VZCZCXRO8032
RR RUEHNZ
DE RUEHWL #0481/01 1732345
ZNR UUUUU ZZH
R 222345Z JUN 06
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 2939
INFO RUCPDOC/USDOC WASHDC 0064
RUEHNZ/AMCONSUL AUCKLAND 0807
RUEHBY/AMEMBASSY CANBERRA 4461
RUEHDN/AMCONSUL SYDNEY 0450

UNCLAS SECTION 01 OF 02 WELLINGTON 000481 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS USTR-JJENSEN 
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