Our place in the health system

PHARMAC’s role within the New Zealand health system is to make decisions on which medicines and medical devices are funded in order to get the best health outcomes from within the available funding. 

Medicines New Zealand Strategy

Government has defined three main outcomes for medicines in New Zealand:

  • Access: New Zealanders have access to the medicines they need, regardless of ethnicity, location or wealth.
  • Optimal use: medicines used to their best effect
  • Quality: medicines that are safe and effective.

PHARMAC focuses on access to and the best use of medicines. We decide which medicines will be government funded. Quality is primarily the role of other organisations, such as Medsafe.

Our relationships and accountabilities

We interact with a wide range of stakeholders in our work.

Diagram attempts to show that DHBs, consumer groups, health workforce, ministry of health, DHBs and other health agencies provide feedback and advice. And we report to the Ministry of health..

Minister of Health

The Minister takes responsibility for PHARMAC’s performance.

The expectations of PHARMAC are set by The Minister who is also involved in appointing the PHARMAC Board.

The PHARMAC Board provide reports and briefings regularly to the Minister of Health.

Parliament and Members of Parliament

As a Crown entity, Parliament holds us to account for our actions. We help the Minister respond to Parliamentary Questions (questions asked about our operations by Members of Parliament). Our performance is also scrutinised by Parliament’s Health Select Committee. PHARMAC also assists MPs with queries from their local constituents.

District Health Boards (DHBs)

DHBs hold the funding for most publicly financed health services, including the Combined Pharmaceutical Budget (CPB) and hospital medical devices.

Our Memorandum of Understanding with the DHBs provides a sound basis for working together over time.

Ministry of Health

We work with the Ministry of Health, which acts on behalf of the Minister, to track PHARMAC’s performance.

PHARMAC takes part in the Ministry of Health’s Health Sector Forum. The aim is to build understanding of health system priorities amongst health agencies and provide leadership to the sector in key areas.

We engage with the Ministry on a range of issues including policy development. We have close working relationships with several of the Ministry’s business units including Sector Operations Group and Medsafe.

PHARMAC took over the management and purchasing of vaccines from the Ministry of Health in 2012. We must consider any changes to the National Immunisation Schedule which is also listed in our Pharmaceutical Schedule.

Sector Operations Group

Sector Operations Group is the Ministry’s claims processing unit. It pays pharmacists for the subsidised medicines people get from their community pharmacy. It also processes Special Authority applications for medicines with specific criteria that must be met before they will be funded. PHARMAC decides what the criteria are and the Ministry checks that applicants meet the criteria.

More information about Special Authorities is available on our website.

Sector Operations Group are contactable via the Ministry’s website: https://www.health.govt.nz/about-ministry/contact-us/groups/sector-operations-contacts/offices(external link) (external link)

Medsafe

Medsafe decides which medicines are safe and effective for New Zealanders to use and that they have undergone quality manufacturing processes (often called ‘medicines regulation’). We usually consider a medicine or device for funding only after approval by Medsafe (but there can be good reasons for departing from usual practice).

> Learn more about Medsafe’s work on their website(external link)

New Zealand Health Partnerships Ltd

This multi-parent Crown subsidiary is led, supported, and owned by New Zealand's 20 District Health Boards (DHBs). Together they are identifying and building services to benefit the New Zealand health sector.

New Zealand Health Partnerships web address is www.nzhealthpartnerships.co.nz(external link) (external link)

CARM

The Centre for Adverse Reactions Monitoring (CARM) in Dunedin is New Zealand’s national monitoring centre for adverse reactions. These include the side effects of a medication or surgery. It collects and evaluates reports of adverse reactions to medicines, vaccines, herbal products and dietary supplements from health professionals in New Zealand. Reports are then provided to Medsafe. CARM’s web address for reporting is https://nzphvc.otago.ac.nz/reporting/(external link) (external link), and is part of the NZ Pharmacovigilance Centre website.

Clinicians and other prescribers

Prescribers include general practitioners, specialists, and nurses. They put the Pharmaceutical Schedule into practice. They refer to it on a regular basis to determine which subsidised medicines are available for their patients.

We also seek clinical advice from PTAC (Pharmacology and Therapeutics Advisory Committee) and their various sub-committees as well as special access panels, health professionals, PHARMAC staff and through our consultations.

Pharmacists

In the community, pharmacists dispense prescriptions and advise patients on how and when to use the prescribed medicine. In the hospital, pharmacists play a vital role in ensuring the funded treatments are available as prescribed. As with prescribers, we rely on feedback from pharmacists on the practicality of Schedule changes.

Health professional groups

Professional associations for doctors, pharmacists, nurses and other health professionals such as clinical engineers, provide an important perspective on medicine funding issues and our approach to hospital medical devices management. We meet with such groups and seek their input through our consultation processes. Working alongside these organisations, we develop activities to manage changes in medicines, improve access to and encourage responsible use of pharmaceuticals.

Consumer and patient groups

The decisions PHARMAC makes impact on almost all New Zealanders, so it is important that the impact of those decisions on patients and consumers is well thought-through. We are in regular contact with patient and consumer groups and welcome feedback on medicine funding, our devices work, or other issues. To ensure we get appropriate consumer input to our operations, we take advice from our Consumer Advisory Committee on our engagement plans and practices.

Pharmaceutical companies

We rely on pharmaceutical companies to provide medicines for New Zealanders. In most cases, when we fund a medicine we agree on a supply contract with the company to ensure they continue to supply the contracted medicines.

Pharmaceutical companies are also required to provide information on; how a medicine or medical device works, its interactions and side effects, as well as all the information we need to assess the medicine for funding using the Factors for Consideration. This information is available through Medsafe.

How our medical devices work fits

Our scope has expanded to include hospital medical devices to eventuate in managing spending within a fixed budget. We are preparing for this by building a list of medical devices for DHBs to use, for example cotton swabs, orthopaedic implants and dialysis machines. We are also negotiating contracts for terms like price and supply continuity to ensure consistency across DHBs.

As our role in hospital medical devices grows, we will apply many of the same principles we use for our medicines work however, as medical devices are not the same as medicines, we are also working out where we need to do things differently. This will include seeking high-quality advice from a range of sources to help us make well-informed decisions. This includes clinical, technical and operational advice, as well as consumer advice where appropriate.