Pharmac is to fund a second generic version of a mental health medicine.
The decision is expected to save about $24million over five years.
From October, the State drug-buying agency says it will begin paying for a third brand of the drug quetiapine, made by the company, Dr Reddy's of India.
Pharmac says about 34,000 people take quetiapine to treat schizophrenia and other psychotic illnesses.
Pharmac already funds another generic version, Quetapel, and says it will only pay the Dr Reddy's price for the patented brand, Seroquel.
Medical director Peter Moodie says the drug has been checked carefully by Med Safe and the change should not create any problems for patients.