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Tender marks 10th anniversary

January 2005

Tender marks 10th anniversary

PHARMAC is marking the 10th anniversary of its annual tender, which has been issued to pharmaceutical suppliers.

Tendering has become a core part of PHARMAC's management of pharmaceutical expenditure since its introduction in 1996. Tendering harnesses competition among pharmaceutical suppliers to set subsidy levels for off-patent medicines. Pharmaceutical companies that make successful bids become the sole subsidised supplier for up to three years.

The 2005-06 tender calls for bids for 592 medicines used both in the community and hospitals, covering 973 line items on the Pharmaceutical Schedule.

The products included in the latest tender currently account for $100 million of the $582 million pharmaceutical budget. The most significant therapeutic areas represented in the tender are cardiovascular medicines ($15 million) and anti-infection medicines such as antibiotics ($15 million).

PHARMAC Chief Executive Wayne McNee says this year's tender reflects the way this strategy has developed over a decade.

"Paracetamol was the first pharmaceutical to be purchased in this manner, but the tender has grown to now encompass 45% of subsidised prescriptions," Wayne McNee says.

"The tender is now an annual activity for PHARMAC and has expanded to include products used both in hospitals and the community. Typically the tender realises savings in the region of $20 to $25 million, although we won't know the full impact of this year's tender until we have received and analysed all the bids."

This year's tender involves a number of oncology products, and treatments for pain relief, heart disease and raised cholesterol.

The closing date for bids is 27 February 2006.


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