Looking after New Zealand's medicines and hospital medical devices

Te Pātaka Whaioranga – Pharmac manages a fixed budget set by the Government and decides which treatments will be funded. We also oversee national contracts for hospital medical devices.

Our job is to get the best health outcomes from treatments for New Zealanders, while staying within the fixed budget the Government sets. This means we must make difficult decisions about which treatments we will fund – there will always be more treatments we want to fund than we can afford.

We also manage national contracts for hospital medical devices. So far, we have about 70 percent of medical devices – that’s about 154,000 – contracted and available for public hospitals to purchase.

Managing supply challenges

While our contracts require that suppliers keep ample stock of medicines, vaccines, and medical devices in New Zealand, Pharmac works closely with them when things don’t go to plan.

The pandemic, the Russia-Ukraine war, shipping delays and labour shortages – the last 12 months have stress-tested the supply chain. Our contract management team have swung in into action to reduce the impact of supply issues for people in New Zealand.

Thankfully, most of the supply issues have not affected New Zealanders but there have been a few significant ones this year. The team has been proactive, from getting alternative brands supplied and listed in the Pharmaceutical Schedule, helping arrange air freighting, and even managing demand for some products and treatments – just to see us through the supply crunch.

Making savings to reinvest in healthcare

Our budget has increased over time to enable us to fund new treatments, widen access to treatments already funded, and meet other costs such as those related to inflation and population growth. To help free up budget to fund new treatments, we also work hard to reduce the cost of the treatments we already fund.

This graph shows our impact on New Zealand’s spending over the past decade, using 2012 prices as a baseline. The gap between estimated expenditure (dotted line) and actual expenditure (solid line) highlights the $2.4 billion the health and disability system would have had to spend on treatments this year without Te Pātaka Whaioranga – Pharmac’s pharmaceutical management.

without Pharmac it could cost $2.4 billion more to fund the medicines we have today .
Estimated savings over the last 10 years

This graph shows our impact on medical devices spending and savings over the past decade. The total annual expenditure under agreement line (solid line) shows how much hospitals have spent on devices we have under contract each year. The cumulative savings line (dotted line) shows what savings have accumulated through Pharmac’s national contracting.

This graph shows our impact on medical devices spending and savings over the past decade..
Price, volume, mix of medicines in New Zealand over the last 10 years

The impact of Pharmac

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

This graph shows that the number of treatments (volume index) and the variety of treatments (mix index) have increased – meaning we’re seeing more, and varied, treatments in New Zealand. At the same time, the cost of treatments (the cost index) has increa.
Price, volume, mix of medicines in New Zealand over the last 10 years