28 May 2019

Guyon Espiner investigates Pharmac: The NZ Buyer’s Club

3:43 pm on 28 May 2019

Guyon Espiner reveals how lung cancer patients are buying cut-price drugs from India, as other New Zealanders fundraise, petition and apply for clinical trials to access medications Pharmac won't fund.


Baden Ngan Kee has kept himself alive by sourcing cut-price medicines from India. Photo: RNZ / LUKE MCPAKE

This is the first story in a four-part investigation into how Pharmac works and whether its model is costing lives. You can read Part 2 here: Pharmac's secret list. The third story is here: Pharmac switches epilepsy drug against Medsafe advice. The fourth story is here: diabetes drugs 'third world' - doctor.Listen to Guyon Espiner discuss this investigation here: Drugs and Money

Baden Ngan Kee edges down the stairs using a black cane topped with a jaguar's head fashioned from silver. He opens the office door leading out to an industrial car park, gives a firm handshake and collapses to the ground.

When he was diagnosed with lung cancer he was given six months to live. That was three years ago. His business savvy has kept him alive. Ngan Kee has been sourcing cut-price medicines from India. They are drugs that would cost $10,000 a month in New Zealand and he's been importing generics, sometimes for as little as $600 a month. Pharmac won't fund the medication for lung cancer patients.

At first, he just sourced them for himself, using drug mules to bring in high- powered pain killers and then modern cancer medicines. Now he helps dozens of other cancer sufferers around New Zealand - hooks them up, refers them on, sorts them out.

It's like something out of Dallas Buyers Club, except we're at his place of work. Baden has fallen at the bottom of the staircase at FoodStuffs, Mt Roskill in Auckland, New Zealand - a country at the bottom of the developed world for access to medicines.

He gets up again, with help. But how many more times?


Do you fancy your chances? You're not going to get sick and need medication, are you? That's good, because in New Zealand if you do, you may need to be patient, lucky, rich, or at least resourceful.

New Zealand spends less on medication per capita, waits longer to buy new drugs and registers fewer new medicines than almost any other nation in the OECD.

Unlike other developed countries, New Zealand puts a ceiling on its medicines budget, and drug buying agency Pharmac is very disciplined: In 26 years of existence, it has never breached its spending cap.

That spending level, by international standards, is low. Pharmac admits we cut it lean with funding medicines but seems to treat that as a badge of honour; the agency highlighted the fact on page two of its briefing for the incoming Health Minister David Clark, with a graph showing New Zealand just above Mexico in its spending on medicines - second last in the OECD.

Yet, Pharmac plans to save $200 million over the next five years and that money, according to Treasury documents, will be "re-prioritised" to the rest of the health system.

With the funding cap and "savings" being funnelled away from drug buying, each time Pharmac needs to free up money to spend on new drugs, it must do so by spending less money on the drugs it is currently funding.

It means New Zealanders can face long waits for new drugs, or never gain access to them at all.


Baden Ngan Kee knows just how desperate that makes people. "I get phone calls, I get text messages, I get instant messaging. It's always the same story. I understand you are able to get medication from India. Can you help me please?"

At first he rejected the approaches, wanting to keep his contacts confidential, but as he became more familiar with the process and the business owners, his confidence grew.

"So I've been referring people to these websites, introducing them to the owners, telling them the process of bringing them in. I've had so many people say, 'Thank you Baden. Thank you for helping me where Pharmac can't'."

But Ngan Kee himself is running out of options. The drugs he needs now, as the cancer marches on, need to be processed in a sophisticated machine which he can't get access to. And he's running out of money.

"I'm coming to the end. They call it financial toxicity. I've got medical toxicity - pain in my back and my head and everywhere - but I've also got financial toxicity. It is so unfair that people with cancer have to think of both sides. You'd like to think that there would be something in the system to look after you after 55 years," he says. "But there isn't."

Before he started buying the drugs, he wrote down a number and put it in a drawer: It was his spending limit, and he promised himself he wouldn't exceed it. He's nearing it now.


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Lung Cancer Foundation CEO Philip Hope says Pharmac's system is 'systematically allowing people to die prematurely'. Photo: Supplied

Ngan Kee's hustle doesn't surprise Lung Cancer Foundation chief executive Philip Hope. He says patients who need drugs parked on Pharmac's funding waiting list are increasingly bringing in generics from India and sometimes Bangladesh. He doesn't like to promote the practice but understands the desperation.

Lung cancer in New Zealand kills 1900 people a year - more than breast cancer, melanoma and prostate cancer combined. Yet Pharmac spends just $2.7 million on the three most expensive lung cancer drugs, out of its budget of nearly $1 billion.

"We were horrified when we saw how low that really was," says Hope, who has lost two of his whanau to lung cancer and believes New Zealand has a "third world approach" to treatment.

At least six lung cancer drugs are sitting on a Pharmac list waiting for funding.

Pharmac did begin funding Pemetrexed for lung cancer in 2017, but that was nine years after its funding application and 13 years after it was funded in Australia. Hope estimates the long delay in funding the drug meant 15,000 patients missed out or had to pay for it themselves.

"It's almost like we are systematically allowing people to die prematurely," he says.

He describes a two-tier system. "Our Māori and Pacific communities, many of them just go home to die. They will have chemotherapy and just go home to die. It's as simple as that," Hope says. "Other patients who have more information or more resources, they will try and fundraise."

If Ngan Kee's hustle seems difficult, fundraising isn't simple either - patients are entering a crowded market. There are hundreds of Give a Little pages in New Zealand set up by people begging for medicine money.

Other desperate patients try to get on clinical trials or compassionate schemes offered by pharmaceutical companies. Most pharmaceutical companies in the country now have Kiwis on compassionate schemes, including US biotech company Sanofi Genzyme who has put New Zealand patients on a scheme, often reserved for developing companies, to fund the drug Myozyme to treat Pompe Disease. Pompe is a rare and often fatal condition which leads to a build up of the complex sugar glycogen, which then damages organs and tissue throughout the body.

While there are about 10 adults with Pompe in New Zealand, Pharmac won't fund Myozyme for adults. It has funded it for infants since 2016, but the catch is, there are no infants with Pompe in the country. So despite announcing this as one of the new drugs it funds for people with rare disorders, Pharmac is not actually spending any money on it.

There is a petition before Parliament asking Pharmac to fund Myozyme for adults with Pompe. And that's another option for desperate patients - petition Parliament, however that's a crowded space as well. There are eight petitions before Parliament calling for 26 treatments to be funded, from cancers to rare disorders, all pleading for funding from Pharmac.



Pharmac CEO Sarah Fitt admits NZ doesn't offer as many medicines as other countries but says that's because Pharmac is smarter. Photo: RNZ / LUKE MCPAKE

What does Pharmac chief executive Sarah Fitt make of people taking desperate measures to fund their own medicine? "I don't think it is a two-tiered system," she says.

"We have to make the decisions about what are the best uses of the medicines we've got. If people choose to go and fund medicines themselves then that is their choice … It's like having elective surgery on insurance - you can choose whether to do that rather than going to the hospital system."

But what if you are a low-income earner? "Yeah, that's not going to be a choice. Absolutely," she says.

Fitt concedes that New Zealand does not offer as many medicines as other countries but claims that Pharmac is smarter. "Funding more medicines doesn't necessarily improve health outcomes. You could find five medicines in the same class that are very similar, you might only need to fund one or two. And that's the strategy that we take."

Is she saying New Zealand knows something other nations don't, and that they are wasting money on these drugs? "Well, that was certainly one of our conclusions when we looked at the comparison with Australia that we did a couple of years ago. You could be spending a lot more money but actually not gaining a lot of additional health outcomes."

When it comes to lung cancer, she says patients often present at a late stage of the disease. "Treatment for cancer isn't all about medicines. It's about screening. The most effective things to manage cancer are screening, diagnosis, radiotherapy and surgery. Medicines make up about 8-10 percent of cancer control."

But Chris Atkinson, an oncologist and the medical director of the Lung Foundation, says many of these new precision cancer medicines are showing remarkable results. While the drugs won't cure them, they are buying them time.

"Every day I'm involved in the care of patients who are giving me cheek two or three years down the track, who presented with disease widely spread from the primary cancer. When you repeat the imaging in response to some of these drugs that are self-funded they don't have any imagable, active cancer."

He says that across all types of cancer, Australia has 55 drugs that New Zealanders can't get, and for lung cancer alone, up to seven more drugs. "We are so far behind that it is starting to become embarrassing and this is inequitable in a country that believes in fair play."

Atkinson says he is aware some patients are bringing in drugs from overseas themselves but cautions that they may not be what they pertain to be and they need to be properly administered. "You could summarise that sort of approach in one word; desperation."

Talk to Fitt about New Zealand's low spend on drugs and she shows pride in Pharmac's negotiating tactics: "Well, we would say we get very good pricing. We pay very, very low prices for a lot of our medicines compared to a lot of countries around the world. So our generics, for example, we can be getting 90-95 percent discounts on medicines."

So what about lung cancer drug Pemetrexed that Pharmac funded in 2017, 13 years after it was funded in Australia. Did Pharmac simply initially get it wrong on that one? "No. It was never declined. It was there waiting to be funded on the evidence, for the price that was being asked."

82856191 - different pills on the table

Photo: 123RF

So Pharmac just wasn't prepared to pay the money for it? "Well, there's always things that are higher up the list to be funded."

How does Pharmac decide what should be funded and in what order? What is the value of a life? Treasury has a number for that: It puts the economic value of a life is $4.7 million. Pharmac isn't nearly so specific.

Some countries, such as Britain, use a system whereby if you meet a certain threshold of benefit it will fund the drug. They use QALYs or Quality-Adjusted Life Years. QALYs measure the length and quality of life. In Britain, the drug-buying agency funds a medicine if it works out at about £30,000 per QALY gained.

Pharmac doesn't have a specific level of health benefit which triggers funding. It looks at four areas, the so-called 'factors of consideration' - the need, the health benefits, the costs and savings and the suitability of the medicine. But Pharmac itself says the factors "are not weighted or applied rigidly" and that "not every factor is relevant for every funding decision" it makes.

Critics, including the Breast Cancer Foundation, say Pharmac's decision making is "veiled in secrecy" and because there are no published minutes of meetings where medicines are ranked, the whole process is opaque.

"It's a very dynamic process," is how Sarah Fitt puts it. "The medicines get funded, we find new savings, things are moving up and down the list all the time."


What remains constant is Pharmac's fixed yearly budget cap. Ngan Kee has his fixed cap too. "The oncologist said write the number on a piece of paper and put it in the drawer. I asked him, 'What usually happens?' And he said, 'People will want to spend more but they won't.' That's where I am at. I want to spend more but I won't."

The number in the drawer was $150,000. That's what he's spent. It's an eye-popping number but the haggling and hustling required is more extraordinary. A lot of his budget has gone on Osimertinib (there is a petition before Parliament for Pharmac to fund it). It costs about $10,000 a month in New Zealand, though Baden sourced it for $5000 from India and then got a generic for $600 a month.

He managed to get access to a mass spectrometry machine to test the efficacy of the drugs he was importing. "The drug companies won't allow you access and the DHBs won't allow you access to the machine. So I had to find my own way of doing it and I did it in New Zealand but I can't tell you how. But I'm confident. And since then, I've been able to refer a lot of other lung cancer patients to the generics."

He's helped breast cancer and colon cancer patients as well as lung cancer sufferers. He says most of the time the drugs make it through Customs in India and New Zealand with a letter of compassion explaining the medications are for personal use not distribution.

So is what he's doing legal? "Um, I'm not sure but I assume it will be. Yeah, I can tell you how to get it through Customs. I can't tell you whether it is legal because I don't know the copyright situation. That is where they'd pull you up."

It's Ngan Kee who needs to be pulled up today, physically. He's been falling a lot lately and today was a big one. The cancer is taking its toll.

"I asked one of my nurses when I was having an infusion: what happens to all those patients who can't afford the medications, who can't get access to it? And the nurse simply said to me, they die. They die. So that mobilized me to do something to help them."

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