PHARMAC confirms their new way of contracting for medicines

Media release Medicines

PHARMAC is standardising the way medicines are contracted, providing better support to healthcare professionals when they are prescribing medicines for their patients.

“I am pleased to confirm that the Principal Supply Status approach will be implemented through the annual Invitation to Tender for both community and hospital medicines,” says Lisa Williams, PHARMAC’s director of operations.

Previously PHARMAC awarded Sole Supply Status for community medicines and Hospital Supply Status for DHB hospital medicines. Principal Supply Status will mean that the contract will be awarded to the main brand funded in the community and/or bought by DHB hospitals, and there would be an allowance for a certain volume of other brands to also be funded.

The principal supplier’s brand will be the main brand funded in the community and/or bought by DHB hospitals, with an alternative brand allowance (ABA) which will enable a certain volume of other brands to also be funded and/or purchased. It will be used on a case by case basis, and PHARMAC will take expert advice on which brands to use it for.

‘We believe this approach will allow PHARMAC to better support healthcare professionals when prescribing medicines for their patients,” explains Ms Williams. “We have used this approach occasionally over the past ten years where appropriate but implementing Principal Supply Status will allow us to consistently do it.”

Before a decision was made on whether to use the proposed approach, PHARMAC undertook a two-stage consultation process and were grateful for the 25 submissions from suppliers, patients groups and healthcare professionals.

“The feedback was largely positive. A suggestion on the proposed contract terms for the principal supply is being suggested prior to the release of the Invitation to Tender. The invitation to Tender will be issued in November 2020 for contracts that will commence from 1 July 2021. 

“We are here to make more medicines available for more New Zealanders. Our competitive procurement activity is a significant aspect of our business, and we want to ensure that it runs smoothly and that we can achieve benefits for New Zealand while minimising any disruptions to people using pharmaceuticals and to the health sector,” concludes Ms Williams.