Pharmac Budget 2024/25

Thank you for your request dated 16 May 2024 under the Official Information Act 1982 (the Act) for information relating to Pharmac funding and Budget. Please find a response to each part of your request below:

Pharmaceutical inflation

Are there pharmaceuticals inflation figures that you use or work with Treasury on when developing Budget bids? If so, what’s inflation for pharmaceuticals currently? Or do you simply apply CPI?

This part of your request has been refused under section 9(2)(j) of the Act to enable negotiations to be carried on without prejudice or disadvantage. It may disadvantage our position with suppliers if Pharmac were to release the components of how budget bids were constructed.

Pharmacy co-payment

How much money would Pharmac bring in if the $5 co-payment weas reinstated? I’ve seen estimates of $75 million in the media – is this correct? I note Pharmac received about $21.8 million in last years Budget to fund the co-payments being removed, but also that $170,197,000 for 2023/2024 was provided overall in the Budget last year for removing co-payments. It would be great to understand how much Pharamc would receive from the co-payments, that could be used towards medicines funding.

This part of your request was transferred to the Ministry of Health under section 14(b)(ii) of the Act on 23 May 2024.

Pharmac cost pressures

Can you give us a breakdown of what cost pressures the recently announced increased funding will be used to alleviate? I’m aware Pharmac has been using its reserves for operational funding in recent years. How much of the increase will support Pharmac operations, and how much will support cost pressures for the Combined Pharmaceutical Budget?

The uplift of approximately $1.7B over 4 years will bring into the National Pharmaceutical Purchasing Appropriation baseline several time limited funding uplifts that had been given to Pharmac previously.

Budget 2022 provided a Combined Pharmaceutical Budget (CPB) uplift of $191 million over two years. This, coupled with a further CPB uplift of $66 million in December 2022, enabled new investments to be made in 2022/23 and 2023/24. However, no funding was provided for subsequent outyears.

The addition of COVID-19 vaccines and treatments of approximately $164.8M was brought into the CPB.

The uplifts of $1.7B over 4 years to the National Pharmaceutical Purchasing Appropriation do not impact Pharmac’s operational budget, which is kept separate from the CPB.