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PHARMAC’S Policies 'Reflect Today's Environment'

Media Release

PHARMAC’S new policies to reflect today’s environment

Maori and Pacific Island people are among those who should benefit from new policies PHARMAC is looking to adopt.

The drug funding agency is reviewing how it operates and is asking key organizations to make submissions, in light of the fact that it is currently working to the same policies designed when it came into existence nearly seven years ago.

The Operating Policies and Procedures govern how PHARMAC manages the list of pharmaceuticals that are subsidised, and set out the criteria to make those decisions. This has not altered despite Pharmac being owned originally by the four Regional Health Authorities, then the Transitional Health Authority, and currently the Health Funding Authority.

“Parts of that policy are now irrelevant as the system of subsidies has developed a lot in seven years, so its time for a complete rewrite, not just amendments,” says PHARMAC General Manager Wayne McNee.

One very important change is adding “Maori and Pacific Peoples’ health needs” to the list of criteria that PHARMAC uses when making decisions. The decision criteria also include factors such as the health benefits and costs of the pharmaceuticals, and whether it is better to treat a person with pharmaceuticals or with other medical treatments such as surgery.

Currently, PHARMAC considers Maori and Pacific People’s health issues under the criteria to take into account “the health needs of all the HFA’s populations”. However, PHARMAC believes that the addition of a specific acknowledgement of this group’s needs would assist in promoting better health for them.



Pharmac says they are proposing five main changes.

 Adding Maori and Pacific Peoples’ health needs to the decision criteria,

 Enhancing provisions on consultation,

 Deleting unnecessary or redundant provisions,

 Setting out various strategies Pharmac can use to stretch the drug budget. This would remove the focus on reference pricing as its primary strategy. Reference pricing is the practice of accepting the lowest price for a drug and setting that price as the subsidy level for all similar drugs in that group.
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2/Pharmac’s new policies to reflect today’s environment


 Devising a new format for setting out contracting and decision-making processes.

This week Pharmac is sending out letters to drug companies and health groups to ask their opinion on the proposed changes. A final version is scheduled to be ready by June.

A copy of the current policies and the new proposed policies are on the website (www.pharmac.govt.nz).

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