Pharmac needs cash injection to relieve $400m shortfall
Pharmac’s wishlist has revealed a shortfall of more than $400 million, sparking calls for a funding review of the government drug-buying agency.
Pharmac’s Options for Investment list, released under the Official Information Act, shows the agency has determined 73 medicines should be funded but has no budget.
To fund each drug – the names of which have not been published – would cost $417,670,000, an increase of more than 40 per cent on the current $1.1 billion budget.
The list has grown dramatically since 2014, when there were 27 proposals for 26 drugs.
In 2020 there were 118 proposals for 73 medicines.
The funding gap has also grown steadily over that time, but Pharmac has not made any strong movements towards the Government to increase its budget.
It didn’t request any increase
before last year’s Budget.
For this year it requested a 4 per cent increase, but no further increases the following two years.
Patient Voice Aotearoa chairman Malcolm Mulholland said publishing the list was a good step and showed how much Pharmac had been underestimating what it needed.
Despite requiring such a large budget increase, Mulholland said money was available, it just came down to priorities.
“With Covid, there seems to be a bit of money floating around. This is about prioritising life. They are big numbers but it is about patients at the end of the day.”
Mulholland said he’d like to see Pharmac take its transparency even further and publish the full list of medicines it is seeking.
It would be good to see if drugs such as Trikafta, for people with cystic fibrosis, which had been gaining much publicity lately, was on the list.
“They are very hard decisions to make, but I suspect if they did release what pills are there, there would be quite a mixture of drugs that prolong and save lives.
“Pharmac needs to be more transparent about what it wants to fund.”
There was cross-party consensus before October’s election about reviewing the Pharmac model.
In March, the Government announced an independent review, to be completed by December, focusing on the timeliness and transparency of Pharmac’s decisions, but not its funding.
Act Party health spokeswoman Brooke van Velden said the new information highlighted the need for the review to address funding.
“The Government may throw Pharmac a bone in the Budget, but these figures show the reason why funding should be part of the review.
“The Government needs to do the right thing and implement the full review.”
Pharmac chief executive Sarah Fitt said they funded as many medicines as they could within budget.
Nearly 1000 medicines, in more than 2000 presentations are funded now, representing three out of four medicines used by New Zealanders.
Its fixed budget each year paid for funded medicines, and anything left over, or if there was a budget boost, was used to pay for new medicines.
In the 2019/20 year, district health boards (DHBs) spent $1.04b on medicines.
Each year with DHBs they put in a joint bid for extra funding, she said.
Fitt declined to reveal the ranked order of their options for investment list, saying they needed the “secrecy to strengthen our bargaining position”.
“If a pharmaceutical company knew their medicine was one of our top priorities, they'd be less inclined to negotiate on the price.
“This would leave less money in our budget for other medicines further down our list.”
Minister of Health Andrew Little was approached for comment.