Proposal to change how discarded medicines are reimbursed

Medicines Consultation Closed

What we’re proposing

PHARMAC is seeking feedback on a proposal to change how we reimburse discarded medicines (“wastage”) in community pharmacies.

The wastage rule is applied to some products in Section B of the Pharmaceutical Schedule to ensure that community pharmacies are reimbursed for the full cost of a pack. Over time, as the type of products that have been listed on the Schedule have changed, the rule has been added to more products.

We are proposing to change the way that community pharmacies claim a subsidy for wastage, to better reflect when products need to be discarded, and to provide more certainty to pharmacists.

Consultation closes at 5 pm on Tuesday, 20 November 2018 and feedback can be emailed to

What would the effect be?

The proposal would mean that pharmacies would be able to submit a wastage claim at the point when the unused portion of the product is discarded, rather than at the time of the last dispensing.

This would mean that pharmacies would not need to make assumptions as to whether or not the remainder of a pack would be dispensed in the future.

The effect of this change would be:

  • Less financial risk for business owners.
  • Alignment with how Pharmaceutical Cancer Treatment (PCT) wastage reimbursement is managed.
  • Improved access to medicines for consumers.

Who we think will be interested

We think people who are involved in the provision, dispensing and reimbursement for Pharmaceutical Schedule products could be interested.

We expect that this proposal will be of particular interest to community pharmacists, pharmacy dispensary software providers and pharmaceutical suppliers.

About wastage reimbursement

Community pharmacies are contracted by District Health Boards to dispense medicines that are listed in the Pharmaceutical Schedule. While we try not to waste medicines, there are unavoidable circumstances where it is impractical to dispense a whole pack. Situations where a part pack must be discarded could arise due to regulative legislation, expiry or limited stability of a medicine.

At times, the amount of a medicine that is prescribed, and therefore dispensed, does not always align with the pack size of the item that is subsidised, which means that part of a pack may be left over after the dispensing. For commonly-used medicines, this part-pack will likely be used in the preparation of another dispensing, but other cases this will not be possible.

We reimburse community pharmacies for the cost of unused part-packs that are subsequently discarded (“wastage”) for specific products. Wastage differs from ‘original pack’ (OP) dispensing, in which an entire pack is dispensed to the patient because it is impractical to do otherwise, such as with inhalers, eye drops or tubes of cream.

Wastage reimbursement was originally limited to oral liquid antibiotics, where a whole bottle is reconstituted, and the undispensed portion is discarded because of short shelf-life following reconstitution. The claim for wastage then occurs as part of the claim for the dispensed dose.

Over time, we have extended wastage funding to other products, such as high cost tablets (e.g. lenalidomide) and injections (e.g. epoetin alfa). These products don’t have the same stability issues as oral liquids, however wastage, if claimed, must still be claimed as part of the dispensing. This creates a situation where pharmacists need to predict whether they will have future dispensings of these products, or if they should discard the product and claim for wastage.

Why we’re proposing this

Over time, more high cost medicines have been listed in the Schedule and dispensed from community pharmacies. These make up a relatively small proportion of the medicines dispensed each year, but they can have a significant financial impact on a pharmacy if a part-pack remains on the shelf.

PHARMAC wants to support patients accessing medicines from their preferred pharmacy, and this means that we need to ensure that pharmacies are not subject to significant financial risk from dispensing part packs of high cost medicines.

The way that wastage is currently funded was not designed for shelf-stable products, and the way that the wastage rule is operationalised in dispensary software does not always support proper use.

We are looking to improve how wastage is managed, encompassing not only which products wastage funding applies to, but also how and when it is funded. This proposal relates to the way in which wastage funding would work; we expect to consult on changes to the list of products that are subject to wastage funding at a later date.

Details about our proposal

We are proposing to modify how and when wastage is funded in community pharmacies, to better suit the high cost, shelf-stable products that we are now using this mechanism for.

This change would mean that a specific wastage claim would be submitted for discarded stock, rather than as part of a normal dispensing. This would mean that:

  • Wastage claims would be able to be submitted when the remaining product was discarded, rather than at the time of dispensing.
  • Pharmacists would no longer have to predict the likelihood of a future dispensing of the product.

If we proceed with this proposal, we would need to develop rules about when a product can be discarded and wastage claimed, which might relate to time since the last dispensing and/or time before product expiry. The details of this would be the subject of a future consultation.

This proposal would bring wastage reimbursement for community medicines in line with the way that wastage is handled for subsidised Pharmaceutical Cancer Treatments (PCTs) in DHB hospitals.

Next steps

In order to make this change happen, changes would be required within the Pharmaceutical Schedule and the Ministry of Health’s pharmacy payments system, as well as to dispensary software. Before proceeding any further however, we want to get feedback on this proposed new approach.

We consider that this change would result in a better, more consistent process for reimbursing pharmacies for drugs that are not dispensed to patients. We would hope that an improved process for wastage claiming would fit better with normal business processes.

To provide feedback

Send us an email: by 20 November 2018.

All feedback received before the closing date will be considered by PHARMAC’s Board (or its delegate) prior to making a decision on this proposal.

Feedback we receive is subject to the Official Information Act 1982 (OIA) and we will consider any request to have information withheld in accordance with our obligations under the OIA. Anyone providing feedback, whether on their own account or on behalf of an organisation, and whether in a personal or professional capacity, should be aware that the content of their feedback and their identity may need to be disclosed in response to an OIA request.

We are not able to treat any part of your feedback as confidential unless you specifically request that we do, and then only to the extent permissible under the OIA and other relevant laws and requirements. If you would like us to withhold any commercially sensitive, confidential proprietary, or personal information included in your submission, please clearly state this in your submission and identify the relevant sections of your submission that you would like it withheld. PHARMAC will give due consideration to any such request.