Cablegate: New Zealand Reviewing Medicines Policy

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FM AMEMBASSY WELLINGTON
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UNCLAS SECTION 01 OF 02 WELLINGTON 000481

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STATE FOR EAP/ANP-DRICCI AND EB/TPP/BTA/ANA-MBGOODMAN
COMMERCE FOR ABENAISSA/4530/ITA/MAC/AP/OSAO
SYDNEY FOR CS

E.O. 12958: N/A
TAGS: ETRD ECON NZ
SUBJECT: NEW ZEALAND REVIEWING MEDICINES POLICY

REF: WELLINGTON 40

1. (SBU) Summary: The New Zealand government has launched a review
of its long-term medicines strategy, aiming to identify ways to
improve the drug-purchasing system that controls the range and price
of most prescription medicines in the country. The review follows
more than a year of escalating public complaints over the
government's failure to fund a number of high-priced medicines for a
range of illnesses. Both the pharmaceutical industry and the
government's drug-buying agency have welcomed the review. End
summary.

2. (U) Associate Health Minister Peter Dunne formally announced the
review on April 13. The ruling Labour Party had committed to such a
review as part of its agreement with Dunne's United Future party to
form a government after the September 17 elections. The opposition
National Party -- which created the drug-purchasing entity, the
Pharmaceutical Management Agency (PHARMAC), while in government in
1993 -- also supports the review.

3. (U) The review will focus on three areas: access to medicines,
particularly to new and high-cost medicines, which would include
looking at PHARMAC's role in assessing which medicines should be
publicly funded; the quality of medicines available in New Zealand;
and, the rational use of medicines, or ensuring that medicines are
not used to unnecessarily prolong or even cause ill health. The
review also will assess how the pharmaceutical budget is set,
whether it is adequate and whether it should continue to be part of
District Health Board spending plans. There are 21 such boards in
New Zealand, responsible for providing government-funded health care
services for the population in a designated geographical area.

4. (U) For the review, the Ministry of Health is consulting a
variety of groups, including the industry, government departments,
health practitioners and patients' and consumer groups. The
Ministry also is studying systems in such countries as Australia,
Canada, Ireland and the United Kingdom. The Ministry will draft a
report to be submitted to Cabinet for approval by November and then
released for public comments by year's end. In early 2007,
government ministers are expected to receive the Ministry's
recommendations on next steps and then decide whether and how to
implement them.

5. (SBU) The review is one reason why the pharmaceutical industry is
cautiously optimistic about the prospect of changes to the
drug-purchasing system, which has crimped the industry for the past
13 years (reftel). An industry representative noted that Minister
Dunne has instructed the Ministry to ensure the report reflects the
opinions of those affected by the medicines policy. So far, the
representative said, the consultations have been inclusive and
collaborative. The industry hopes the review will achieve -- at a
minimum -- "more realistic funding" for pharmaceuticals and greater
transparency in PHARMAC's decision-making.

6. (SBU) Meanwhile, PHARMAC hopes the review will result in an
increase in its budget for drug purchases. The agency has found it
increasingly difficult to choose between funding expensive drugs for
less common diseases and funding cheaper medicines that help larger
numbers of patients. Its decisions in the past year have focused
greater public attention to the plight of patients with
life-threatening diseases who were unable to afford unsubsidized
medicines. PHARMAC has been reviewing its decision-making process
for high-cost drugs, which may serve as input for the medicines
strategy review.

7. (SBU) Dunne has criticized PHARMAC for emphasizing cost
containment when deciding which medicines to subsidize. A Ministry
of Health official, however, warned against expecting a huge
increase in the pharmaceutical budget.

8. (SBU) The official also cautioned against turning the
consultations into an attack on PHARMAC. For example, pointing out
that Australia subsidizes a larger number of medicines than New
Zealand would be a "fruitless exercise," the official said.
Instead, an appropriate question might be how Australia decides its
funding priorities.

9. (SBU) Comment: Post understands that the medicines strategy
review will be discussed at the U.S.-New Zealand Trade and
Investment Framework Agreement talks set for June 27.
Pharmaceutical industry representatives say they hope the U.S. side
will acknowledge the review in a positive way, without any measure
of pressure. The industry is pleased that the government has
undertaken the review, wants to be seen as a constructive partner

WELLINGTON 00000481 002 OF 002

and hopes to preserve the cooperative spirit that so far has marked
the consultations.

MCCORMICK

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