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

Lexchin and Caygill point out that there have been eight 31 occasions where
international pharmaceutical companies have bought legal proceedings against
PHARMAC in the New Zealand courts. All of these cases were successfully
defended by PHARMAC. None of these claims could have been regarded as
vexatious (Lexchin & Caygill, 2000). Whilst defending court actions taken
against it is not a particularly desirable use of public money by PHARMAC,
equally as a Crown Agency it should not resile from the need to publicly defend
its actions. In light of this, it would not seem appropriate that PHARMAC should
be protected from this normal level of legal jeopardy. If the government were to
provide PHARMAC with an extraordinary level of legal protection this would
create the impression that they are entitled to act in ways that lie outside that
which would be considered normal commercial dealings by the Courts.
Past legal actions cannot be a predictor of what would have happened if the full
exemption from Section II of the Commerce Act had been removed. This is
because the previous actions were taken under the protection of the Commerce
Act. PHARMAC may not have fared so well in the nine legal challenges if the
full force of Section II of the Act had been directed at it.
PHARMAC argued that the public benefit of saving public funds from litigation
costs outweighs any detriment to the pharmaceutical companies and the
detriment to side stepping the controls of the Commerce Commission.
This Royal Australasian College of Surgeons (RACS) also complained that by
the Bill granting immunity from Part II of the Commerce Act, the government
owned public health services were taking an unfair advantage over private
health providers.
The RACS submitted that they considered this (immunity) has the potential to
disadvantage private providers of publicly provided services. This would result
in decreased availability of privately provided health services and cause a
higher cost of publicly provided care 32 . The College would regret such an
outcome and suggested that private providers of publicly funded services, such
as themselves, should also be exempt from the provisions of the Commerce Act
31 Prior to the year 2000.
32 See ‘Rent seeking’ on p40
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