4.0 Decision making by PHARMAC – General approach and principles

  1. Before considering the Sole Supply Decision, it is useful to summarise PHARMAC’s general approach to making decisions about the funding of medicines. This is not intended as an exhaustive summary of either PHARMAC’s processes or its obligations. The focus is on matters most relevant to the Sole Supply Decision (the details of which are considered in the next section).

PHARMAC’s Objectives and Factors for Consideration

  1. PHARMAC’s objectives and functions are set out in ss 47 and 48 of the New Zealand Public Health and Disability Act 2000 (NZPHDA). At the heart of PHARMAC’s objectives is prioritising which medicines will deliver the best outcomes for New Zealanders within the amount of funding provided.
  2. The consideration of applications for new medicines to be funded, the possibility of moving from innovator medicines to generics and/or from multiple brands to one brand, and the financial implications of such decisions, are core business for PHARMAC. PHARMAC carries out approximately 60 brand changes per year. There is a limited pool of public funds for medicines in New Zealand. Savings in one area lead to availability in another area. Therefore the financial implications are, rightly, at the centre of PHARMAC decision-making – but, it is by no means the only consideration. To assist with its decision making, PHARMAC has established a framework The Factors for Consideration.[3] The four main factors for consideration are:
    • Need – considering the impact of the disease, condition or illness on the person, their family or whānau, wider society, and the broader New Zealand health system.
    • Health benefit – the potential health gain from the medicine being considered.
    • Costs and savings – to the person, their family or whānau, and to wider society.
    • Suitability – the non-clinical features of the medicine that might impact on health outcomes.

PHARMAC’s Board and Statutory Committees

  1. The NZPHDA requires PHARMAC’s Board to establish two advisory committees:[4]
    1. A Pharmacological and Therapeutics Advisory Committee (PTAC). The PTAC’s role is “to provide objective advice to Pharmac on pharmaceuticals and their benefits; [5] and
    2. A Consumer Advisory Committee (CAC). The CAC’s role is “to provide input from a consumer or patient point of view”. [6]
  2. The status of PTAC and CAC as statutory committees emphasises the importance of each committee’s role in PHARMAC’s decision making. But, both committees are expressly advisory. Decision making ultimately rests with PHARMAC, either through its Board or, under the Board’s delegation, by others.
  3. PTAC is a committee of senior health practitioners from multiple specialities selected for their expertise in critical appraisal as well as broad experience and knowledge of pharmaceuticals and their therapeutic indications.[7] PTAC meetings are normally held in Wellington four times per year – but PTAC also meet by teleconference and make recommendations by email.[8]
  4. PHARMAC has appointed a number of PTAC Subcommittees to provide advice either directly to PHARMAC or to it through PTAC.[9] Of particular relevance for immediate purposes are PTAC’s Neurological Subcommittee and its Mental Health Subcommittee.
  5. PTAC and its Subcommittees are an important part of PHARMAC’s decision making. Relevant principles relating to PTAC, its Subcommittees, and PHARMAC include:
    1. PTAC may seek advice from Subcommittees on specific issues. Subcommittees give a written opinion to PTAC by way of Subcommittee meeting minutes.[10] Subcommittee minutes are formally reviewed by PTAC at its next meeting.[11] The relevant portions of any PTAC minutes are then provided to each Subcommittee for information and interest.[12]
    2. PHARMAC’s Medical Director (or delegate) may attend each PTAC and Subcommittee meeting and participate in the discussions.[13]
    3. The advice given by PTAC and its Subcommittees is published on PHARMAC’s website.[14]
  6. PHARMAC’s Terms of Reference for its CAC describes the purpose of the CAC in the following terms:[15]

The primary purpose of the CAC as described in the legislation is to provide the Board of PHARMAC with input from a consumer or patient point of view on matters relating to PHARMAC’s activities. Recognising the difficulties representing the wide range of disparate views held by consumers, it is not intended that the CAC represent all consumer views. The CAC’s primary functions, therefore, are to provide advice to PHARMAC on how it can best access the diversity of consumer views and consider these when carrying out its role.

The CAC’s Terms of Reference go on to state that “[t]he CAC does not have a role in pharmaceutical funding decisions”.

  1. PHARMAC describes the CAC’s activities as including (but not being restricted to) providing advice to PHARMAC from a consumer or patient point of view on:[16]
    • how PHARMAC can canvass and consider consumers’ views on the processes involved in the assessment, prioritisation and funding of medicines and related issues of special concern to consumers and patients;
    • PHARMAC’s strategy, policy and operational activities which relate to funding decisions, and access to and optimal use of medicines, but not specific funding decisions; and
    • how PHARMAC’s implementation of its funding decisions, policies and strategies, including how information and education related to those funding decisions, policies and strategies would be best communicated to consumers.
  1. CAC meetings are normally held in Wellington, no less than twice a year. The CAC may also meet by teleconference or provide advice in other ways.[17] Minutes of each CAC meeting are provided to the PHARMAC Board.[18]


  1. PHARMAC has an express, statutory obligation to consult in implementing its objectives and carrying out its functions. When it considers it appropriate to do so, PHARMAC must:[19]
    1. consult on matters that relate to the management of pharmaceutical expenditure with any sections of the public, groups, or individuals that, in PHARMAC’s view, may be affected by decisions on those matters; and
    2. take measures to inform the public, groups, and individuals of PHARMAC’s decisions concerning the Pharmaceutical Schedule.


[3] The Factors for Consideration document is available on our website

[4] NZPHDA, s 50(1)

[5] NZPHDA, s 50(1)(a)

[6] NZPHDA, s 50(1)(b)

[7] Terms of Reference for PTAC and PTAC Subcommittees (2016) (PTAC Terms of Reference) at [4.1].

[8] PTAC Terms of Reference at [8.1].

[9] PTAC Terms of Reference at [1.2].

[10] PTAC Terms of Reference at [3.2.1].

[11] PTAC Terms of Reference at [3.2.2].

[12] PTAC Terms of Reference at [3.2.3].

[13] PTAC Terms of Reference at [3.3.1].

[14] PTAC Terms of Reference at [9.4]. This is subject to any specific content being withheld under one of the grounds in the Official Information Act 1982.

[15] Terms of Reference for the PHARMAC Consumer Advisory Committee (2010) (CAC Terms of Reference) at [2.1].

[16] See CAC Terms of Reference at [2.2] for a full list of the activities and how they are described.

[17] CAC Terms of Reference at [10.1].

[18] CAC Terms of Reference at [3.1.2].

[19] NZPHDA, s 49.