Includes the barriers (tariff and non-tariff) that U.S. companies face when exporting to this country.

The U.S. pharmaceutical industry has voiced strong concerns over access to New Zealand’s pharmaceutical market, in which the Government of New Zealand is the primary purchaser of pharmaceuticals in the country.  Some U.S. pharmaceutical companies have even left the market or substantially scaled back operations since the Pharmaceutical Management Agency (PHARMAC) was created in 1993.  PHARMAC administers the Pharmaceutical Schedule of over 2,000 medicines, which lists medicines that are entitled to subsidies from the New Zealand Government.  It also manages the Exceptional Circumstance program (medical funding for people with rare conditions).  In 2010, PHARMAC’s role was significantly expanded to buy hospital drugs (which formerly were done by district health boards) and some medical equipment.  Within the budget, which is set by the Minister of Health, PHARMAC essentially decides what medicines to fund, negotiates prices with pharmaceutical companies, and sets the subsidy levels and conditions. 

Industry representatives criticize PHARMAC’s lack of transparency, timeliness, and predictability in the reference pricing process and the onerous approval processes and delays in reimbursing new products.  Combined, these issues create an unfavorable environment for innovative medicines.  While New Zealand does not restrict the sale of approved pharmaceuticals that do not receive a pricing subsidy, most private medical insurance companies will not cover the cost of these medicines and doctors are often reluctant to prescribe them.  The small market size for private purchasing of pharmaceuticals outside of PHARMAC makes it unsustainable for pharmaceutical companies to rely solely on this market.  When PHARMAC declines a pharmaceutical on a sole supply tender, the company is essentially excluded from market access in that therapeutic area.  (Note:  Sole supply tendering occurs when PHARMAC funds a company to supply 100 percent of the New Zealand public market.  The period of the sole supply tender may last for years.  There is no right to view the basis for the decision or appeal the decision.) PHARMAC also uses a rigidly capped budget to fund both growth in volume of existing medicines and the purchase of new medicines.   As a result, the budget relies on savings on existing medicines to fund the inclusion of new innovative medicines, which in practice severely restricts the entrance of new medicine.
   
Because of such concerns, PHARMAC has said that it is working to improve transparency and increase stakeholder involvement in its processes.  The pharmaceutical industry has also reached out to partner with the government of New Zealand and other stakeholders in achieving better provision of quality medicines, as well as better health and economic outcomes. 

The Patents Act 2013 does not contain provisions for patent term restoration.  This is not in keeping with international best practices.  Industry estimates say that the regulatory approval process for new drugs in New Zealand is approximately three years after the date of approval in the country of first launch.  Entry into New Zealand’s market is also delayed by the timeliness of the PHARMAC approval process, which is essential to make the market viable for pharmaceutical companies.  As such, New Zealand will not have a mechanism to restore patent terms for pharmaceutical products to recover lost time from the regulatory approval process.

Prepared by the International Trade Administration. With its network of more than 100 offices across the United States and in more than 75 markets, the International Trade Administration of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.