PHARMAC tender savings top $600 million

PHARMAC has run a tender for off-patent medicines since 1997. The tender promotes competition among pharmaceutical companies to bid for sole supply contracts, usually giving the winning bidder the sole subsidised supply for up to three years.

Director of Operations Sarah Fitt says the tender started small but is now an established and successful part of PHARMAC’s management of pharmaceutical spending for community and hospital medicines.

“It’s grown from just one product to over 400 line items each year,” she says. “And every year the tender makes considerable savings which we can then use to help fund new medicines for New Zealanders.”

“The estimated tender savings from the 2013/14 tender are anticipated to be over $50 million. And decisions from the current tender to date are estimated to save $24 million over three years with a similar amount likely to follow. This takes total estimated savings from the tender to more than $600 million since 1997.”

Sarah Fitt says PHARMAC has seen the number of suppliers bidding for tender contracts grow in recent years, which reflects a healthy competitive market in New Zealand.

“This is one of the factors that enables us to continue to negotiate some of the lowest prices in the world for off-patent medicines.”