The Dim-Post

May 15, 2011

Condensed question and answer

Filed under: Politics — danylmc @ 6:46 pm

Question: What kind of asshole tries to destroy his own country’s healthcare system in exchange for a paycheck from foreign owned pharmaceutical companies?

Answer: Meet lobbyist Mark Unsworth, the kind of asshole who is also close friends with the Prime Minister’s Chief of Staff.

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74 Comments »

  1. I can neither confirm nor deny reports that the PM advised Mr. Eagleson that if venturing to Las Vegas he would need to be armed to the teeth.

    Comment by Sam Vilain — May 15, 2011 @ 7:49 pm

  2. Danyl, According to your link, it’s either Mark Unsworth or Barry Saunders. Can you identify the villain you mean?

    Comment by Carol — May 15, 2011 @ 7:56 pm

  3. Should be Unsworth – definitely that kind of asshole.

    Comment by Psycho Milt — May 15, 2011 @ 8:11 pm

  4. Oh, they’re not trying to destroy it. They only want to make “reasonable modifications”, increase “transparency” “timeliness” “access to information” and “independence”, and give us “access to drugs”.

    These are reasonable things, I’m sure National will agree.

    Seriously, Pharmac and the ACC are the best of their kind in the world, both radically lowering costs in the healthcare system. They’ve already started dismantling the latter.

    Comment by George D — May 15, 2011 @ 8:38 pm

  5. Carol, apologies for pedantry, but I think you mean Barrie Saunders, not Barry Saunders. I’d be much happier if Barry was hitting up Vegas with Eagleson.

    Comment by **** — May 15, 2011 @ 8:41 pm

  6. I see the Herald now describes DPF as “National Party pollster and conservative blogger”. Danyl seems to’ve gotten his wish, at least in this case.

    Comment by MikeM — May 15, 2011 @ 8:52 pm

  7. @MikeM: I followed the link of “David Farrar’s political views”. Whatever you think of DPF, he really has gone out of his way here to respond to the criticism. Above and beyone, actually.

    Comment by DT — May 15, 2011 @ 9:27 pm

  8. These are reasonable things, I’m sure National will agree.

    And, of course, it’s not like there are people with close links to the National Party working for the firm.

    Comment by Christopher Nimmo — May 15, 2011 @ 9:37 pm

  9. Fixed the name up. Thanks guys.

    Comment by danylmc — May 15, 2011 @ 9:44 pm

  10. Its useful to have these sorts of health debates because everything.. everything to do with health is about some form of rationing.

    Here our rationing is about time, techniques and medicines.. in the US its money. That means we will defer your hernia operation on the public system till there’s an emergency where you are taken by ambulance to a public hospital and an operation is performed to save your life or avoid condemnation as a third world facility. You will not be operated on to save your job, keep you off the dole/sickness benefit or meet your basic human right for a timely operation.. you have been rationed.

    In the US you can get instant access for your hernia operation with the best care and procedures in the world.. and all you need is the money to pay for the procedure(s).. up to $20,000. Like NZ your health care has thus been rationed.

    In NZ, your access to the most successful treatment for certain types of MS is betaferon, yet just 10% of all MS patients will get it free from Pharmac, in Aussie or the UK nearly all such patients will get it free.. if you decide to pay for it yourself it will cost about $15-18,000 a year.. perhaps for the rest of your life. You have been rationed where the Oz/UK patient gets it for free and its covered under insurance in the US (depending on the plan). With this disease in NZ, your access and human right to the drug is rationed by the nation’s ability to pay.

    Everything to do with health is thus rationed in some way and every country does it either by personal payments or national ability to pay. We recognise that we as a nation or individuals have limited ability to pay and thus we use Pharmac as a rationing agent.. in other countries with either greater personal or national wealth they use other methods and I dont think the statistics pertaining any one of these methods in aggregate are superior to one another.. but boy.. it can make a hell of a difference to individuals.

    JC

    Comment by JC — May 15, 2011 @ 10:03 pm

  11. JC: My girlfriend just spluttered into her tea, and said (and I quote):

    JC is incorrect, there is plenty of evidence showing Pharmac has some of the lowest costs for best overall outcomes in the entire world and the US system is a categorical and undeniable failure

    She’s just finishing up the Masters-level paper in Public Health Systems at Otago, so my hunch is that she’s not making it up.

    Comment by Simon Poole — May 15, 2011 @ 10:47 pm

  12. JC, from what I remember of my only economics paper that looked at health economics (honours public economics) that what your girlfriend is saying is pretty much accepted gospel. The US insurance based scheme creates massive distortions and costly inefficiencies that the NZ system commendably avoids.

    Comment by DT — May 15, 2011 @ 10:56 pm

  13. Ahem, that would be my partner, not JC’s.

    Also, from the stuff article linked in OP:

    Unsworth said NZ is second to bottom in the 23 OECD countries on drug spending as a proportion of GDP.

    Umm, fantastic! That’s the sort of thing we have Pharmac for. Clearly, Unsworth thinks our low drug spend is a problem.

    Comment by Simon Poole — May 15, 2011 @ 11:06 pm

  14. Apologies Simon, your girlfriend, anyone else I mislabeled.

    Comment by DT — May 15, 2011 @ 11:15 pm

  15. We do have better health statistics and longer life-expectancy than the US, despite the fact that they spend 16% of GDP on health care and we spend only 9% of GDP on ours, and that’s 9% of a GDP that’s lower per capita than theirs. Sure, their system may be better in some respects, but it’s clearly not the ’6 of one and half-a-dozen of the other’ situation that JC’s post implies.

    Comment by Kahikatea — May 15, 2011 @ 11:24 pm

  16. What a quisling piece of shit.

    Apologies for not being capable of more nuanced analysis.

    Comment by Jono — May 15, 2011 @ 11:26 pm

  17. What a weasel, no wonder hits in well in the corridors of parliament, or the street corners of the Beehive whoring himself.

    Comment by will — May 15, 2011 @ 11:51 pm

  18. …no wonder he fits….

    Comment by will — May 15, 2011 @ 11:52 pm

  19. Low spending is only advantageous if it covers the actual need. Unfortunately, as noted above, drugs are rationed in most countries, including NZ.

    The “Researched Medicines” crowd considered NZ was a free rider on US investment in R&D, and large pharma in the US lobbies their government to impose conditions in free trade agreements. The ever-increasing disparity in international drug prices is triggering quite a backlash in the USA.

    Much of the USA more sophisticated pharmaceutical R&D is following their pharma manufacturing offshore to China and India, especially with the huge government and regional subsidies offered, along with the promise of access to the fast-growing local market. Previously, it was mainly the bulk generics that were transferred to Central American countries. THe US pharma R&D and Manufacturing industry has been in serious decline for the last few years – the companies are still doing OK due to off-shoring and Direct-To-Consumer marketing, but their innovation lead is decreasing daily.

    There’s bound to be similar lobby/marketing firms in NZ willing to pursue the well-paying US pharma industry cause. However, it’s unlikely to affect NZ’s position on purchasing drugs, as both China and India want to become global players in the market, generating even more price reductions across most pharmaceutical categories than Brazil and India suppliers achieved.

    Comment by Bruce Hamilton — May 15, 2011 @ 11:54 pm

  20. The decline of big pharma is a complex thing. It’s partly down to the fragmentation of the industry, with new discovery increasingly happening in smaller biotech firms than in monolithic pharma companies. And also because new biotech drugs are often developed for and targeted at smaller, more specific patient populations than chemically derived medicines of the 1950s – 1990s. Which creates interesting price issues.

    But it is still the case that private pharmaceutical interests free ride massively off state investment in university biochemical research. And that profit margins in the pharmaceutical industry are enormous compared to other sectors. We are lucky to have, in Pharmac, one of the few government agencies anywhere which has the legislative and regulatory clout to take on the pharma industry on something resembling a level playing field.

    Compare and contrast: in the US Bush jr extended Medicare part D benefits, increasing Medicare coverage for pharmaceuticals. As a result of lobbying, one of the concomitant conditions was that Medicare insurance companies cannot negotiate with pharma companies on price. That came about because of the huge expenditure on health care lobbying in the US, which is estimated to be bigger than defense industry spend on political lobbying (long article about a year ago in the NY review of books on this subject, which I can’t be bothered tracking down and referencing properly). A seriously broken system.

    Comment by Dr Foster — May 16, 2011 @ 12:43 am

  21. @Chris Nimmo: You can also add a certain Kyoto-sceptic/Big mining lobbyist.

    Comment by DeepRed — May 16, 2011 @ 3:01 am

  22. And it seems the TPPA’s view on ‘piracy’ doesn’t just apply to entertainment.

    Comment by DeepRed — May 16, 2011 @ 3:11 am

  23. Oh come on people! He’s doing it for the money, not because the actually believes in the causes he’s lobbying on behalf of! If he did that he could be said to have principles!

    Comment by Guy Smiley — May 16, 2011 @ 8:36 am

  24. Martha Rosenberg in Alternet is well worth reading on the US pharmaceutical industry, and she doesn’t do a bad cartoon either (excuse technomoron lack of ability to link) – from memory one went…. Patient to Dr “Can Fosamax give me jaw cancer?” Patient to DR = “When it works….yes” (Ex pharmacist explains – Fosamax is a brand name of a drug for the “disease” osteoporosis) Of course most pharmacists in NZ don’t like Pharmac too much, mainly I suspect because the agency put the end to (amongst other things) bonuses and rebates pharmacists used to get for using a particular brand of drug, as Pharmac now only generally funds one brand of any particular drug, especially the commonly over? used ones like paracetamol, amoxycillin etc. (Geez, at last a topic I know something about)

    Comment by John Thomson — May 16, 2011 @ 8:49 am

  25. Sorry to be off topic, but about Dr Foster’s comment above…
    ” But it is still the case that private pharmaceutical interests free ride massively off state investment in university biochemical research. ”

    Massive?, possibly but less likely, as recent research showed.

    Of the 252 drugs approved by the FDA between 1997 and 2007, and studied in the following paper, their sources break down as follows. Note that some drugs have been split up, with partial credit being assigned to more than one category.

    58% from pharmaceutical companies.
    18% from biotech companies..
    16% from universities, transferred to biotech.
    8% from universities, transferred to pharma.

    http://www.nature.com/nrd/journal/v9/n11/abs/nrd3251.html

    The paper goes on to examine the type sf drugs and, as expected, Universities and Biotech do well in the “orphan drug” market, big pharma loses out in some innovation areas ( the consequence of “me too” drugs and targetting the high value markets ). There’s more interesting data in the paper that dispels several popular misconceptions about where drug innovation and development arises from, including national origins.

    Comment by Bruce Hamilton — May 16, 2011 @ 9:46 am

  26. Sorry to be off topic, but about Dr Foster’s comment above…

    Don’t apologise, this is interesting.

    My limited knowledge of drug funding models relates almost entirely to developing countries, where obviously a different set of factors are at play. More detail and comparative knowledge in this policy debate can only be a good thing – if we’re to have an informed discussion we might as well establish facts.

    Comment by George D — May 16, 2011 @ 10:14 am

  27. Simon and others,

    I did not argue that Pharmac supplies expensive drugs.. it doesn’t. My argument is Pharmac is also a rationing system, and I supplied the well known MS example.

    In fact the US has two systems in play, the private option where you pay the costs directly or through insurance, and the public options of Medicare and Medicaid. The private option caters for about 84% of the population, and the public options cover the other 16%.. both cost about 8% of GDP each. If you (or mainly your company) can afford the better private plans you will have excellent access to services and drugs, but if you are on the scarily expensive (to the taxpayer) public scheme you will be rationed.

    Pharmac does a fine job for most people, but it is a gatekeeper that restricts or refuses many drugs that people in other countries have access to.

    JC

    Comment by JC — May 16, 2011 @ 10:50 am

  28. Damn.. I should have mentioned that the US public option includes people over 65.

    JC

    Comment by JC — May 16, 2011 @ 10:52 am

  29. Someone arguing a point you don’t agree with is trying to destroy the health system. That’s almost Standard-like logic

    Next you’ll be banning people for suggesting you are a person not an unthinking computer system, or a tool of the LPRU and not a collective of independent thinkers with no particular alignment ;-).

    Comment by insider — May 16, 2011 @ 11:08 am

  30. JC, as I understand it, you are still able to access such drugs privately, they are simply not funded by the state. If you have insurance, or large pockets, you can take the considerable step of buying drugs that fall under Pharmac’s cost/efficacy threshold.

    To take a simple example, coldsore creams (a treatment for the common disease herpes simplex) were for a period of time part-funded by Pharmac, on the basis that their disfugurement caused sufficient economic loss to justify the relatively small payment required. Once their model was changed, these were no longer funded, but are still available in shops for around $20. Disfigurement is again rationed by ability to pay.

    Comment by George D — May 16, 2011 @ 11:11 am

  31. George D,

    I’m outside my area of knowledge, but I’m not sure why global Pharma companies would go to the cost of registering drugs with Medsafe if their potential market in NZ was small, hence the manufacturers push to get Pharmac subsidies on their products.

    Perhaps Medsafe accepts overseas registrations as evidence of efficacy and safety, and allow importation of some drugs?. I vaguely recall some people going overseas for drug regimes not available in NZ, but I’m not sure if that was an issue of availability or cost.

    Comment by Bruce Hamilton — May 16, 2011 @ 11:37 am

  32. Bruce Hamilton wrote: “I’m outside my area of knowledge, but I’m not sure why global Pharma companies would go to the cost of registering drugs with Medsafe if their potential market in NZ was small, hence the manufacturers push to get Pharmac subsidies on their products.”

    I don’t know either, but they definitely do – heaps of unsubsidised medicines are registered for sale in New Zealand. One explanation that comes to mind is that they are getting the medsafe registration because that’s the step you have to go through before applying to Pharmac to get it subsidised.

    Comment by Kahikatea — May 16, 2011 @ 12:07 pm

  33. Fair point Bruce – I haven’t read some of the more recent research on this, so perhaps not massive. Although that paper does point out that if you look at priority review medicines, universities and biotech companies account for 54% of medicines approved (30% universities, 24% biotech). So the underlying subsidy for the important drugs is pretty big.

    There’s lots published about this stuff. Anyone wanting to read further could start with a quick Google Scholar on the various works of Joel Lexchin.

    Comment by Dr Foster — May 16, 2011 @ 12:12 pm

  34. “JC, as I understand it, you are still able to access such drugs privately, they are simply not funded by the state. If you have insurance, or large pockets, you can take the considerable step of buying drugs that fall under Pharmac’s cost/efficacy threshold.”

    Thats right.When you set up an organisation like Pharmac you create two classes of citizens.. those who met Pharmac’s cost and efficacy thresholds for free or subsidised medicines, and those who don’t. This can be pretty dramatic in that if you don’t meet the criteria and cant afford a drug privately.. your life will be shortened, you have to stop work and you have to suffer increasing disability. On the surface Pharmacs decisions are cost efficient and justifiable, but they are a human rights disaster.

    Australia recognises this dilemna and funds more drugs on the basis of fairness than strict cost or medical efficacy might indicate.

    JC

    Comment by JC — May 16, 2011 @ 1:47 pm

  35. This discussion misses the point completely. The main purpose of Pharmac isn’t to subsidise certain drugs for certain people: it’s to negotiate bulk discounts with (largely overseas-owned) drug companies. By and large, the cost savings to consumers come not from government subsidies but from bargaining down prices. This saves NZers a tremendous amount of money, but it also cuts into the drug firms’ profit margins.

    The comparison with the US is instructive: When the W Bush administration signed a prescription-drug-purchasing law for Medicare, the public health insurance system for seniors, they did not allow the US government to negotiate on price. As a result, the government is on the hook for tens or even hundreds of billions of dollars more than they would be paying with bulk discounts.

    The people trying to undermine Pharmac are not trying to make the system more efficient or equitable, or improve access to specialty drugs. They’re trying to destroy something that has worked extremely well for NZers – i.e. negotiating prices down in exchange for bulk purchases – and replace it with a costly boondoggle straight out of the Bush administration.

    This is not rocket surgery, people. It’s a scam designed to inflate foreign drug companies’ profits at our expense.

    Comment by onreturning — May 16, 2011 @ 2:08 pm

  36. JC wrote: “Australia recognises this dilemna and funds more drugs on the basis of fairness than strict cost or medical efficacy might indicate.”

    Is that equivalent to what we would get in New Zealand if we kept the current Pharmac criteria but gave them more money so that they could extend to funding drugs that are currently borderline in their assessments? or are you talking about something qualitatively different?

    Comment by Kahikatea — May 16, 2011 @ 2:15 pm


  37. Thats right.When you set up an organisation like Pharmac you create two classes of citizens.. those who met Pharmac’s cost and efficacy thresholds for free or subsidised medicines, and those who don’t. This can be pretty dramatic in that if you don’t meet the criteria and cant afford a drug privately.. your life will be shortened, you have to stop work and you have to suffer increasing disability. On the surface Pharmacs decisions are cost efficient and justifiable, but they are a human rights disaster.

    No.

    We saw this with expensive breast cancer medicines, which Pharmac independently reviewed and found to be ineffective for the short period of statistical life they offered sufferers. The state is obliged to provide a level of care for its citizens (in this liberal-democratic society we vote in parties which do so), but the level of care is by necessity restricted. All citizens in New Zealand are guaranteed what is a level of state provision which is high by international standards. The state fulfils its obligations, and contrary to your assertion it does consider disability, quality of life, ability to work and live an active life, and length of life. In this regard it is probably the most evidence based agency in New Zealand.

    A budget, as a state conducts every year, is a form of rationing. Their resources are not unlimited, and they must be spent where they are thought to be most effective. If more expensive drugs with less proven efficacy are to be funded, either the state must take money from other parts of its budget, or raise taxes.

    Comment by George D — May 16, 2011 @ 2:22 pm

  38. “and contrary to your assertion it does consider disability, quality of life, ability to work and live an active life, and length of life. In this regard it is probably the most evidence based agency in New Zealand.”

    That doesn’t guarantee fairness. Take two women who have relapsing/remitting MS, both appear to have exactly the same level of disability and are following the same disease progression.. only one will get free interferons because she had a relapse in the last two years.. the other had a relapse two years and one month ago, ie, outside the qualifying period.

    Australia, the UK and parts of Europe recognise this unfairness and will fund both. Pharmac is doing its job as gatekeeper and cost saver but it is using arbitrary and clearly unfair criteria to determine who gets the treatment. This also forces the argument of access and drug efficacy away from fairness and benefits to the patient to one of arguing about the exact position of the gate posts.

    JC

    Comment by JC — May 16, 2011 @ 2:41 pm

  39. Yes JC you are correct, but Mr Unsworth is not lobbying for increased funding to Pharmac, he’s lobbying for breaking down the regulation surrounding them, to do things like destory thier monopoly purchasing power and make them more suceptable to inproper interferance.

    Comment by Michael — May 16, 2011 @ 2:55 pm

  40. JC, thank you for giving a specific example.

    I don’t know any of the details in this case, and I don’t know anything much about MS either, so I can only presume that Pharmac considered MS, and decided that two years was an acceptable indicator for relapses (also considering the effectiveness of the drug in preventing relapses and its cost).

    Fairness of method will not always guarantee fairness of outcome. If we were to fund to try and approach fairness of outcome (all patients given the best available medicines), we would have a very expensive system. The solution, in this case, may to be to argue from the community consultative group that the cost to the sufferer of not providing this medicine is excessive.

    Comment by George D — May 16, 2011 @ 2:57 pm

  41. “Yes JC you are correct, but Mr Unsworth is not lobbying for increased funding to Pharmac, he’s lobbying for breaking down the regulation surrounding them, to do things like destory thier monopoly purchasing power and make them more suceptable to inproper interferance.”

    and he probably is only doing this to get more money for himself (ie he’s being generously paid to do it) but I can’t see how that makes it any better.

    Comment by Kahikatea — May 16, 2011 @ 2:59 pm

  42. make them more suceptable to inproper interferance.

    Making them more susceptable to improper interference could also be construed as making them more responsive to the community.

    Because everyone’s sister is important to them, the value to that person of a smaller chance of relapse/higher chance of recovery, or of a few months on this earth is essentially infinite. We saw this with Herceptin. When you have a sufferer appealing directly to a Minister, it is very hard to say no without appearing cruel and heartless. Drug companies know this. They also know that it is much harder to tug heartstrings when making submissions to a committee that requires independent evidence about clinically measured outcomes. Hence, words like “inclusiveness” “consultation” “responsiveness” and similar represent real moves to destroy the integrity of Pharmac.

    Comment by George D — May 16, 2011 @ 3:04 pm

  43. If I understand the process, Pharmac, compared to other countries, chooses a winner drug in each category, and funds that drug, whereas some countries fund several in each category. Presumably that means that new drugs have to show improved cost benefit and/or efficacy to become the current Pharmac MasterPill.

    Here’s a discussion paper about similar issues for those that have nothing better to do, and want to dig deeper…
    Review of Access to High-Cost, Highly-Specialised Medicines in New Zealand
    Paul McCormack, Joy Quigley & Paul Hansen.
    http://www.nzdoctor.co.nz/media/34741/review-access-hchs-medicines-in-nz09%5B1%5D.pdf

    Comment by Bruce Hamilton — May 16, 2011 @ 3:06 pm

  44. JC said:

    “is doing its job as gatekeeper and cost saver but it is using arbitrary and clearly unfair criteria to determine who gets the treatment.”

    With any kind of regime that won’t inefficiently blanket fund everything, Pharmac has to have rules in place. It simply has to. Inevitably, in particular cases the application of these rules will have consequences that are unfair on the individuals affected. However, given the funding that it receives, this system treats more people and better than a blanket system, which would have to rule whole types of treatment unfunded rather than determine a single funded treatment (even if that may not be the best for every single case).

    You seem to be saying that because Pharmac has to make difficult choices, it is possibly not superior to the alternatives. That is to place individual instances of imperfect outcomes above the positive impact that it has on the many. Given the limited budget that Pharmac has to work with, it can’t be everything to everyone. It has to be the best it can for the most it can.

    Comment by DT — May 16, 2011 @ 3:08 pm

  45. One of the claims is that we don’t pay our share of drug development.

    Is that true? I frequently see articles about about NZ University researchers and their participation in international studies.

    http://www.nznewsuk.co.uk/news/?id=14332&story=New-cancer-treatment-drug-enabled-by-University-of-Canterbury-research

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10647846

    Comment by Graeme — May 16, 2011 @ 3:23 pm

  46. Pharmac is a state monopoly….and by definition costing we the taxpayers money.If it was operating in an open and competitive market the facts would emerge very quickly and its existence would be short…..like all the other SOE’s and so called “assets”.

    Comment by James — May 16, 2011 @ 5:12 pm

  47. James, actually it’s a monopsony, not a monopoly. It’s certainly not some kind of capital asset, like an SOE. And it does a very good job of forcing a notoriously oligopolistic market to work in a relatively efficient fashion in New Zealand. The taxpayer in NZ spends a lot less on health care in general and pharmaceuticals in particular than in many other developed countries. Especially the US. Nobody here is debating that Pharmac is doing a good job of saving taxpayers’ money. The debate is whether it does so in a fair and equitable fashion (I think that, on the whole, it does and that it’s the best answer anyone has yet found to the rationing problem for pharmaceuticals).

    Comment by Dr Foster — May 16, 2011 @ 5:25 pm

  48. Pharmac is a state monopoly….and by definition costing we the taxpayers money.

    Except that it is not a monopoly – people are free to pay for their own (non-illegal, medsafe approved or “complimentary”) drugs, regardless of efficacy.

    And it is a purchaser of goods/services, rather than a producer. It is not costing the taxpayers anything – the $694 million of taxpayers money it spends on drug purchases (negotiated at bulk rates with the manufacturers) is part of the health budget – to replace Pharmac with ad-hoc purchasing would represent an enormous increase in drug spending and transfer of wealth from NZ into the profits of manufacturers (and, apparently, their lobbyists).

    FM

    Comment by Fooman — May 16, 2011 @ 5:34 pm

  49. If the drugs were complimentary I wouldn’t expect to be paying for them Fooman ;-)

    Comment by insider — May 16, 2011 @ 5:39 pm

  50. Dr Foster,
    Great when people use “monopsony”, we use it so infrequently that Google is triggered!.

    Graeme,
    The claim, frequently made by the “Researched Medicines Industry Association” ( or similar – which may now have been replaced by Medicines NZ? ), arose from the time when Pharmac was proposed.

    The association claimed that the high NZ cost of drugs still under patent included the “research” cost. Hence the name of the Association, their claim was specific to their “researched drugs” they wanted to sell, low NZ prices would be freeloading off USA shareholders who had funded the work for the drug, and paid higher prices for drugs. Trying ti induce a guilt trip.

    The claim was used to justify their higher prices for individual drugs they wanted to sell here, it wasn’t about NZ not doing our own research and development on pahrmaceuticals. The implied threat was that they would pull any research funding in NZ if Pharmac came into being, based on the lower margins they would have to accept.

    I suspect it would be an unusual week if a reputable research entity somewhere in the world did not announce a novel treatment for a form of Cancer. Most founder in Phase Two trials ( proof of efficacy ). New drugs in the USA now are also required to be superior ( reduced side-effects, better efficacy, etc. ) to the the current best-in-class drug.

    Comment by Bruce Hamilton — May 16, 2011 @ 5:54 pm

  51. I remember having a dinner table discussion which included a drug company rep, and watching the outrage on her face when it was suggested that big pharma were price gougers who held society to ransom. “Without them, some of you would very likely suffer from polio right now!” she shrieked. Setting aside for a moment the fact that Jonas Salk perfected the vaccine without the help of big pharma, and then refused to patent it, it was pointed out that the drug companies actually devote themselves enthusiastically to developing so-called lifestyle drugs (think Viagra) while the world continues to wait patiently for a better, cheaper vaccine for malaria, which is really a poor person’s disease.
    Given the concern expressed that NZ doesn’t pull its weight in research, it’s also interesting that the US drug companies spend twice as much on the promotion of their products than they do on r&d (http://www.sciencedaily.com/releases/2008/01/080105140107.htm
    They’re in it just for the money. All this rubbish about free access, more competition and fairer systems is just high priced spin from fancy salesmen like Mr Unsworth.

    Comment by Neil — May 16, 2011 @ 7:20 pm

  52. I don’t know either, but they definitely do – heaps of unsubsidised medicines are registered for sale in New Zealand. One explanation that comes to mind is that they are getting the medsafe registration because that’s the step you have to go through before applying to Pharmac to get it subsidised.

    Yep I had private health insurance through ING while I was in NZ and they had access to Medsafe-but-not-Pharmac medicines. The example they gave there was Herceptin (before the debacle anyway).

    Comment by StephenR — May 16, 2011 @ 8:10 pm

  53. it was pointed out that the drug companies actually devote themselves enthusiastically to developing so-called lifestyle drugs (think Viagra) while the world continues to wait patiently for a better, cheaper vaccine for malaria, which is really a poor person’s disease.

    That representation is not particularly accurate or particularly helpful. It is difficult to think of a large international pharmaceutical company that does not have some kind of partnership or significant involvement with initiatives such as the GAVI Alliance (a global immunizations program), and who does not practice price discrimination. (there are historic reasons why this has all come about, but the involvement of these companies is genuine and sincere.

    They are businesses that seek to make a profit (in developed countries, and on the diseases of the rich), but they aren’t pathological.

    Comment by George D — May 16, 2011 @ 8:21 pm

  54. Kahikatea @36,

    Phamac does a superb job at keeping costs down and yes, it would do a better job if it had more money. However, it isn’t independent as it is the buying agent for its stakeholders.. the DHBs; any extension of its buying power would have to be OKed by them because it would increase their budgets.

    Michael @39,

    I’ve dealt with some of the people in Medicines NZ and would not agree they want to kill Pharmac.. rather the nature of the Pharmac setup means Pharmac have the say on who’s drugs get purchased and probably subsidised from bulk purchasing or made free in some cases. Pharmac is thus in an enormously powerful position and that means a great deal of politicking. It also means the agency stands between doctor/specialist, the client and the preferred drug. That might be OK in many or most cases, but it means that drug treatment is actually determined by Pharmac’s medical and cost criteria.. not that of the specialist and client.. that is a potentially poor ethical outcome.

    George D at 40,

    The MS example shows up some of the dilemmas. Approx 85% of all new diagnosis are the relapsing/remitting kind and *potentially*, all such newly diagnosed would benefit from the interferons.. many dramatically so. Unfortunately we don’t know who will get some benefit, a lot or not at all till we try it and Pharmacs criteria ensures that only about a lucky 10% will be given the opportunity to find out.

    DT @44,

    “Given the limited budget that Pharmac has to work with, it can’t be everything to everyone. It has to be the best it can for the most it can.”

    Good point.. but I’d be much more comfortable if it was mandatory to apply a “burden of disease” or injury to any Pharmac decision. What that means is the agency would have to consider the cost of *not* supplying a drug to the patient and the welfare system. The Australians have done this for a number of diseases to show how a best drug regime can reduce the overall cost to the nation, the individual and the family. The NZ Treasury has a marked aversion to this sort of approach.

    JC

    Comment by JC — May 16, 2011 @ 8:29 pm

  55. JC @ “8.29″ (although its still 7.44 in Kawhia)- re Australia – when they funded the cox-2 inhibitors – were they able to factor in the repressed evidence (repressed by the, surprise, drug company) for their markedly increased cardiovascular risk as a cost for NOT supplying that class of drugs, or was arthritis not one of the diseases assessed for A best drug regimen, like, according to who?

    Comment by John Thomson — May 16, 2011 @ 8:44 pm

  56. “I’d be much more comfortable if it was mandatory to apply a “burden of disease” or injury to any Pharmac decision. What that means is the agency would have to consider the cost of *not* supplying a drug to the patient and the welfare system.”

    You mean a death panel?

    All health systems (even the US’s) have limited resources and need criteria for determining what gets funded and what doesn’t. Pharmac ensures that drugs are available at a comparatively low cost, ensuring that more drugs are available per dollar. Now, you can whine at length about the funding formula they apply, as JC does, (or whine that it’s the government and thus evil, as James does), but that does not mean that the model is wrong, and the agency should go. In general NZ health consumers are well served.

    Comment by Guy Smiley — May 16, 2011 @ 9:18 pm

  57. Now, you can whine at length about the funding formula they apply, as JC does

    I think JC makes a number of good points.

    Pharmac has been the subject of policy consensus for two decades, and for good reason. Undermining and fracturing this consensus is the role of Unsworth Saunders. Labour has a strong duty to make a clear and public stand to restoring the default position.

    Rather than an open policy process, significant concessions are being sought in the context of an international trade agreement. Like the UK, which transfered the role of the sovereign to the cabinet in international affairs, New Zealand does not put its international agreements up for debate by parliament, and they certainly don’t pass select committee. I don’t trust National to put the interests of New Zealanders ahead of the interests of dairy farmers (these interests are not identical, contrary to common belief).

    Comment by George D — May 16, 2011 @ 9:47 pm

  58. There are a few different things in here.

    Pharmac is not a perfect model. As JC points out, it is a rationing model, as other have pointed out it is a bulk purchaser that is used to drive down costs from the (largely overseas-based) drug companies. If you want/need a drug that is relatively standard you’d be pretty happy. If you’re a relatively health taxpayer, you’d also be happy. If you’re someone that falls into one of many categories that Pharmac underserves, you might be much less happy – say someone who is allergic to the particular drug that Pharmac funds, or someone who just misses one of the thresholds that Pharmac set.

    The US system is also not a perfect model. And the larger size of their system, the more lobbyist driven nature of their politics, and the greater rents available to those who manipulate that system, lead to very perverse outcomes. I can give examples of perversity introduced by the Dems as much as the Republicans – I believe the Dems introduced a law that made it illegal for insurance purchases to band together into purchasing groups so as to buy health insurance. Which means that large corporates get reasonable rates for health insurance, but sole traders and small employers have real difficulty getting reasonably priced plans. There are also rules that prohibit sale of insurance across state borders, can’t remember who introduced them. All these things reduce competition. So yes, the US system could do with improvement too.

    Some here seem to be suggesting that it is proven and undeniable that Pharmac is better than all alternatives. I’m not convinced that is true. I recollect an article – perhaps in the economist – that made the point that Health services have two components – the life threatening/emergency stuff, and a bunch of lifestyle stuff. The life threatening stuff should be measured by the health outcomes and dollars spent – it’s reasonable to say that country X spends less than country Y, for better measured health outcomes.

    The discretionary stuff is quite different. It’s like saying that Americans spend far more on holidays than NZers. Yes, they do. Because they’re richer. They also spend on healthcare that in NZ we’d life with – cosmetic surgery, hip replacements, whatever. The point not being that they’re somehow better or worse than us, just that a richer society naturally spends more money on discretionary stuff – and in terms of quality of life, health is a big place people spend discretionary dollars. So, yes the US system is full of flaws, but also some of the measures aren’t entirely accurate either.

    Comment by PaulL — May 16, 2011 @ 10:06 pm

  59. They also spend on healthcare that in NZ we’d life with – cosmetic surgery, hip replacements, whatever. The point not being that they’re somehow better or worse than us

    That isn’t true. The point _is_ that they do perform worse than us ,in terms that are easily measured. Despite spending more on drugs than almost any country on earth, they have the 36th highest life expectancy in the world, compared to our 11th. If they had access to more life extending drugs (cancer drugs, heart attack preventing drugs etc) you would expect an improvement. Instead, they die years younger than everyone else. What you have instead is a healthcare system which diverts resources away from other areas of health, leading to much higher costs and much worse outcomes. Their corrupt system of government has led them this way, because lobbyists like Mark Unsworth are able to channel money and influence.

    Comment by George D — May 16, 2011 @ 10:52 pm

  60. George, I don’t see it as being that black and white. For segments of the population, the US health system I suspect is the best in the world. For other segments of the population, it fails completely (and those segments are largely served by the govt funded bit). Averages cover a lot of ground, and there is a lot of other stuff baked into those averages (for example, gun murders…..). Not everything about the US system is bad, not everything about the NZ system is good.

    Comment by PaulL — May 17, 2011 @ 12:26 am

  61. “…The US health system I suspect is the best in the world”

    Gold Paul. Gold.

    Comment by taranaki — May 17, 2011 @ 11:17 am

  62. from http://www.huffingtonpost.com/2011/05/16/us-healthcare-costs-double-report_n_862677.html

    “U.S. healthcare is so expensive that records are broken even when cost increases slow.

    According to a new report by Milliman, a global consulting and actuarial firm, the total cost of healthcare for the average family of four, if covered by a preferred provider organization, is now a now a record $19,393.

    That might be only 7.3 percent higher than last year’s average cost of $18.074, which is the smallest year-over-year increase in almost a decade. But it’s also the highest year-over-year increase in total dollars spent per family at $1,319.

    Trends over the last decade more completely illustrate the toll taken on the average American by rising healthcare costs.

    “In 2002, American families had healthcare costs of $9,235, and those costs have now doubled in fewer than nine years,” said Lorraine Mayne, Milliman principal and consulting actuary, in a press release. “As costs continue to grow — and even as the cost trend decelerates — the total cost of care for American families constitutes a larger and larger portion of the household budget.””

    Comment by TBWood — May 17, 2011 @ 11:34 am

  63. Nice partial quote taranaki. If you’re rich, there’s nowhere else you’d go for medical care. If I had cancer, I’d go to the US for care, and I’d pay for it. For people who can afford the top end treatment, the success rates in the US are higher than almost anywhere else.

    Also, if we go beyond pure medical effectiveness, we can talk about customer service. The US system (again if you have the money/insurance) actually focuses on the customer experience, rather than purely on medical throughput.

    I’m not suggesting that NZ should rush off and get the US system, as I said it has many flaws. But it is also myopic to decide that the NZ system is perfect the way it is, and that any change must therefore be bad. There are areas where other systems outperform the NZ system, and an ideal system would improve those areas.

    Comment by PaulL — May 17, 2011 @ 11:34 am

  64. Paul, so what you’re saying is that the US system caters well to those with unlimited means, and pretty well prohibitive for anyone else?

    Nice to have that cleared up. You’re welcome to go to the US for your treatment, then. I suspect the rest of us will want to prevent ours from being reformed on a similar model.

    L

    Comment by Lew — May 17, 2011 @ 11:41 am

  65. Paul, you’re concerned about “customer experience”?

    Gold Paul, gold.

    Comment by taranaki — May 17, 2011 @ 11:50 am

  66. “…The US health system I suspect is the best in the world”

    Gold Paul. Gold.

    That is quite the partial quote there.

    Comment by StephenR — May 17, 2011 @ 11:57 am

  67. I tend to agree with Paul on this one. The US health care system is, technically, a very good one, for those who have access to it (although there are issues of excessively high intervention rates in some respects, and iatrogenic illness. Barbara Starfield can be interesting on this). It is just monstrously inequitable and increasingly unsustainable, even for the wealthy.

    As an example of the bizarre workings of the US system: an article in the New York Review of Books last year (I can’t remember the exact reference off the top of my head, but Google should find it) estimated that more political lobbying money is spent in the US by health care interests than by the defence industry. This manifests itself in interesting ways. When Bush Jr extended Medicare Part D coverage for pharmaceutical benefits, the new law included a condition that insurers cannot negotiate on price with pharmaceutical companies. Bascially, pharma firms can name their price for their products. America, the land of the efficient free market…

    Comment by Dr Foster — May 17, 2011 @ 11:59 am

  68. We pay wholesale for our medicine…the Americans pay retail.

    I prefer our business model.

    Comment by Peter Martin — May 17, 2011 @ 12:51 pm

  69. The real issue is that for many years each additional dollar spent on healthcare had a high return on life expectancy and/or quality. However there is no longer as much low hanging fruit (e.g., antibiotics). In economic talk with have diminishing returns to scale. However to the individual receiving care there is no upper bound on what they are willing to pay for each additional year, month, day (how much would you be pay to see your first grandchild etc).

    The US got to this point before NZ and most other developing countries, they also have some different regulatory structures that effect cost, but it is not the regulatory/business structure that is driving up the cost of medical care. It is the cost of the new technology/drugs that provide that extra year, month, day. And an aging population (most health care exenditure is on first and last two years of life). So costs are increasing at the margin.

    New breakthrough research may lower the cost structure and generate higher returns. But for now the health sector is facing similar issues to the issue of aging baby boomers – how do we afford to maintain existing and or new entitlements where costs are increasing at the margin but returns are decreasing at the margin.

    It is a seperate question as to which system has better allocative efficiency (e.g., Pharmac, private insurance, or Canadian model – public funded by private provision). The allocative efficiency will depend on different value preferences.

    What does matter is the long run question (decreasing marginal returns) rather than the short run issue of allocation.

    Note in essence Pharmac is simply a Utilitarian allocation mechanism. That can be ok so long as your happy with the trade-offs.

    Comment by WH — May 17, 2011 @ 1:40 pm

  70. So, I do think there are things we could learn from the US system. The US system is broken in many ways, and works well in others. Would the US system be better if it did allow bulk purchasing of insurance, if it did allow bulk purchasing of drugs, if it didn’t have ludicrous liability laws for doctors, if it did allow cross state provision of care? Would that system be better than the NZ system? We don’t know.

    I do care about customer service. Most hospitals are geared for throughput. If you get through your 100 patients a day, it doesn’t matter if they wait 2 hours, even 12 hours in the waiting room, and 3 weeks to get an appointment. Because there is no price put on patient time. It is possible to be more efficient with patient time without changing outcomes, throughput or any significant impact on cost. But our system doesn’t care about patient wait times, so nobody does anything about it. This customer service all turns into productive hours lost from the economy, and from people’s lives. So it’s a net drain on the country, but we don’t measure it and so don’t care. In a more private/consumer driven model, you’d see a change in focus.

    Comment by PaulL — May 17, 2011 @ 2:10 pm

  71. Nice try Paul. We’re talking about Pharmac who Unsworth is being paid to lobby against, not other parts of the US health industry which yes, might just be better or worse for those who can afford it. We have quite enough respectable international evidence about the relative cost-effectiveness of Pharmac and of our overall health system. And the wealthy in New Zealand are already free to make other arrangements at their own expense (eg: Lloyd Morrison) if you’re worrying about their interests being thwarted.

    Comment by Sacha — May 17, 2011 @ 2:48 pm

  72. I’m going to file this alongside right-wing wank about left wing activists destroying “their OWN COUNTRY’s economy”.

    Comment by Hugh — May 17, 2011 @ 2:57 pm

  73. On the topic of lobbyists, which firm represented the US Record Companies during the development of the recent file-sharing laws?

    Comment by Graeme — May 17, 2011 @ 7:31 pm


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