New Zealand's Pharmac is coming under increasing criticism from the pharmaceutical industry and patient groups for what is seen as inadequate reimbursement coverage of cost-effective medicines.
IHS Life Sciences perspective | |
Implications | New Zealand's patients are reportedly waiting for over 35 cost-effective treatments – already recommended by Pharmac's technical advisory committee – that have yet to receive reimbursement, amid concerns that new investment has been ploughed into the healthcare sector rather than into much-needed treatments. |
Outlook | Given New Zealand's stretched public-health budget, a further increase in Pharmac's budget is unlikely in the near future. |
New Zealand's pharmaceutical-reimbursement regulatory authority, Pharmac, is coming under increasing criticism from the pharmaceutical industry and patient groups for what they consider to be inadequate reimbursement coverage of cost-effective medicines, according to local media reports.
According to the New Zealand Herald, New Zealand's patients are waiting for over 35 cost-effective treatments already recommended by Pharmac's technical advisory committee, but have yet to receive reimbursement. Pharmaceutical-sector lobby group Medicines New Zealand argues that new investment has been ploughed into the healthcare sector, rather than into much-needed treatments.
Year-on-year (y/y) growth in investment into New Zealand's healthcare sector is up to 29 times larger than that for medicines, argues Dr Graeme Jarvis, Medicines New Zealand's general manager, adding that investment into new therapies had saved neighbouring Australia nearly NZD7 billion (USD4.6 billion) in hospital costs.
According to a report by Australia's medicines industry association, New Zealand ranks the lowest in terms of state-funded access to new medicines out of 20 developed countries surveyed (Australia was ranked 18th). The Organisation for Economic Co-operation and Development (OECD) also ranks New Zealand's drug-spending as significantly below the average of developed countries.
The development follows intense criticism last week by patient and cancer associations over Pharmac's decision not to reimburse Merck & Co (US)'s melanoma treatment Keytruda (pembrolizumab, see New Zealand: 3 December 2015: Cancer groups criticise Pharmac decision not to fund Merck & Co's Keytruda). In response, Prime Minister John Key has indicated that Pharmac may be granted increased funding for high-priority drugs. New Zealand has one of the highest rates of skin cancer worldwide, with approximately 300 deaths per year.
In May 2015, the government announced a rise in Pharmac's combined pharmaceutical budget to NZD800 million, compared to NZD795 million in the previous year's budget. However, the NZD5-million increase fell short of the NZD11 million requested by Pharmac, which added that besides the pharmaceutical budget, the agency also uses NZD40–60 million of new funding each year, which is freed up through price concessions.
Outlook and implications
The long-standing concern that New Zealand's patients have poorer access to funded treatment than in Australia appears to be coming to a head, with recent new studies and reports giving rise to political mudslinging. Cancer associations have called on Pharmac to fast-track high-priority oncology treatments, arguing that Australia not only funds a wider range of cancer drugs, but that individual treatments are also funded for a wider range of indications than in New Zealand. Despite the recent NZD5-million increase in funding for Pharmac, the regulatory body's budget has increased by only 0%–1.74% over the past five years. However, given New Zealand's tight public-health budget, a further increase in Pharmac's budget is unlikely in the near future.
New Zealand Labour Party leader Andrew Little has said that population pressure – and inflation – mean that Pharmac's budget should have risen by around 10% per year in the past four years, rather than by the approximate level of 2%. New Zealand's health minister Dr Jonathan Coleman has stated that Pharmac's current budget constituted a record amount, and implied that Medicines New Zealand's comments were understandable, since the association represents the pharmaceutical industry.
Patient-association concerns are only expected to increase with the advent of the Trans-Pacific Partnership (TPP), which is expected to lead to higher drug prices and negatively affect access to healthcare (see Australia - New Zealand: 11 June 2015: Leaked documents claim to show TPP will raise drug prices significantly, affecting Australia's healthcare). Pharmac is reportedly the most exposed of any TPP-negotiating country's health programmes, since – unlike Australia – New Zealand has not attempted to minimise its exposure to potential lawsuits allowing pharmaceutical firms to take direct legal action against governments over national policies.