Introduction to Pharmac
What is Pharmac?
Pharmac is a Crown Entity that makes decisions on which medicines, vaccines and related products, and medical devices are publicly funded to get the best health outcomes within the available funding. This includes:
- Receiving funding applications for new medicines and eligibility criteria
- Contracting medical devices used by public hospitals
- Seeking clinical advice
- Applying health economics
- Following procurement guidelines
- Managing the Pharmaceutical Schedule (including maintaining the Schedule of medical devices, which Health New Zealand | Te Whatu Ora hospitals can purchase under the agreed terms and conditions).
We do not make, buy, or sell medicines or medical devices, nor do we manage their distribution (although we do buy vaccines and manage their distribution as part of the National Immunisation Schedule).
We don't make a profit.
We manage a budget set by the Government in collaboration with Health New Zealand and we invest all of it on making sure New Zealanders can access medicines.
Our priority is improving health outcomes for all New Zealanders. An important part of this is ensuring New Zealanders can equitably access suitable medicines and medical devices.
Medsafe(external link) is the regulator responsible for assessing the safety and efficacy of medicines. Medsafe operates independently of Pharmac. You can find information on Pharmac’s relationship with Medsafe in our recently updated Memorandum of Understanding.
How does the New Zealand market work?
Pharmac manages the Pharmaceutical Schedule. This schedule is split into three sections:
- Medicines
- Vaccines and related products
- Hospital medical devices
The Pharmaceutical Schedule also lists (where applicable):
- Eligibility criteria for patients
- Funding rules related to dispensing of that pharmaceutical
The Pharmaceutical Schedule is separated into sections that relate to medicines, special foods, vaccines, extraneously compound products, and devices.
The majority of products listed are supplied and/or funded under the terms of agreements with suppliers. Many of these agreements have come about as a result of competitive processes that follow National Procurement Rules. This includes our annual multi-product Tender and Requests for Proposals (RFP).
Pharmaceuticals (medicines, vaccines and vaccine-related products) that are successful in these bids are often awarded a period of market exclusivity. Medicines that are funded outside of a competitive process, such as those under patent, are subject to agreements directly negotiated between Pharmac and suppliers.
Market exclusivity means that there is only one brand funded by Pharmac and the supplier is responsible for ensuring supply for the entire market for that medicine or vaccine with their brand. This approach may differ to other markets, such as Australia, where frequently there are multiple brands funded. Pharmac uses defined terms such
as Principal Supply Status, Sole Supply, and Hospital Supply Status in agreements to describe these arrangements.
Market exclusivity means that suppliers benefit from being the only brand funded, and can plan accordingly, including stock levels and lead times, without the challenges of managing market-share.
A direct contract, rebate scheme or market share arrangement exists between Pharmac and a supplier to provide medical devices at an agreed price to Health New Zealand hospitals.
These arrangements can be very beneficial for suppliers but still contain the obligations that all our Contractual Agreements employ, such as the need to inform Pharmac if there is likely to be an issue with supply.
What is the Pharmaceutical Schedule?
The Pharmaceutical Schedule is a list of all the medicines and therapeutic products that Pharmac has approved for funding. The Schedule lists more than 4,500 medicines that are dispensed in the community or contracted to be given in public hospitals at specified prices, and a growing list of approximately 200,000 hospital medical devices that may be ordered at a specified price.
In the Schedule you’ll find:
- The list of funded medicines in the community
- The list of funded medicines that can be used in public hospitals
- The rules for dispensing or giving medicines
- The price and subsidy (the amount that it is funded) for each medicine
- Any rules or limits on access to funding for specific medicines or groups of medicines
- The list of Health New Zealand hospital devices with national contracts.
- More information on the Pharmaceutical Schedule and our guide to use.
Official Information Act
As a Crown Entity and part of New Zealand’s Public Sector, Pharmac is subject to the Official Information Act 1982 (OIA). Under that Act, members of the public may write to Pharmac to get access to official information. While there are some grounds to withhold information, the general rule is that official information held by Pharmac is subject to the principles of availability and transparency.
For suppliers, this means that:
- information provided by suppliers to Pharmac becomes official information and must be dealt with under the OIA. Pharmac’s duty to act lawfully will supersede other duties Pharmac may owe to the supplier.
- Suppliers may request official information held by Pharmac, just like any other member of the public.
Where Pharmac is asked to disclose information which was provided by a supplier (or may otherwise affect suppliers), Pharmac may ask the relevant supplier for feedback before deciding how to respond to the request. Even where lawful grounds to withhold information are available, Pharmac will still consider whether it is in the
public interest to make that information available.
Pharmac’s decisions on information requests under the OIA are subject to a right to make a complaint to the Office of the Ombudsman.
Pharmac’s OIA team will be available to assist and provide guidance on related questions. Suppliers are also welcome to raise any OIA questions with their contract managers or TGMs.
Email enquiry@pharmac.govt.nz to talk to the OIA team
Our Values
Our values ground our behaviour and guide our thinking. They help us make decisions that create better health outcomes for New Zealanders.
It is important for our suppliers to learn and understand these values, as these make up Pharmac’s identity as an organisation and forms the basis for how we engage with our partners within the health sector in New Zealand and abroad.
Our values and how they relate to our organisation
Te Tiriti o Waitangi
The text of Te Tiriti o Waitangi is the enduring foundation of the Crown’s commitment to Māori, and as citizens of New Zealand we endeavour to respect the principles that Te Tiriti represents.
At Pharmac, this outlines our continuing pursuit of excellence in addressing the best health outcomes possible for Māori and as a supplier we expect and encourage cooperation as we look to improve the lives of Māori as well as other groups experiencing health inequality.
During our ongoing supply partnership, if you, as a supplier, identify inequity in New Zealand, we would strongly encourage you to reach out to your Contract Manager to advise whether you could provide value in this area.
Pharmac acknowledges the special relationship that exists between the Crown and Māori. We uphold the articles of Te Tiriti, advancing Māori health and aspirations: Tino Rangatiratanga, Partnership, Active Protection, Options, and Equity. In the context of supply chain and pharmaceutical supply, this includes:
- Working with whānau, hapū, iwi and Māori communities when developing responses to supply issues with significant impact on these groups.
- Ensuring Māori enjoy the same access to medicines as non-Māori and that changes acknowledge and safeguard Māori cultural concepts and values.
- Encouraging Māori participation in problem solving, especially when issues significantly impact whānau, hapū, iwi and Māori communities.
Read Te Whaioranga for more information.
How do we work with medicines and medical device suppliers?
We work with pharmaceutical companies to secure medicines for New Zealanders. Our scope has expanded to also include negotiating contracts for hospital medical devices:
- Pharmac manages a fixed budget set by the Government and decides which pharmaceuticals will be funded. We also oversee national contracts for hospital medical devices.
- We must make difficult decisions about which pharmaceuticals we will fund – there will always be more pharmaceuticals we want to fund than we can afford. Our decisions are informed by evidence, our Factors for Consideration, internationally recognised assessment methods and expert advice.
- We also use commercial tools (such as competitive procurement) to get as much value from the budget as possible so that we can fund more products for more New Zealanders. We do not make, buy, or sell pharmaceuticals. We don't make a profit. We are given a budget by the Government, and we invest all of it on
making sure New Zealanders can access treatments. - Pharmac negotiates contracts with suppliers to provide hospital medical devices and related products for Health New Zealand hospitals. They include a range of options to support local requirements, such as how equipment is managed and maintained. They include terms and conditions to support the ongoing use of
hospital medical devices. - Once terms are finalised, the hospital medical devices are then added to the Hospital Medical Devices List.
- Caveat: In future, hospital medical devices will need to be listed in the Hospital Medical Devices List for Health New Zealand to be able to use them. Medical devices don’t need to be contracted to be added to the Hospital Medical Devices List. Over time, anything of significant value (financial or clinical) will be
contracted. - Currently, both Pharmac and Health New Zealand manage contracts for hospital medical devices. Health New Zealand holds and manages national contracts for hospital medical devices that Pharmac has not yet contracted.
- Pharmac’s hospital medical device contracts supersede all national, regional, and local Health New Zealand contracts for the same hospital medical device (with the same supplier). The contract terms and conditions include the responsibilities of Health New Zealand, suppliers, and Pharmac.
- Most hospital medical devices, used by Health New Zealand hospitals, will be under Pharmac contracts in 2025.
How do we work with Health New Zealand?
Health New Zealand holds the funding to deliver most publicly financed health services, including public hospitals and the medical devices they use.
We work closely with clinicians and procurement staff when making decisions about hospital medical devices.
How do we work with Medsafe?
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 can consider a medicine or related product for funding before approval by Medsafe.
We are establishing national contracts for medical devices.
In most cases, we agree on a supply contract with the company to ensure they continue to supply the contracted medicines or medical devices. These arrangements are generally ‘ever-green’, which means there is no specified end date for supply.
Every medicine and medical device supplier with an active agreement is assigned a Contract Manager. Contract Managers are generally contactable via phone or email, however in some instances written notification is required (such as when you experience, or may experience, a supply issue).