PHARMAC uses a prioritisation process to compare and rank funding options. Possible opportunities for new investment will always exceed the budget PHARMAC has available; therefore prioritisation is an intrinsic part of PHARMAC’s decision-making process.

The relative ranking of options aims to support PHARMAC’s statutory objective “to secure for eligible people in need of pharmaceuticals, the best health outcomes that are reasonably achievable from pharmaceutical treatment and from within the amount of funding provided”.

A funding application or proposal is considered ready for prioritisation when sufficient information is available to permit it to be reviewed against PHARMAC's Factors for Consideration and to inform a comparison with other possible investment decisions. Possible investment decisions include those funded through the Combined Pharmaceutical Budget as well as those relating to hospital pharmaceuticals. This process will likely extend to medical devices in the future.

PHARMAC generally holds a prioritisation meeting 3 to 4 times a year, where new funding options are ranked relative to all previously ranked funding options. This enables PHARMAC to identify which funding options represent the best health outcomes at that given point in time. PHARMAC will also use this information to assist negotiations with pharmaceutical suppliers, and inform PHARMAC’s budget forecasts and annual budget bids to the Minister.