Medicine funding decisions in NZ are essentially political – July 2016

There is great emphasis put on the independence of Pharmac and the aura of “expert decision-making” free of political interference, in medicine funding decisions in New Zealand. It’s a great pity this myth is so readily swallowed by many observers who don’t take time to dig a little deeper.

The political dimension occurs when the health minister decides each year what funds Pharmac will have at its disposal. The minister’s decision is in the context of a priority list of new medicines or expanded access to existing ones, that could be purchased with different funding allocations, and the minister’s decision on the budget allocation largely determines what will be purchased and what will not be. It’s a small consideration really, and perhaps their only real independence, that Pharmac can adjust the priority list based on the deals it can negotiate.

Evidence of this political dimension is starkly apparent in the recent decision to fund Keytruda and Opdivo for advanced melanoma. Pharmac were unable to fund these medicines without a specific allocation of funds from government to do so. Yet government still claims a hands-off role and Pharmac still claims its independence in this process.

Pharmac plays a very useful role in negotiating supply of most medicines at good prices, but it has almost no ability to decide independently if new medicines will be funded. It relies on funds allocated through a political process, to allow them to do so.

No wonder some medicines for rare diseases are not funded and the patients are left abandoned. Companies seem quite willing to negotiate on their prices, yet Pharmac is not given sufficient cash to do a deal with them. It seems no one in government cares enough to change that.