Pharmac warns Govt of Big Pharma incentive

The health budget could blow out by up to $90 million a year if frequent work wasn’t being undertaken by Pharmac to reduce costs, the national drug purchaser has warned the Government.

It comes as the Government confirmed its intention to continue with plans to implement a controversial interim drugs fund, similar to one that has faced heavy criticism for budget blowouts and ineffective treatments in the UK.

In its briefing to new Health Minister David Clark, Pharmac chief executive Steffan Crausaz said yearly reviews of pharmaceutical expenditure kept the agency operating and gaining access to new medicines within its means.

‘‘If Pharmac did not undertake transactions to lower costs, each year between $60m - $90m new funding would be required from Government every year to maintain growth in usage of current products.’’

Meanwhile, drug companies continued to ‘‘push the boundaries of evidence-based decisionmaking’’ - a challenge in the face of high public expectation for access to new medicines, Crausaz said.

While public engagement and participation was encouraged, pharmaceutical companies themselves were often inflating those expectations.

"Pharmaceutical suppliers continue to push the boundaries of evidence-based decision-making." Pharmac chief executive Steffan Crausaz

Last week, the financial statements of pharmaceutical lobbying group Medicines NZ were revealed, which showed it had spent more than $150,000 on a mysterious ‘‘election 2017 project’’.

Repeated calls, texts and emails to managing director Graeme Jarvis however went unanswered for more than two weeks, offering him a chance to explain the spending.

Medicines NZ has lobbied strongly for an interim drugs fund, which would allow extremely expensive but new-age drugs to be funded for a period of two years, where there wasn’t sufficient data to consider permanent funding.

Late last year it was also revealed former Labour leader Andrew Little hosted the group, comprising New Zealand representatives of some of the world’s largest drug companies, for dinner in the party’s caucus room, three months before adopting the drugs fund as a party policy.

In its briefing to the minister, Pharmac said the cost of cancer medicines continued to be expensive.

‘‘In the year to June 2017, total spend on cancer medicines was $203m, or 17 per cent of total spending on all medicines. However, prescriptions for cancer medicines represent just 0.6 per cent of the total.’’

More than a quarter of that spending was on only two high profile medicines; Herceptin and Keytruda.

The medicines industry had an incentive to ‘‘secure funding for new medicines while evidence is still emerging’’, Pharmac has briefed the minister.

Crausaz expressed concern over what an interim drugs fund would mean for Pharmac’s ability to competitively negotiate on other drugs. But a solution could be workable, along the lines of a novel approach it had already developed to approve medicines for rare diseases.

Clark has said it remained Labour policy, and that he was ‘‘convinced’’ it was the right thing to do.

But he said such a fund’s success would come down to the parameters placed around it. The reason to invest early in medicines ‘‘would be because they had early promise of delivering more quality-adjusted life years’’.