5 Dec 2013

Pharmac continues expanding medicines within budget

9:30 pm on 5 December 2013

The annual review of New Zealand's drug-buying agency Pharmac shows it is paying substantially less for some medicines than the price paid in Australia.

Pharmac is continuing to expand the drugs it is buying while staying within budget, at a time when some observers fear its role is threatened by ongoing trade talks with the United States and others.

In its annual review released on Thursday, Pharmac says spending on community medicines, hospital cancer medicines and vaccines rose in the past year to $783.6 million.

It says 3.4 million New Zealanders received a funded medicine, and the number of funded prescription items also grew.

The annual review found that more people are now taking a tablet to treat cancer rather than having chemotherapy in hospital. Pharmac lists oral treatments for cancer, personalised medicines and a decline in oral contraceptives as trends in medicine usage. Paracetamol and low-dose aspirin were the most commonly prescribed, funded medicines.

Chief executive Steffan Crausaz says Pharmac's drive for the best deals enables it to get more for less, and an example is the drug atorvastatin that costs a tenth of what is paid by Australia.

"What we do know is that across the whole basket of common goods for pharmaceuticals, New Zealand though Pharmac pays about half of the price that Australia pays."

Mr Crausaz says the low prices for most medicines it buys offer scope for newer, expensive more drugs used by fewer people.

The annual review reveals, for example, that 12% of gross spending - $112 million - buys just four medicines for 6000 people.

"What's really good is that because we're able to, through the various mechanisms that we've developed over the years, we're able to get prices for older technologies relatively low. That means that lots of the funding is freed up for the newer, higher cost types of medicines."

One of the four medicines is also the most expensive medicine Pharmac bought last year - the rheumatology and auto-immune treatment adalimumab, known as Humira.

But the general manager of the Medicines New Zealand group, Kevin Sheehy, says there is scope for further improvement by Pharmac.

"We believe that when they generate savings from products coming off patent, that money that's already in Pharmac's budget should be reinvested into new medicines. At the moment, what they're doing expanding their remit taking on vaccines and other products, which is a good thing, but they're not getting a growing budget for that. So they're trying to do a lot more with less."

But a group comprising 60 doctors have on Thursday written to Health Minister Tony Ryall saying Pharmac is too valuable to the health system to lose, and its future is threatened by negotiations towards the Trans-Pacific Partnership agreement.

Auckland University's Dr Papaarangi Reid is a spokesperson. "We believe Pharmac and its ability to negotiate a balanced portfolio of affordable medicines for New Zealanders as of critical importance to our stretched health system."

Jane Kelsey, an Auckland law professor and trade deal opponent agrees. "Pharmac has saved New Zealand billions of dollars over the last decade. It's not perfect - but in fiscal terms as well as public health terms, it is a real asset and it really is seriously at risk in the negotiations this weekend."

Pharmac, meanwhile, says it's busy expanding its work to include management of medical devices. It says in that more risky area it will continue using skills it has already honed, to save money for yet more purchases.