New Zealand is opposing the pharmaceutical provisions tabled by the United States, which would require governments to “appropriately recognize the value of the patented or generic pharmaceutical products or medical devices” when setting reimbursement rates.  According to Inside U.S. Trade, New Zealand has said the provisions are unacceptable unless the United States agrees to apply them on a reciprocal basis – but the language tabled by the United States attempts to carve out its state and local programs (notably Medicaid and the “340B” program, which serve low income Americans).

The text proposed by the United States applies to  healthcare programs in which “a Party’s central level of government make the decisions regarding matters to which this Chapter applies.”  There is a “Clarifying footnote regarding scope of application,”  and a similar section of the Korea-US Free Trade Agreement explicitly carves out Medicaid by identifying it as a regional, not federal, government entity.  As written, the TPP language would affect New Zealand’s PHARMAC program – long criticized by multinational pharmaceutical firms for providing low reimbursement rates – while attempting to shield American programs that provide discounted medicines through the public sector.

U.S. state government officials have written the Obama administration, asking for protection from these types of provisions.  For instance, last June Vermont Gov. Shumlin wrote:

U.S. Federal government agencies and state governments use the same policy tools as foreign governments for public medicine purchasing and reimbursement, and they pay similar prices…  Even if a chapter was proposed that did include a Medicaid carve-out, state leaders believe it is inappropriate for U.S. trade policy to advance restrictions on pharmaceutical pricing programs that U.S. programs do not meet but for technical carve outs.