Mythbusting PHARMAC

Myth: PHARMAC cares more about money than lives.

Truth: The people who work at PHARMAC want all New Zealanders to live longer, healthier, happier lives. We care about money only because we have a limited budget which we need to manage carefully.

The entire pharmaceutical budget is spent on the medicines that New Zealanders need.

Myth: PHARMAC buys and sells medicines.

Truth: PHARMAC doesn’t buy medicines. We just decide which ones the government will pay for. Pharmacies buy medicines from suppliers and pharmaceutical companies. The Ministry of Health then reimburses pharmacies at the rate we agreed with the pharmaceutical company.

Read more about our role in supply management

The only exception to this is vaccines (except the influenza vaccine).

Myth: PHARMAC refuses to fund new drugs, especially for cancer.

Truth: We are committed to funding medicines that are proven to make a difference for people. Price is not the only issue with many new medicines. Our clinical advisers tell us whether any new medicine has the evidence to back up the claims made by pharmaceutical companies. 

PHARMAC moved quickly to fund PrEP and Maviret. These are truly lifesaving and life-changing medicines. PrEP prevents the spread of HIV and Maviret is a cure for hepatitis C.

In 2019/20 we funded 14 new medicines and widened access to 32 other medicines. Six of the 14 new medicines were cancer medicines.

An estimated 71,245 more people benefited from our 2019/20 funding decisions.

Read more:

How PHARMAC works

The journey of a funding application

What factors we consider when make a decision

Our operating policies and procedures manual

Myth: PHARMAC only funds the cheapest medicines.

Truth: When negotiating with pharmaceutical companies, we consider a range of factors. Price is one of these. However, we also look at things like taste, packaging and a medicine’s overall impact on the health sector. For example, how do people take it? Is it a pill or do they need to see a nurse or doctor?

We have the Tender Medical Evaluation Subcommittee. It is made up of GPs, pharmacists, nurses and other experts. As part of the tender process, they examine every brand of medicine that might be funded. They check the taste, the feel, how easy it is to get into the package.

The annual tender is one way that we get better prices for medicines.

Myth: PHARMAC funds ‘knock off’ medicines that aren’t as good as ‘brand name’ versions.

Truth: Funded medicines must be approved by Medsafe. If we fund a ‘generic’ brand, it is as safe and effective as the original medicine.

Read more about generic medicines

Some medicines are very complex. There can even be differences between batches made by the same company. Always talk to a health professional if you notice side effects from any medicine.

Read more about biological and biosimilar medicines

Myth: New Zealanders are missing out because the government spends less on medicines than other countries

Truth: New Zealand’s spend on medicines per person is second lowest in the OECD. New Zealand has such a low spend because PHARMAC has forced prices down. If we had not negotiated prices down, the medicines budget would have to be more than double. This is just for the medicines we funded 25 years ago, not including all the new ones we’ve funded.

Myth: Australians have access to lots more funded medicines

Truth: On a straight numbers basis, the Australian government does list a few more medicines and related products than New Zealand (about 100).

However, Australians pay more for each prescription, up to AU$41. Most New Zealanders only pay $5. In New Zealand, you do not have to pay the co-payment after you’ve received 20 prescriptions in a year. This means your medicine is likely to be free after you’ve paid $100 each year. In Australia, the cap is closer to $1500.

While no system is perfect, the New Zealand model means cost is less of a barrier for people to access the medicines they need.

Unlike New Zealand, Australia does not have a fixed budget for medicines.

Read more about the Australian Pharmaceutical Benefit System(external link)

Myth: Because PHARMAC gives suppliers sole access to the New Zealand market, we are more likely to have stock issues.

Truth: New Zealand has fewer stock issues than Australia in general. When we give suppliers sole access to the funded market, we also make them responsible for ensuring that medicine is available. There can be financial penalties for suppliers who fail to keep medicines in stock.

In 2020, we have had more stock issue than normal. COVID-19 has contributed to this problem. The pandemic has made transport more challenging and affected many manufacturing plants.