How does the operation of PHARMAC's 'Community Exceptional ...

The Commerce Act gives protections and opportunities to test the fairness of
the commercial and retail market by injunctions and other legal remedies.
These legal proceedings can be taken by persons or organisations likely to
suffer damages by reason of contravention of the Commerce Act. The
Commerce Commission 30 is established as an independent authority to protect
the consumer from price-fixing and other anti-competitive behaviour.
The Commerce Commissioner must provide surveillance and vigilance,
watching trading companies and professional bodies to ensure they all act
within an agreed set of rules. The Commerce Commission has considerable
remedies available to it to redress any breaches of the Commerce Act. The
RMI claimed that these remedies have been swept away by excessive breadth
and width of the immunity provisions provided to PHARMAC in Clause 6 of the
NZPHD Bill.
The submission made by the Royal New Zealand College of General
Practitioners also made the point that the Bill should more clearly state that
PHARMAC’s objective was to achieve quality patient outcomes and not only
price control (PB/ 14 The Royal NZ College of General Practitioners, 2000).
The owners and managers of New Zealand private hospitals, the New Zealand
Private Hospitals Association (NZPHA) agreed with the RMI that the exemption
from the Commerce Act should be limited and only available to transactions
between the DHBs and public health organisations, by application to the
Commerce Commission (PB/57 New Zealand Private Hospitals Association,
2000). Lexchin and Caygill (2000) submitted that in relation to the argument of
whether PHARMAC should have a wide or narrow exemption, that “economic
efficiency is not the only goal of the Commerce Act” (Lexchin & Caygill, 2000).
They described their belief that economic efficiency was a desirable outcome
from competition and health equity outcomes, in relation to pharmaceuticals, as
also important. Lexchin and Cagyill’s submission pointed out to the Select
Committee that the Commerce Act seeks to promote competition, by prohibiting
contracts or arrangements that substantially lessen competition. The misuse of
a dominant position in the market does not necessarily create or prevent
30 The Commerce Commission is a legal entity with significant powers to investigate and remedy anticompetitive trade
practices. The Commission’s website is http://www.comcom.govt.nz/
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