Our place in the health system
Pharmac’s role within the New Zealand health system is to make decisions on which medicines and related products are funded for the best health outcomes from within the available funding. We also contract for hospital medical devices.
Pharmac is working with the Ministry of Health, Te Whatu Ora – Health New Zealand, and Te Mana Hauora Māori to support the transformation of the health system.
The information on this page describes how we fit in the health system before the recent Pae Ora (Healthy Futures) Act 2022.
Our relationships and accountabilities
We interact with a wide range of stakeholders in our work.
Minister of Health
The Minister takes responsibility for Pharmacs performance. The Minister and government of the day set Pharmac's budget.
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 helps 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.
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.
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.
Medsafe decides which medicines, related products and medical devices are safe and effective for New Zealanders to use. They check that these products meet standards of quality, safety and efficacy. We usually consider a medicine or related product for funding only after approval by Medsafe (but there can be good reasons for funding an unapproved medicine).
New Zealand Health Partnerships Ltd
This multi-parent Crown subsidiary is led, supported, and owned by New Zealand's District Health Boards (DHBs). Together they are identifying and building services to benefit the New Zealand health sector.
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.
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 have a network of about 160 clinical experts we regularly seek advice from for a range of decisions we make. We also seek advice from any clinician when we consult on potential funding decisions.
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 our decisions.
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.
We also have a Consumer Advisory Committee who we seek advice from on a range of issues.
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.