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The Pharmaceutical Management Agency, better known as Pharmac, is a New Zealand Crown entity that decides, on behalf of District Health Boards, which medicines and pharmaceutical products are subsidised for use in the community and public hospitals.
Pharmac was created in 1993 as a response to the ever-increasing costs of pharmaceuticals. The agency's primary aim is to ensure that New Zealanders get the best possible health outcomes as is possible from pharmaceutical treatment with the limited amount of Government funding available. In 2013/14, Pharmac has a subsidy budget of approximately $795 million, which was used to subsidise 41.8 million prescriptions issued to 3.4 million New Zealanders.
While initially responsible for community medicines only, Pharmac's role has been expanded to include all medicines used in DHB hospitals, and in preparation for the national management of medical devices. On 1 July 2012, the management of the national immunisation schedule, and assessment of new vaccines, transferred to Pharmac from the Ministry of Health.
Pharmac's current governing legislation is the New Zealand Public Health and Disability Act 2000, specifically sections 46 to 53. As a Crown entity, the agency is responsible to the Minister of Health via its Board of Directors.
Pharmac has four main roles:
- Managing the New Zealand Pharmaceutical Schedule of about 2,000 Government-subsidised community pharmaceuticals
- Promoting the best possible (or optimal) use of medicines
- Managing the subsidy of medicines and some medical devices used in public hospitals
- Managing the Named Patient Pharmaceutical Assessment (NPPA) policy (a mechanism for people to receive funded medicines not available through the Pharmaceutical Schedule) and other special access programmes.
Pharmac uses several techniques to reduce the cost of medications. For example, where a medicine is off-patent and generic versions are available, Pharmac may tender out the right to be the sole subsidised brand for a fixed period of time (usually three years). This causes pharmaceutical companies to compete with each other, driving down prices and reducing the subsidy costs, freeing up funds to subsidise newer patented medicines. Another technique is reference pricing, in which Pharmac offers a fixed subsidy amount on a widely used medicine (e.g. the combined contraceptive pill), with the subsidy based on the cheapest brand, therefore causing pharmaceutical companies to compete with each other at the pharmacy counter. In 2012/13, it was estimated that Pharmac spent just 15% of its budget subsidising medicines used by 84% of patients.
Performance and political status
Pharmac has been hailed for its success in controlling New Zealand's expenditure on pharmaceuticals. A British Medical Journal article from 2010 cites Pharmac as the key reason for New Zealand’s low pharmaceutical prices.
Pharmac has been a regular point of contention in debates around potential free-trade agreements which could affect its ability to operate, particularly the Trans-Pacific Partnership Agreement (TPPA).
Opponents of the TPPA say US corporations are hoping to weaken Pharmac's ability to get inexpensive, generic medicines by forcing New Zealand to pay for brand name drugs. Doctors and organisations like Medicins Sans Frontieres have also expressed concern. The New Zealand Government denies the claims; Trade Negotiations Minister Tim Groser saying opponents of the deal are "fools" who are "trying to "wreck this agreement".
- Introduction to PHARMAC
- "Annual Review 2013" (PDF). Pharmaceutical Management Agency. Retrieved 11 May 2015.
- "Purchasing medicines" (PDF). Pharmaceutical Management Agency. Retrieved 20 June 2014.
- "Annual Review 2013" (PDF). Pharmaceutical Management Agency. Retrieved 22 June 2014.
- "“How New Zealand has contained expenditure on drugs” BMJ 2010;340:c2441. Published 18 May 2010." http://www.bmj.com/content/340/bmj.c2441
- Fallow, Brian (29 November 2012). "Pharmac vulnerable in trade talks". The New Zealand Herald. Retrieved 28 June 2014.
- "Access to medicines". It's Our Future. Retrieved 11 May 2015.
- "The Salve for the Pharmaceutical Industries Pains in New Zealand?". Published in Accession magazine (Otago Law Faculty student magazine), Volume 2 2012" http://officialinformationact.blogspot.co.nz/2012/10/the-salve-for-pharmaceutical-industries.html
- Moran, Dylan (5 December 2012). "US companies 'out to get Pharmac". 3 News NZ. Retrieved 22 June 2014.
- Wilson, Peter (5 December 2012). "Doctors warn of TPP risks". 3 News NZ. Retrieved 22 June 2014.
- Moran, Dylan (3 December 2012). "War of words in TPP public perception battle". 3 News NZ. Retrieved 22 June 2014.