
Medicines NZ recently launched a report highlighting that New Zealand is behind the rest of the world in funding medicines.
The Stuff.co.nz article by Gianina Schwanecke, “Time taken for Pharmac funding decisions ‘too long’, says Medicines NZ” implies Pharmac cannot make decisions. The article misses the point, the delay in funding medicines in NZ is purely down to one thing, Pharmac does not have enough money to fund them.
There is nothing wrong with Pharmac’s decision-making, they make decisions in line with their operating window prescribed by the Government. Staying within budget is the key focus.
This discussion should be directed to the government and the Health Minister, if they increased Pharmac’s budget, Pharmac could negotiate and fund more new medicines.
Governments in NZ have loved Pharmac, they have taken the heat for years, protecting governments from challenges to fund medicine, a great deflection. This is also why it is easy for the Government not to increase the funding to Pharmac. Pharmac is not the squeaky wheel so there is no pressure to continue to allow growth in the budget. Not many political votes are to be gained.
Like all Government departments, Pharmac is responsible to deliver to the Health Minister. This is why Pharmac would never say, they would love to fund a medicine, but they don’t have the money. They will come up with lots of different reasons, like, lack of evidence of the benefit, rather than say it’s because they have no money.
In the stuff article, there is a video of the then-Health Minister, saying “the days of the republic of Pharmac are over”, the irony is it’s the government that created the “republic”, Pharmac is only doing what it is instructed to do by the Health minister. Again, a great deflection, blaming Pharmac for doing the job the government has asked of them.
Pharmac does a great job of getting the “best bang for their buck” and New Zealand pays significantly less than other countries for the same drug. For example:
Product | NZ Price NZD | AU Price AUD |
Clarithromycin 250mg 14tabs | 8.53 | 19.13 |
Atorvastatin 20 mg 30 tabs | .55 | 15.15 |
(Different brands funded in both countries, NZ converted to equivalent AU volumes per pack. No currency conversion)
The cost of this is a lack of choice and options, but this is a separate philosophical discussion. Many new medicines are new categories and modes of action that would meet an unmet need. It's not a me-too to another product funded.
In many cases, there will be medicines that if funded would reduce hospitalisation and save money in other areas of the health system (never mind the productivity gains), but Pharmac's narrow operating window does not allow it to access these savings to help fund the medicine. If you challenge the hospital system on this, they will tell you the savings aren’t there because the hospital bed would be used by someone else. A very defeatist point of view. Who knows what that person is doing while the bed is taken by someone who could be treated with the latest medicine?
This brings me to another topic; the role of the health system to keep people working, my blog on this topic is linked below.
This discussion needs to be reframed and the question should be; Does the New Zealand government value medicines? It’s a question of priority and where you want to allocate the budget.
The counterclaim you often hear is that “New Zealand cannot afford it”, again is inaccurate when you consider historically that countries are higher on the OECD list of spending more on medicine. Interestingly NZ now longer provides the OECD with spending on medicines. I wonder why? It’s all about choices.
Source: Medicines NZ

Pharmac’s comeback to NZ spending less on medicine is that they do such a good job getting NZ better pricing. While this is partly true, NZ still doesn't have access to many global standard-of-care medicines.
So let’s reframe the discussion and point it squarely back to the Minister of Health.
Goals of a health system.
Previous blog on the goals of the health system.
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