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Tender for generic medicines contributes $38 million savings

PHARMAC tender for generic medicines contributes $38 million savings

New Zealanders’ use of generic medicines is likely to grow further following the just-completed 2013/14 PHARMAC tender. The tender reached record levels this year, receiving nearly 3500 offers to supply pharmaceuticals from 54 companies.

PHARMAC has now awarded 246 contracts from this tender process, likely to produce savings of approximately $38 million (across hospital and community medicines) over three years.

“The savings from the tender are important for PHARMAC and serve two purposes,” says PHARMAC’s Director of Operations Sarah Fitt. “Firstly we need to make savings to enable us to fund the growing volume of medicine that is used in New Zealand each year.”

“And secondly, it can free up funding that we can then use to invest in new medicines. This enables us to produce greater health gains for New Zealanders, which is what PHARMAC is all about.”

New Zealand already has one of the highest usage rates of generic medicines in the world, according to the OECD Health at a Glance report1 The report shows over 73 percent of medicines used in New Zealand are generics. Only Germany and the UK have higher rates of generics use.

Sarah Fitt says this comparatively high usage in New Zealand is largely because of the annual PHARMAC tender, which actively seeks bids for medicines coming off-patent and promotes competition between suppliers.

“New Zealanders are now familiar with generic medicines, and are used to changing between brands of medicine from time to time,” says Sarah Fitt. “This can happen as a result of our tender, and PHARMAC supports change through information for patients, pharmacists and prescribers. This has also helped with acceptance of generics.”

Sarah Fitt says people also have greater understanding that generic medicines go through the same quality, safety and efficacy checks as any other medicine before being registered by Medsafe.

PHARMAC also actively manages all supply contracts to ensure New Zealand continues to enjoy fewer stock shortages than other countries.

Significant decisions from the current tender include new contracts for different presentations of the painkiller paracetamol, New Zealand’s most-prescribed medicine, which is estimated to result in saving more than $2 million over three years.

Moving to sole supply of the mental health medicines, quetiapine and olanzapine will produce the biggest savings from the current tender so far. The quetiapine decision – moving to the Quetapel brand – is likely to save more than $6 million over three years. And sole supply for olanzapine adds a further $2 million of savings. There’s information about these changes at


Other products awarded tenders that will produce savings of $1 million or more over three years include the painkiller tramadol, the cancer treatment paclitaxel, and the migraine medicine rizatriptan.


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