18 Apr 2024

Pharmac's perpetually stretched budget

From The Detail, 5:00 am on 18 April 2024

Pharmac holds the keys to New Zealand's medicine cabinet, and what it dishes out is never enough.

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Photo: RNZ/Vinay Ranchhod

Close to 3,500,000 prescriptions for paracetamol are written in New Zealand every year. 

It's just one of the treatments funded by Pharmac, the drug agency that barters with pharmaceutical companies to get medicines for us at the lowest cost possible. 

Currently its yearly budget is about $1.5 billion, but apparently that's still not enough, with over 130 treatments on its Options for Investment list. That's a wish-list of drugs and medical devices that it would like to fund but can't stretch to. 

These treatments are listed in order of importance, but the list isn't available to the public because Pharmac says it's commercially sensitive.

Doctor David Hughes is at the table where decisions are made and explains why it's kept private.

"If you're a supplier and you knew that you were number one on our list, you might not be particularly interested in negotiating a better deal," he says.

Hughes says there's a commercial tension, because Pharmac aims to buy as many medications as it can for the maximum number of New Zealanders. 

He says being able to vigorously negotiate with suppliers is key and any advantage it can get is good. 

But for friends and whānau or indeed individuals who are waiting for something on that list, being left in the dark only increases the anxiety about waiting for treatment.

Over the years several groups, organisations and committees have spoken out against Pharmac.

Even the former Health Minister Andrew Little publicly hit out at the drug buying agency stating "the days of the independent republic of Pharmac are over," following a scathing review into the body in 2022.

But Hughes defends Pharmac saying it has an extremely detailed review process, seeking expert advice from over 20 advisory committees, many of which are specialised in specific health need areas such as mental health, diabetes and cancer treatments.

"The journey to funding has many stages, some of which may be repeated as we get new advice or information. All of the process has clinical advice and critical appraisal of evidence at its core," he says. 

Pharmac considers funding medications through its Factors for Consideration framework, looking at need, health benefits, cost and savings and suitability through the lens of the individual, their whānau and the wider community. 

For example, if the existing treatment is an IV infusion, someone would have to go into a hospital or a day unit to get it. If the new treatment is a tablet that can be taken at home, Pharmac takes into account the reduced costs to the health system, the reduced time and impact on family and caregivers and the individual.

"But we still need to balance the budget and get the best health outcomes that are reasonably achievable from within the funding provided," Hughes explains. 

However he does understand it is frustrating for those who are living with an illness and are waiting for funding. 

"When people are experiencing loss or pain it's difficult not to just look at Pharmac and say, 'give me my medicine'."

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