Funding New Zealand's medicines

Pharmac is a unique agency. It is the only organisation in the world that manages a fixed budget set by the Government and decides which medicines will be funded.

As a Crown entity, our mission is set out in the New Zealand Public Health and Disability Act 2000. Our job is to get the best health outcomes from medicines for New Zealanders, while staying within the budget the Government sets. We decide how we’re going to achieve this - that’s where our strategic direction, values, and commitment to te Tiriti make the difference.

But we can’t do it alone. We work with people and organisations across New Zealand and the world to achieve this mission - from international suppliers of medicines and medical devices to New Zealanders prescribing, dispensing, and using these products. 

More access to more medicines

We know our decisions affect the lives and wellbeing of New Zealanders. We’ve continued to add more medicines and widen access to medicines that are already funded, benefiting an estimated 45,000 people in the 2020/21 financial year. And that’s on top of the 3.7 million New Zealanders who benefitted from subsidised prescriptions.

While the costs of medicines have increased over time, our unique position has allowed us to make more, and varied, medicines available in New Zealand. And we’ve been able to save money in the process - money we then reinvest in funding more, new medicines. 

During the year, we funded 13 new medicines and widened access to 19, building on the approximately 2,000 medicines already subsidised by the Government.

It’s not all about new medicines

Access to medicines can’t just be measured by something being listed in the Schedule. It also matters that people can get the medicine and use it correctly.

We know that many New Zealanders are not getting the funded medicines they need to live their healthiest lives. Maori, Pacific peoples, people with low socio-economic status, refugees, and those who live rurally are often affected by inequity. Improving access to funded medicines for all New Zealanders is a strategic priority for Pharmac.

Finding the money for new medicines

We’ve been successful at negotiating the costs of medicines down. Despite the prices for medicines going up, we’ve reduced the average cost of each dose of medicine each year. 

Without the cost reductions we have secured over time, the pharmaceutical budget would have to be $3 billion just to pay for what we already fund. Instead, it’s a third of that.

Price, volume, mix 

This graph shows that the number of medicines (volume index) and the variety of medicines (mix index) have increased - meaning we’re seeing more, and varied, medicines in New Zealand. At the same time, the cost of medicines (the cost index) has increased but the actual price paid (the subsidy index) has decreased – showing Pharmac is getting more medicines for less money.

as per above.
Price, volume, mix of medicines in New Zealand over the last 10 years

The impact of Pharmac

This graph shows our impact on New Zealand’s medicines spending over the past decade, using 2021 medicine prices as a baseline. The gap between estimated expenditure (blue line) and actual expenditure (green line) highlights the $2 billion the health system would have had to spend on medicines without Pharmac’s pharmaceutical management.

without Pharmac it could cost nearly $2 billion more to fund the medicines we have today .
Estimated savings over the last 10 years