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:


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.