Combined Pharmaceutical Budget

The CPB is part of the health budget. It’s the money set aside to pay for medicines and related products.

3.77 million Kiwis received funded medicines.

Pharmac manages the CPB

Medicines are the only part of the health sector where a separate government agency manages the budget.

Each year, we aim to spend every dollar of the CPB on medicines New Zealanders need. We’re responsible for making sure that medicines remain affordable for New Zealand and New Zealanders.

The CPB is completely separate from the money used to meet the costs of running Pharmac. Our operating budget is set by the Minister of Health.

What is the Combined Pharmaceutical Budget for?

The CPB pays for medicines and related products given in hospitals and dispensed from your pharmacy. It also pays for funded vaccines (except the COVID-19 vaccine).

We decide which medicines will be funded by the CPB. You can find all funded medicines and related products listed in the Pharmaceutical Schedule.

The CPB does not pay for your pharmacist’s time to dispense the medicine to you. This is paid for out of the main health budget. Payments are managed by the Ministry of Health.

How is the CPB set

Pharmac, like all Crown entities, takes part in the Treasury Budget process each year. We negotiate with the broader health sector and Treasury to agree how much we’ll ask for.

We then send the Health Minister a letter outlining what we’d like the CPB to be for the next 4 years. Then the final decision is announced as part of the annual Budget in May.

Read previous Budget bid letters

Does the CPB always stay within budget?

Pharmac is legally required to not exceed the CPB. At the same time, we want to put every dollar to work getting better health outcomes for New Zealanders.

It’s a fine balance. If we did overspend, it could affect budgets in the wider health sector. To manage this risk, we have a small discretionary pharmaceutical budget to smooth out any spending lumps.

We constantly monitor how much and which medicines get used. Before we agree to fund a new medicine, we have to know it will stay affordable into the future.

Is increasing the CPB the only way to fund new medicines?

No. In fact, the main way Pharmac funds new medicines is by driving down the cost of the already funded medicines.

A million dollars today buys a lot more medicine than it did in 1993. We achieved these price reductions using our range of negotiation tactics. 

An increase in the CPB also does not guarantee new medicines will be funded. Despite our best efforts, the cost of funding all currently funded medicines does increase over time.  

Read more about contract negotiation

Process chart of how the budget is set (full text follows).
The budget setting process