Accusing other countries of “free-loading”, US President Donald Trump has announced plans to make countries like New Zealand pay more for drugs.
Speaking at the White House this weekend, Trump accused foreign countries of extorting “unreasonably low prices from US drug makers” and forcing Americans to pay more to subsidise the research and development costs. “America will not be cheated by foreign countries.”
Trump had directed his trade representative Bob Lighthizer to “make fixing this injustice a top priority with every trading partner” by negotiating with other countries to pay more.
New Zealand, like the UK and Australia, has a national agency that negotiates with pharmaceutical companies to bulk-buy drugs. That agency, Pharmac, has successfully managed down prices by playing one drug company off against another.
Long may that continue.
But drug pricing is very complex. The reality often is that the second and subsequent new drug may costs less than 10 cents to manufacture but the first new drug costs over $1 billion in research, development and testing.
So what is the fair price for a new drug?
Auckland University professor of law Jane Kelsey said if the US re-entered the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) deal it would demand extensions on patent periods as it was currently doing in the North American Free Trade Agreement (NAFTA) with Mexico and Canada.
She said the US was already demanding 12 years of exclusivity for biologic medicines, like Keytruda, up from five years in the TPPA.
And that would be a price too high to pay. Plus the US has shown it will ignore aspects of trade deals it finds inconvenient so a trade deal with the US at the moment looks far too risky.