Tender still important to maintain NZers’ access to medicines

Media release

PHARMAC’s annual tender continues to achieve its objectives, freeing up nearly $45 million from the 2014/15 tender round to reinvest in more medicines for more New Zealanders.

The tender is one of the main ways that PHARMAC releases savings from pharmaceutical spending. The savings are important to enable New Zealanders to get the best health outcomes from pharmaceutical funding, by giving PHARMAC the ability to continue funding an increase in demand for existing medicines and create opportunities for new medicines to be funded.

Director of Operations Sarah Fitt says that the process of awarding contracts from the 2014/15 tender is nearly complete.

Overall, the 2014/15 tender was PHARMAC’s biggest ever, containing 591 medicines or presentations of pharmaceuticals used in the hospital and community, and resulted in savings estimated at $38 million to the Combined Pharmaceutical Budget, plus an additional $6.6 million estimated savings to DHB hospital pharmaceutical budgets.

“We’re pleased with the continued success of the tender, which reflects the healthy competition in the New Zealand pharmaceutical sector,” says Sarah Fitt.

“Without the tender, we would need to seek additional funding from DHBs just to maintain the funded medicines we now have. So it’s an important mechanism that helps us provide continued access to medicines for New Zealanders.”

Now in its 19th year, the 2015/16 draft Invitation to Tender released yesterday includes over 480 different medicines or presentations of pharmaceuticals. Following feedback, PHARMAC will then seek bids from suppliers in November.

Sarah Fitt says the largest estimated savings in the 2014/15 tender were achieved through price reductions on the heart medicine felodipine - $6.2 million over the three-year tender period. The antiviral treatment valganciclovir also produces savings of $3.7 million, while the skin treatment fluorouracil cream and the heart medicine candesartan save $2.7 million each over the three-year tender period.

Some tender bids remain under assessment and, if awarded, may achieve further savings, says Sarah Fitt.

In hospitals, the largest estimated savings of $1 million over three years comes from tranexamic acid, which is used to prevent excessive bleeding.

Contracts negotiated via the 2015/16 tender will come into effect from early 2016.