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Promoting competition key for high cost medicines

Media release

Promoting competition key to improving patients’ access to high cost medicines

PHARMAC has announced its intention to test out a contestable fund for high cost medicines for rare disorders, which could be seeking proposals from pharmaceutical companies by the end of 2014.

Promoting competition among suppliers could be the key to improving patients’ access to high cost medicines for rare disorders, says chief executive Steffan Crausaz.

The fund is a response to concerns about access to these medicines that PHARMAC has been hearing from patients through forums and consultations in recent months.

“We’ve listened closely to these views, and thought about them carefully. Our thinking leads us to the view that the core problem is a lack of competition,” says Steffan Crausaz.

“We know competition leads to lower prices, and that’s an area where PHARMAC has an established track record. Our activities in promoting competition enable New Zealand to achieve some of the lowest prices for medicines in the world.”

“We think that by promoting competition among suppliers, prices will reduce and as a result, patients will get funded access to them. Ultimately, that’s what this fund is about.”

“Pharmaceutical suppliers tell us one of their main motivators is providing patients with access to their products. That’s something we certainly want to see, and I hope the industry takes this opportunity to help us find a way to make these medicines more available to patients.”

Steffan Crausaz says the new approach is possible within PHARMAC’s current operating framework, and would still involve PHARMAC seeking to get the best health outcomes for patients from the available funding for pharmaceuticals.

“PHARMAC will continue to look for the best health outcomes for patients, and the best value investments. The approach we intend to use will be consistent with the PHARMAC model and, importantly, will still enable us to continue to fund other new medicines for conditions that aren’t rare.”

PHARMAC has published a discussion paper on its website and is inviting comments from the public and industry on the contestable fund. These comments would help iron out some of the detail of how the fund would operate.

Steffan Crausaz says up to $5 million per year may be available, through funding that has already been budgeted but not likely to be used for the $8 million exceptions policy. Because this funding is already budgeted, it won't limit PHARMAC's ability to fund other treatments for less rare conditions.

Should PHARMAC request commercial proposals by the end of 2014, funding could begin in early 2015. The discussion document can be found on our


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