28 September 2001 Media Statement

Pharmac to be drug-buying agent for DHBs

Health Minister Annette King says District Health Boards could potentially save millions of dollars a year, now that Pharmac has been authorised to purchase drugs for their hospitals.

Announcing the move today, Mrs King said individual DHBs would in the future no longer have to negotiate directly with pharmaceutical companies for all the drugs used in their hospitals.

"Currently, because hospitals negotiate with pharmaceutical companies in isolation, it is likely there are variations in the prices they are paying for pharmaceuticals," she said. "Where Pharmac acts as the sole central negotiating agent there will be nationwide consistency and an opportunity for savings to be made."

Pharmac, the Ministry of Health and DHBs are still working out the details of Pharmac's new role, and a Hospital Pharmaceuticals Advisory Committee, comprising hospital purchasing and pharmacy managers, has been set up to advise in the development of its purchasing strategies.

Mrs King said because DHBs might have to wait until their existing contracts with pharmaceutical companies expired, the savings were expected to start in 2002 and increase in later years.

Pharmac already manages DHBs' negotiations for pharmaceuticals used in the community.

"I see real advantages in drawing on Pharmac's pharmaceutical negotiation skills and established systems and networks in order to assist DHBs to make savings when purchasing hospital pharmaceuticals. Pharmac will be able to keep the prices down meaning hospitals' available funding can be spent on other service areas."

Pharmac's purchasing power is expected to lead to national annual savings of around $7-$10 million from an estimated national bill of $100-$140 million. Where Pharmac cannot make savings, hospitals may end up retaining responsibility for purchasing some pharmaceuticals.

Pharmac is expected to gradually take on its new role from December this year. It will take some years before Pharmac has completed all the relevant tenders.

ENDS

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