Keeping stock: How Pharmac manages the medicine maze

A supply issue occurs when there is a risk to New Zealanders’ access to funded medicines and medical devices. We do our best to anticipate supply issues, let those who might be affected know as early as possible, and proactively work with suppliers and wholesalers to resolve them.

Supply challenges are not unique to New Zealand or healthcare – they are felt worldwide and in almost every sector.

But why do they happen? The most common reasons include shipping and distribution disruptions, changes in demand, manufacturing or quality assurance challenges, product discontinuations or labour shortages across the supply chain.

Many of New Zealand’s medicines and medical devices are manufactured overseas, meaning global events such as extreme weather, earthquakes, conflicts or pandemics can also impact the supply chain.

Pharmac and suppliers work hard to resolve supply issues so New Zealanders’ access to medicines and medical devices isn’t affected. When we identify a potential supply issue, our contract management team works with the supplier and others to take action to manage it so that we can maintain supply.

Due to Pharmac’s contractual agreements with suppliers, New Zealand avoids many supply issues. These require suppliers to keep a certain amount of stock in New Zealand to keep supply flowing. We are also in regular contact with suppliers and can share information about forecast supply and demand to prevent any issues. While these arrangements don’t always stop supply issues from happening, the Pharmac model helps protect continuity.

When facing a supply issue, we ask our expert advisors on our specialist advisory committees to help us understand the impact of the problem on people’s health and what alternative options could be. Our advisory committees consist of health professionals who understand how people, their whānau and communities, and healthcare professionals might be affected by the supply of a medicine or medical device running low or changing.

We also talk with Te Whatu Ora to understand the broader health system impacts of a medicine or device shortage and how we can best work with the sector to support people through the supply disruption.

We work closely with suppliers, wholesalers, Medsafe (New Zealand’s medicines and medical devices safety authority) and, sometimes, Customs to keep products supplied in New Zealand. This can include working with suppliers specialising in finding and supplying medicines from alternative overseas markets to help alleviate short-term issues.

An example of how Pharmac works with others to support continuity of supply was during a catheter shortage in 2024. Pharmac’s relationship with Te Whatu Ora and its suppliers meant we could identify an alternative supplier. Additional stock of catheters was then airfreighted to New Zealand to prevent any disruption to hospital services.

When a medicine or medical device is discontinued, which can happen for various reasons, we look at whether another supplier can take over Pharmac’s supply agreement to provide the product here. We also consider sourcing alternative brands or products through a procurement process.

An example of a discontinuation is when API Consumer Brands announced it was exiting the New Zealand market. API supplied about 21 funded medicines, including treatments used to manage pain, epilepsy, ADHD and skin irritations. Pharmac considered multiple options to secure products – including adding the discontinued medicines to the Annual Invitation to Tender (a competitive procurement process run by Pharmac). This let other pharmaceutical suppliers know that we were looking for new suppliers for the medicines provided by API.

By May 2024, we’ve found alternatives for 17 products, delisted two products from the Pharmaceutical Schedule that were no longer needed and are still working to secure two others. In some situations, Pharmac will also manage supply issues by changing the listing of the medicines or medical devices in the Pharmaceutical Schedule. This includes changing dispensing quantities (like limiting the volume of paracetamol dispensed on a prescription) and dispensing frequency (like moving from three-monthly dispensing to monthly dispensing), introducing a “no new patients” rule/endorsement, or amending Special Authority criteria to allow people to change from one medicine to another more easily.

The Pharmac teams managing supply issues are committed to supporting the best possible health outcomes for New Zealanders by ensuring a steady supply of medicines and medical devices available when people need them.

Geraldine MacGibbon is Pharmac’s director, pharmaceuticals

This article was originally published by NZ Doctor on 5 June 2024(external link) (reproduced here by permission)