Evidence of meeting #42 for Health in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was pharmac.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Matthew Brougham  As an Individual
Heather Roy  Chair of Board, Head Office, Medicines New Zealand
Graeme Jarvis  General Manager, Medicines New Zealand

12:45 p.m.

Conservative

The Vice-Chair Conservative Len Webber

Thank you, Mr. Kang.

We'll quickly move on to our Conservative colleague, Dr. Carrie, for five minutes.

12:45 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

Thank you very much, Mr. Chair.

I want to thank the witnesses for getting up early and being with us, as everyone says.

I want to move along this line of questioning about costs versus quality. I believe, Heather, you said that you had been an MP, so you were sort of in that situation that we see ourselves in. We talked about the concern about balance, getting the best outcome for a limited budget and the best return on investment. I guess that's okay, as long as you're not the person who needs the innovative medicine.

You mentioned melanoma. I think to myself, what if I was a New Zealand citizen who had paid for my whole life into this system for pharmaceuticals, but when the day came that I needed an innovative drug, I couldn't get it? In Canada, we have a very vibrant private sector insurance industry. We have vibrant generics and name brand industries.

Do you have any data on people who can't get these innovative drugs? Have you ever had a lawsuit? As I was saying, if I'm part of society down there and I've paid for this entire system my entire life, and then some bureaucrat makes a ruling that I can't have that drug, what do I do if I'm a New Zealand citizen and I need treatment?

12:50 p.m.

Chair of Board, Head Office, Medicines New Zealand

Heather Roy

We don't have lawsuits, for two reasons. First, Pharmac has an exemption from the Commerce Act, so there aren't lawsuits—company versus Pharmac—for that reason. We also have a public insurance-based system called Accident Compensation that deals with accidents only, not illnesses. That system was put in place also to prevent lawsuits from being prevalent in New Zealand. They're not impossible, but they tend not to happen.

With regard to your comment, it's very hard to get data on who's missing out. It's much easier to get data on who is taking medicines, but that leaves a big gap in terms of how many people are missing out.

In the absence of data, we measure how much noise there is out there in the community about people who are not getting access. People think we have a pretty good system, by and large, until they or somebody very close to them develops a disease and is presented with a lack of access to something that their doctor knows would help them with the illness that they have by treating them or curing them. We have had some pretty high-profile public cases in which patients have taken petitions to Parliament, stood on the steps of Parliament. Recently we had a case of melanoma treatment where that exact thing happened. That person's just been awarded the New Zealander of the Year title for 2016.

There is disquiet out there. Many of the patient groups are very vocal and lobby hard because of the lack of access to drugs that they know they would have automatic access to if they lived in Australia, Canada, or the United Kingdom.

The balance is really important. I would like to see much greater transparency around the Pharmac decision-making process, and we would like to see government committing more to the amount of funding that they allocate to Pharmac for pharmaceutical funding.

12:50 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

I find your comments interesting, because in Canada I do have the right as a citizen to purchase private health insurance for pharmaceuticals if I so wish.

Just out of curiosity, from an industry standpoint, I guess, does the private insurance industry for pharmaceuticals down there employ a lot of people? Do you have an industry? I know you have name brand companies down there, but do they actually do a lot of the innovative research in New Zealand, or are you more just purchasers?

It's the same with the generics in Canada. In my community, we have a company that not only does generic manufacturing, but also does research and development, and there are jobs that are included with that. Does New Zealand have that industry that helps the economy overall, or is it pretty much just buying, and that's about it?

12:50 p.m.

General Manager, Medicines New Zealand

Dr. Graeme Jarvis

We are a net importer of pharmaceuticals. Back in 1990 we had two or three domestic New Zealand companies that were mainly generics companies, but one of those companies no longer exists. The other one is a net exporter of generics out of New Zealand. It changed its model in the 1990s. It had to, to be quite frank—I talked to the then owner, who unfortunately has passed away—because of the Pharmac model. Perversely, then, a New Zealand-based generics manufacturer is a net exporter as well.

Our industry nevertheless does have a better economic impact in New Zealand—we just completed a study on this—because they invest in research and development and clinical trials and because they buy raw materials. We've shown that over the past few years, $380 million of goods and services were purchased by our member companies, and the GDP impact from our member companies per annum was $384 million.

Even though we're a net importer in New Zealand, the industry thus still has quite an economic contribution to make. For every person who is working in the industry in New Zealand, another nine New Zealanders are in active employment or partially in employment because of this. The economic multiplier is quite significant from an industry. I'd love to see a bigger domestic industry, but as I've indicated, there are some strong headwinds facing that goal at the moment.

12:55 p.m.

Chair of Board, Head Office, Medicines New Zealand

Heather Roy

None of our member companies manufacture in New Zealand—that all happens offshore—but there are a number of clinical trials done. One tricky thing for them is that they have ethical dilemmas around.... There's never any hope of having our products funded, should we even bother with registering them in New Zealand, and that's problematic, because it means that clinicians have no access to those medicines, even for the private market, should they want to prescribe them.

12:55 p.m.

Conservative

The Vice-Chair Conservative Len Webber

Thank you, and thank you, Mr. Carrie.

We'll move quickly on to our friend John Oliver, of the Liberal Party.

12:55 p.m.

Liberal

John Oliver Liberal Oakville, ON

Thank you very much.

Thank you for your testimony. I want to continue on that line of questioning, to make sure I understand this.

You cited a number of delays whereby people in New Zealand aren't able to access certain drugs that would be available in Canada today. Is there a means for people of means to acquire those drugs? Can people leave New Zealand, buy them, bring them in, and continue with their treatments? Is there a private insurance sector in New Zealand that insures people for drugs that aren't available through Pharmac?

12:55 p.m.

Chair of Board, Head Office, Medicines New Zealand

Heather Roy

Our private health care is pretty tiny. About 30% of New Zealanders take out private insurance of some type, but that's predominantly—

12:55 p.m.

Liberal

John Oliver Liberal Oakville, ON

Is that for pharma?

12:55 p.m.

Chair of Board, Head Office, Medicines New Zealand

Heather Roy

No, it's not for pharma; it's predominantly surgical coverage. I think the biggest private insurer allocates a small amount of funding for pharmaceuticals.

12:55 p.m.

Liberal

John Oliver Liberal Oakville, ON

Isn't there a big public demand, then, for private insurance, and for pharma specifically?

12:55 p.m.

Chair of Board, Head Office, Medicines New Zealand

Heather Roy

It's not an offering. I think there is a demand, but it's not an offering.

12:55 p.m.

Liberal

John Oliver Liberal Oakville, ON

Are there any laws prohibiting private insurance from—

12:55 p.m.

Chair of Board, Head Office, Medicines New Zealand

12:55 p.m.

General Manager, Medicines New Zealand

Dr. Graeme Jarvis

They tend to cover copayments sometimes for Pharmac-funded medicines. Some of the private insurers, to be honest, have started to invest or have special packages for cancer treatments for melanoma and other things, but these are additional, on top of the system proper—

February 14th, 2017 / 12:55 p.m.

Liberal

John Oliver Liberal Oakville, ON

I only have a few minutes left, so I'm going to keep moving you along. I apologize for seeming rushed at the end of your testimony.

For my second question, I'm curious about the political discourse in New Zealand around pharmacare and what you're doing. The National Party is probably right of centre, and the New Zealand First party is probably further right.

In Canada we have probably 200-plus private insurance companies. If you're not insured through a public system, then you're on your own, pretty much, through employers or through private plans. Is any political party in New Zealand pushing to go back to that kind of fractured private insurance model, or are all the parties focusing on how to do a better job of delivering the national pharma model?

12:55 p.m.

Chair of Board, Head Office, Medicines New Zealand

Heather Roy

The latter was the case in New Zealand.

12:55 p.m.

Liberal

John Oliver Liberal Oakville, ON

Nobody is pushing to replicate what we're doing in Canada and to have huge parts of our population uninsured and uncovered in a very much discombobulated sort of marketplace.

12:55 p.m.

Chair of Board, Head Office, Medicines New Zealand

12:55 p.m.

Liberal

John Oliver Liberal Oakville, ON

I noticed in your values that you said you recognize the fiscal pressures of providing health services and that you offer solutions before criticism, so I am curious: what have you done through the large pharma companies that are behind you? What are the top things you've recommended as solutions to some of the problems you've identified today?

12:55 p.m.

General Manager, Medicines New Zealand

Dr. Graeme Jarvis

A lot of it has been just to open up the discourse. Quite clearly the companies have asked for transparency in the Pharmac decision-making process. They would be comfortable, I think, Heather, if they were able to sit there when the decisions were being made, to hear that their medicine hasn't been funded for the following reasons. There are delays even in getting those decisions out to them, and time is a pressure for everyone in business.

Those are the sorts of solutions that we've asked for, improvement in the actual processes. I think even politicians in New Zealand from all different parties have also seen that a simple solution is actually to fund it at the correct level. Have we gone too conservative in the way that we actually fund the medicines? I think today we've talked about the evidence that indicates we may have.

Just getting the funding equation correct is a problem for every government, and we want to be part of that solution.

1 p.m.

Chair of Board, Head Office, Medicines New Zealand

Heather Roy

The ultimate solution is having a population that is well, so that everyone is able to care well for their families and everybody in work. When you're sick and you can't get the cures that you need to allow those things to happen, you have a problem. The current government actually has a very active program about getting people back to work and making sure that wellness rather than treating illness is a focus.

1 p.m.

Liberal

John Oliver Liberal Oakville, ON

In regard to the slowness in bringing in some of the new diabetic treatments and some of the new cancer treatments that you've described today, do you view that as budgetary constraint or do you view it as a slow bureaucratic process in Pharmac? What do you view as the reasons it is not more timely? Have you provided any recommendations to Pharmac on how to improve the timeliness?

1 p.m.

Chair of Board, Head Office, Medicines New Zealand

Heather Roy

The short answer to the question is yes. I think there are a number of factors, both budgetary and operational.

Around timeliness for our companies, Pharmac doesn't have to make a decision. It doesn't have to say to a submission that's made, “Yes, we will accept this and fund your new medication” or “No, we won't”. One of the things we have pushed long and hard for is to have timelines in place so that if the answer is no, a company can stop negotiating with Pharmac, which is a very time-consuming thing, and just move on to whatever is next in the pipeline.

Pharmac has been very resistant to putting any sorts of timelines in place at all. We believe that if you can't get to the point where your negotiation is complete in 18 months, you probably don't have something that's worth negotiating over.

Pharmac likes stringing these negotiations out for longer because the patent period during that time becomes smaller, and if they do eventually decide to fund something, the cost isn't going to be so great.