The Pharmaceutical Management Agency (PHARMAC) is responsible for procuring medicines at a subsidised rate for Kiwis, using the fixed annual combined pharmaceutical budget (CPB) set by the Minister of Finance. Before funding a new medicine, PHARMAC usually requires that the medicine has been registered by Medsafe first. Medsafe is responsible for regulating medicines and medical devices in New Zealand, and evaluates the quality, safety and effectiveness of new medicines before they are registered.
To assist PHARMAC in decision-making about what to fund, all applications are also reviewed by PHARMAC's committee of clinical experts - the Pharmacology and Therapeutics Advisory Committee (PTAC).
The PTAC’s role is to advise PHARMAC on each application and make a funding recommendation to PHARMAC based on an objective clinical assessment of the medicine concerned. PHARMAC has a fixed budget and their ability to fund medicines that are safe and clinically beneficial is limited - a positive recommendation from PTAC is not a guarantee that PHARMAC will fund the medicine. Until PHARMAC decides to fund these cost-effective medicines publicly, they remain on a number of waiting list.
Medsafe is responsible for regulating medicines and medical devices in New Zealand. The 20 District Health Boards (DHBs) have a budget for medicines which PHARMAC (the medicines procurement agency) manages. PHARMAC’s Pharmacology and Therapeutics Advisory Committee (PTAC) reviews funding applications for cost-effective new medicines and PTAC makes recommendations on which medicines should be publicly funded by PHARMAC. Until these cost-effective medicines are funded, they remain on a Waiting List.
Unnecessary delays in the funding system provide significant setbacks for the health system and patients who could benefit from the medicine being funded. Some patients are still waiting a decade or longer for a public funding decision on some of these medicines.
While comparable countries have access to breakthrough world-class medicines and treatments, our current funding model continues to deprive New Zealanders of publicly funded access to these medicines. In many cases, modern medicines that are recommended as a public funding priority by PTAC remain unfunded despite PTAC’s clinical expertise.[1]
PHARMAC has publicly released their options for investment (OFI) list, consisting of over 100 applications PHARMAC would like to fund if they had the budget for them. This is only a small portion of the applications in PHARMAC’s system awaiting a decision.
The backlog of applications in PHARMAC’s system awaiting a decision is evidence that New Zealand’s medicines funding processes and budget levels require review. Without an increase in the CPB, the long list of applications is expected to grow.[1]
From 2011 to 2020 Australia publicly funded close to three times as many modern medicines as New Zealand and made funding decisions almost a year faster. [5] For example between 2011 and 2020, New Zealand did not publicly fund any of the modern medicines that were launched for mental health, diabetes or arthritis. By comparison, Australia funded 4 for mental health, 10 for diabetes and 4 for arthritis. We think this lack of funding for modern medicines creates healthcare inequity for New Zealanders with these conditions compared with their Australian peers.
Patients with rare diseases also face health inequities in medicines funding as most modern medicines publicly funded in New Zealand for rare diseases, are used to relieve symptoms like pain and inflammation rather than treat the rare disease itself. In 2021, 1 in 3 rare disease patients in New Zealand were in hospital for an average of 13 days. This impacts on the overall public health system too, with costs of $1,200 per day in a public hospital ward and $5,500 for a day in an intensive care unit.
We think that New Zealand’s failure to invest in proven modern medicines is letting down many New Zealanders who rely on the public health system. Other countries have better access to modern medicines, which in many cases, can be linked to better health outcomes. The failure to fund cost-effective medicines results in higher hospitalisation and mortality rates. [8-11]
Because unsubsidised modern medicines are often unaffordable for the average Kiwi, some patients patients are forced to take extreme measures to get the medicine they need, including;
New Zealand’s current medicines strategy is 15 years old and the current plan supporting it expired in 2020. The current Health Reforms offer an opportunity to change an outdated system which does not provide patients with the best possible health outcomes.
The medicines budget needs to be increased to bring New Zealand’s spending per capita in line with other comparable OECD countries.
In 2022, a defined medicines appropriation was included in the Budget, which made it clear that only 5% of New Zealand’s total health budget is invested in medicines. This is in stark contrast to comparable OECD countries like Australia and the UK which both have investments of over 10%.
Even though the Government increased funding for PHARMAC in this year’s budget, the medicines budget has been underfunded since 2007. Ongoing investment needs to be made to help New Zealand catch up with our peer nations and ensure New Zealand patients don’t continue missing out on proven modern medicines and that New Zealand is well placed to fund innovative medicines coming down the pipeline.[13-15]
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Introducing a rapid access to medicines scheme would provide patients with access to effective medicines faster to ensure no patient is left waiting for a medicine they need.[16]
Doing nothing is not an option if timely access to new medicines is important for retaining trust and confidence that publicly funded health is ‘modern’ and fit for the future.[2,16]
