Industry experts say the public funding model for pharmacies needs urgent reform to ensure businesses can be financially sustainable based on dispensing services alone, rather than relying on retail margins to cross-subsidise core healthcare functions.

They say reform is critical to ensuring the long-term viability of the sector, with prescription rule changes taking effect on Sunday and data showing the number of New Zealanders requiring ongoing medication management is at record highs.

From February 1, 2026, New Zealanders with stable, long-term conditions such as asthma and diabetes will be eligible for 12-month prescriptions, up from the current three-month limit. The change is intended to reduce GP visits and lower costs for patients by allowing medicines to be paid for or collected less frequently.

However, sector leaders caution the move has introduced more financial uncertainty for already beleaguered pharmacies, with no clear details yet announced on how dispensing will be reimbursed under the new model.

“Pharmacies need a funding structure that works on the basis of dispensing and clinical services alone,” says Zoom Health director David Taylor. “Relying on retail margins to keep essential health services viable is no longer sustainable, particularly for New Zealand-owned community pharmacies that lack the scale or offshore backing of large discount operators.”

Data from Te Whatu Ora shows the number of New Zealanders accessing community pharmacy services continues to rise, even as pharmacy capacity tightens.

As at September 2025, 1,806,836 New Zealanders were using community pharmacy services each month, up from 1,693,515 in September 2022, an increase of more than 113,000 patients in three years.[1]

Over the same period, pharmacies dispensed 98.6 million prescription items annually, up 4.4 percent year on year, with repeat prescriptions growing faster than initial scripts.[2]

Yet the number of community pharmacies has declined. Te Whatu Ora data shows 1,069 pharmacies were operating in September 2025, down from 1,091 at the same point in 2022.[3]

Industry leaders say the divergence highlights growing strain within the system.

“Pharmacies are doing more work with fewer outlets,” Taylor says. “That reduces resilience, particularly in communities where the loss of even one pharmacy can have a significant impact.”

Industry workforce data shows New Zealand already has one of the lowest rates of pharmacists per capita among comparable developed countries, further limiting the system’s ability to absorb rising demand.

As at mid-2025, New Zealand had around 8 pharmacists per 10,000 people, compared with about 9.4 in Australia and around 11 per 10,000 in countries such as Canada and the United States. That places New Zealand between 15 and 30 percent lower than comparable health systems, depending on the country used for comparison.[4]

The rate declined by around 1.5 percent over the past year, despite continued population growth, effectively reducing per-capita access to pharmacy services.[5]

Regional disparities are stark, with pharmacist availability falling well below the national average in several parts of the country. In Tasman, there are just around 2.5 pharmacists per 10,000 people, while Gisborne sits at approximately 5.8 per 10,000 and Northland at about 6.8 per 10,000. Health experts warn that in regions with such low workforce density, the closure of even a single pharmacy can severely restrict access for local communities.[6]

They say the combination of fewer pharmacists per head, fewer physical pharmacies, and rising prescription volumes leaves little buffer in the system, particularly as pharmacists absorb some of the pressure created by declining access to primary care.

The pressure is being amplified by a sharp rise in long-term conditions, which typically require ongoing medication management and repeat dispensing.

Te Whatu Ora data shows the number of people receiving publicly funded long-term condition medicine management services increased from 144,733 in September 2022 to 170,078 in September 2025, a rise of nearly 18 percent in three years.

Health experts stress this represents only the funded subset of long-term condition patients, with the total number of New Zealanders managing chronic illness significantly higher. They say these patients are among the most reliant on consistent pharmacy access and the least able to absorb disruption.

Online services, like Zoom pharmacy, that are specifically designed to support long-term condition patients are available to help fill distribution gaps for patients in rural or remote areas, or patients unable to or who choose not to access community pharmacy. But, health sector analysts warn that ensuring patient choice is paramount and that reducing access to community pharmacy will impact access to care and ultimately health outcomes.

“As access to community pharmacies and general practice becomes more constrained, the health system will increasingly need to rely on a mix of delivery models to maintain patient access,” Taylor says. “That will require better recognition of the clinical work pharmacies already provide, alongside greater use of virtual and remote services for patients who can’t easily reach a physical site.”

While headline pharmacy numbers have fallen gradually, sector leaders say the figures mask deeper financial stress.

“General practice has benefited from clear corporatisation pathways that allow GP owners to exit through acquisition or consolidation,” Taylor said. “Pharmacists don’t have the same options. Many are reaching retirement age with no viable way to sell, which increases the risk of sudden closures rather than planned transitions.”

“Australia has long recognised pharmacies as essential health infrastructure and protects geographic access through location rules,” Taylor says. “In New Zealand, discounters can open almost anywhere, and community pharmacies simply can’t compete on price alone.”

He says pharmacy valuations have fallen sharply, leaving many owners working for little or no return as they try to keep services operating.

The loss of local pharmacies has direct consequences for patients who cannot easily travel.

Din Redzepagic, pharmacist and director of Zoom Health, says declining physical access was already affecting patients’ ability to stay on treatment.

“For many of the patients we see, particularly older New Zealanders or those managing chronic conditions, travelling to a pharmacy isn’t straightforward,” Redzepagic says. “When access becomes harder, the risk isn’t just inconvenience. It’s missed doses, delayed treatment and avoidable deterioration in health. Pharmacies have also become an essential provider of vaccination services, so reduced access can mean fewer people getting immunised and more pressure pushed back onto an already stretched primary care system.”

Rural and provincial communities face compounded challenges, where pharmacy closures often coincide with limited public transport and reduced access to GP services.

Sector leaders say the financial challenge facing pharmacies is not demand, but viability.

While pharmacies are reimbursed for the cost of medicines, the margin earned on dispensing is extremely thin, leaving little capacity to absorb revenue volatility or policy change.

This makes pharmacies heavily dependent on a stable and predictable funding model for core dispensing services, particularly as prescription volumes increase and dispensing intervals change under the new 12-month prescription rules.

With prescription volumes rising, long-term conditions increasing, pharmacist workforce capacity trailing international peers and pharmacy numbers declining, sector leaders say the system is operating with diminishing buffers.

“If pharmacies continue to disappear, the demand pressure doesn’t vanish,” Taylor says. “It shifts even further into hospitals, emergency departments and, ultimately, into people going without care.”

“This isn’t a future problem,” Taylor says. “It’s already happening.”

Notes:

[1] ICPSA monitoring report - Health New Zealand | Te Whatu Ora. (n.d.). https://www.tewhatuora.govt.nz/health-services-and-programmes/community-pharmacy/icpsa-monitoring-report

[2] ICPSA monitoring report - Health New Zealand | Te Whatu Ora. (n.d.). https://www.tewhatuora.govt.nz/health-services-and-programmes/community-pharmacy/icpsa-monitoring-report

[3] ICPSA monitoring report - Health New Zealand | Te Whatu Ora. (n.d.). https://www.tewhatuora.govt.nz/health-services-and-programmes/community-pharmacy/icpsa-monitoring-report

[4] Workforce demographics - Pharmacy Council NZ - Public Site. (2025, November 26). Pharmacy Council NZ - Public Site. https://pharmacycouncil.org.nz/public/workforce-demographics/

[5] Workforce demographics - Pharmacy Council NZ - Public Site. (2025, November 26). Pharmacy Council NZ - Public Site. https://pharmacycouncil.org.nz/public/workforce-demographics/

[6] Workforce demographics - Pharmacy Council NZ - Public Site. (2025, November 26). Pharmacy Council NZ - Public Site. https://pharmacycouncil.org.nz/public/workforce-demographics/

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