearing so is not really a problem.

        When it became clear Pharmac would remain the Anti mob switch to another line [funny that a standard tactic when losing is to bait with something scary and switch to another topic] namely the sky is falling prices will sky rocket and think about those who can’t afford to pay more. Key said no change in cost to consumers of medicines as the Government would absorb the cost driven by extended patent protections on medicines. So again no problem.

        So again we see another bait and switch – but the poor NZ taxpayer will pay more…. A nice half truth which ignores the other aspects of the TPPA. Sure the taxpayer funds a little more for medicines BUT the government reaps more taxes from an expanded economy so any additional outlay is covered.

        Its nice and simple …. but what do you get as an opposition to your clean presentation….. ‘The increased costs are real! But the increase economic activity is theoretical’. Pretty poor counter arguments laced with half truths and woo is us rhetorical flourishes….

        Keep up the logic Alan…..

        Reply

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