This is the text extract for Annual Review 2007 - Part 2, browse documents here.

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Pharmaceutical investments in 2006-07 – new patients, new spending, better health

Each year, PHARMAC invests millions of new dollars in pharmaceuticals and works to ensure these produce better health for New Zealanders. When looking at the impact on patients, we express health gain in terms of Quality Adjusted Life Years, a standard pharmaco-economic measure that enables comparisons to be made between different medicines that do different things. This is one of PHARMAC’s decision criteria, outlined on page 27. PHARMAC added 11 new products and 30 new presentations of existing products to the Pharmaceutical Schedule during 2006/07. These included treatments for the heart (clopidogrel, pravastatin), asthma (fluticasone with salmeterol combination inhalers), diabetes (insulin glargine), and HIV/AIDS (atazanavir, tenofovir, emtricitabine, enfuvirtide, combination abacavir with lamivudine). Access was widened to a further 28 medicines. These included extending treatments to more patients who had epilepsy or bipolar disorder (lamotrigine), cardiovascular risk and heart failure (carvedilol), diabetes (pioglitazone, insulin aspart and lispro, insulin isophane animal), asthma (budesonide with eformoterol combination inhalers), node positive early breast cancer (paclitaxel), Prader Willi syndrome (growth hormone), and anaemia from cancer chemotherapy treatment (erythropoietin beta). In addition to new listings and expanded access, two of the new presentations listed this year (candesartan 32 mg tablets, nevirapine oral suspension) also produced health gains over previously funded treatments.

Health gains from funding decisions

PHARMAC also assesses the health gains obtained through its investments, and measures outcomes in quality adjusted life years (QALYs). We’ve highlighted the impact of seven of the most significant decisions from 2006-07 here: • insulin glargine for diabetes; • enfuvirtide for HIV/AIDS; • clopidogrel for cardiovascular risk; • tenofovir for HIV/AIDS; • paclitaxel for node positive early breast cancer; • growth hormone for Prader Willi syndrome; and • pioglitazone for diabetes. Investing in these seven medicines led to 9300 new patients being treated in 2006-07, at a cost of $5.6 million. These patients gained the equivalent of 246 full years of extra life (i.e. QALYs). This included 160 QALYs for clopidogrel and 65 QALYs for insulin glargine. After 12 months, these medicines should provide 309 QALYs for 11,500 patients, costing $7.0 million.

Costing new investments

In 2006/07 new investments and widening of access cost $9.0 million. The largest new investments in terms of cost were the listing of clopidogrel, costing $3.3 million over 8 months, insulin glargine ($1.6 million, 11 months), and changes to combination asthma inhalers (further costs of $1.5 million net, 11 months). In addition, this spending was matched by potential nominal savings elsewhere in the Pharmaceutical Schedule or the rest of Vote:Health of $2.5 million. This equated to nominally saving $45 for every $100 spent on these medicines. This included $2.0 million nominal savings for clopidogrel and $310,000 for paclitaxel (breast cancer). After 12 months, nominal savings should reach $3.4 million. These figures do not include the health benefit and savings which would have been gained from other investments; many decisions had no cost, or were savings decisions which did not require such information for a positive decision to be made.

More people treated

New spending decisions in 2006/07 saw an estimated 19,700 new patients treated with these subsidised medicines. These numbers will increase significantly in coming years, as many of the new medicines listed had not yet been subsidised for a full year. The largest numbers of new patients were 5,140 using clopidogrel by June 2007 (eight months following listing), followed by combination asthma inhalers (4,050 by June – 11 months), and with 3580 new patients using insulin glargine. In the first full year of these decisions being implemented, PHARMAC estimates that there would be 33,000 new patients using these medicines – including 7000 new patients using clopidogrel and 6100 new users of combination asthma inhalers. Total expenditure over 12 months for these decisions would be $12.5 million.

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Numbers of patients from specific PHARMAC investment decisions, 2006/07

Decision New listings insulin glargine candesartan - tab 32 mg fluticasone with salmeterol enfuvirtide nevirapine - oral suspension 10 mg per ml clopidogrel atazanavir pravastatin abacavir with lamivudine ferrous fumarate with folic acid emtricitabine tenofovir alendronate with cholecalciferol Relistings phenelzine Access widening budesonide with eformoterol(2) goserelin bupivacaine oxypentifylline paclitaxel insulin aspart, lispro, isophane animal growth hormone for Prader Willi syndrome cyclizine carvedilol lamotrigine pioglitazone midazolam August 2006 August 2006 September 2006 September 2006 September 2006 September 2006 October 2006 December 2006 February 2007 February 2007 April 2007 May 2007 162 7 93 129 239 5 281 413 259 316 1,320 162 10 100 140 280 5 700 990 1,250 600 1,320 November 2006 139 160

(2)

Month of implementation July 2006 August 2006 August 2006 September 2006 September 2006 October 2006 November 2006 November 2006 January 2007 January 2007 April 2007 April 2007 June 2007

Estimated no. new patients by June 007 3,584 1,641 4 9 5,143 114 22 94 868 76 129 611

Estimated no. new patients by 1 months’ implementation 3,600 1,800 4 10 7,000 170 30 200 1,900 145 145 6,200

In addition, access was widened to erythropoietin beta (December 2006), nifedipine (September 2006), acetylcysteine (September 2006), apomorphine (September 2006), interferon alpha-2a/2b (September 2006), total parenteral nutrition (September 2006), ursodeoxycholic acid (September 2006), fluoxetine (November 2006), buspirone (June 2007), mianserin (June 2007), spermicide applicators (September 2006), glycerol (swallowing agent) (February 2007), asthma spacer devices and masks (March 2007), and hydrocortisone with wool fat and mineral oil (March 2007). For these 14 investments, patient numbers at this stage were no higher than predicted had investments not been made, so numbers are not estimated. Notes: 1. Patient numbers have been estimated from HealthPAC data, based on maximum monthly use for the year ending June 2007 beyond expected levels had investments not been made. 2. Changes to the availability of asthma medicines in 2006/07 have been the listing of fluticasone with salmeterol combination ICS/LABA inhalers (Seretide) and widened access to budesonide with eformoterol combination ICS/LABA inhalers (Symbicort). NB: ICS = inhaled corticosteroids; LABA = longacting beta agonist From August 2006 to June 2007, listing Seretide and widening access to Symbicort has been associated with: • 6900 fewer patients for fluticasone (-13500scripts); • 1000 fewer patients for eformoterol (beyond swapping to salmeterol) (-2300); • 20 fewer patients for salmeterol (than expected from increases since salmeterol widening) (-40); • 1010 fewer patients for Symbicort (despite widening) (-2800); and • 6980 extra patients for Seretide (13900). These numbers suggest a net decrease of -900 patients on ICSs including combination products (-0.3% fewer ICS patients), but 5000 extra patients using LABAs including combinations (7% extra LABA patients).

net effects of improving access to asthma medicines() - new listing of fluticasone with salmeterol, widened access to budesonide with eformoterol combination inhalers: ICSs and LABAs Total NB: ICS = inhaled corticosteroids; LABA = long-acting beta agonist August 2006 4,054 19,71 6,096 33,017

“New spending decisions in 006/07 saw an estimated 19,700 new patients treated with subsidised medicines”

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Therapeutic Group Review

The impact of the Government’s access policy changes were the biggest factor driving an 11.8% increase in prescribing during 2006-07.

New Zealand had its largest increase in subsidised prescriptions for a decade in the last financial year, with an 11.8% rise. This means an additional 3.3 million prescriptions that, after analysing the data, can be directly linked to the Government’s Primary Healthcare Organisation (PHO) access policies (including cheaper doctor visits and reduced medicine co-payments). The biggest contributing factor was the final stage of the Government’s access policy roll-out in 2006-07, increasing eligibility for people aged 45-64. In earlier years, the policy had been rolled out to people aged 65 and over (2004), 18-24 (2005) and 25-44. PHARMAC estimates these changes to access policies alone led to an increase of 1.4 - 1.8 million prescriptions, compared with the previous financial year. Influence of access policies on prescription numbers.

Year 2004/05 2005/06 2006/07 Patient age 65 and over 18 to 24 45 to 64 No. Increased Recorded Prescriptions (millions) 1.18 - 1.77 0.13 - 0.17 1.43 - 1.83

Recorded Prescriptions (millions)

The graph below, of recorded aspirin prescriptions, illustrates the increase in recorded prescriptions following increased subsidies for patients aged 45-64. Recorded Prescriptions for Low Dose Aspirin

25,000 20,000 80,000 15,000 10,000 5,000 0 May-06 May-07 Jul-05 Jan-06 Jul-06 Jan-07 Sep-05 Nov-05 Sep-06 Nov-06 Mar-06 Mar-07 Jul-07 Widening of Access 60,000 40,000 20,000 0 120,000 100,000 Recorded Prescriptions: all other patients

May-07

Recorded Prescriptions for Low Dose Aspirin

30,000 Recorded Prescriptions: 45 to 64 years

Increased Subsidies for Patients Aged 45 to 64 years

Patients aged 45 to 64 years

All other patients

Impact of theImpact of the Roll-out Primary Health Care Funding on Roll-out of of Primary Health Care Funding on Recorded Prescriptions Recorded Prescriptions

2.90 2.70 2.50 2.30 2.10 1.90 1.70 Sep-04 Sep-05 May-05 May-06 Sep-06 Jul-04 Jul-05 Jan-05 Jan-06 Jul-06 Nov-04 Nov-05 Nov-06 Mar-05 Mar-06 Jan-07 Mar-07

Overall, the contributing factors to the increase in prescribing were: • Changes in access policies (5-6 years) •Alimentary Tract and Metabolism (20%) Underlying prescribing growth •Alimentary low dose aspirin Growth in Tract and Metabolism (20%) AlimentaryBlood and Metabolism (20%) •Blood and Tract Forming Organs (13%) Population growth 5% % 19%

Actual

Without Roll-outs Estimated

Investment by Therapeutic Group

13% AlimentaryBlood and Metabolism (20%) Tract Forming Organs (13%) •Bloodinvestments in 006-07 New and 1% Blood and Blood and Metabolism (20%) Cardiovascular System (11%) Alimentary Tract Forming Organs (13%) • Other factors 1% AlimentaryBlood and Metabolism (20%) Blood and Tract Forming Organs (13%) Cardiovascular System (11%) Cardiovascular System (11%) AlimentaryBlood and Metabolism (20%) Dermatologicals Forming Organs (13%) Blood and Tract (2%) Blood and Blood Forming Organs (13%) Cardiovascular System (11%) Alimentary Tract (2%) Dermatologicals and Metabolism (20%) Hormone Blood Forming Organs Dermatologicals (2%) Systemic (13%) Blood andPreparations (11%) Cardiovascular System Alimentary Tract and Metabolism (20%) excluding Contraceptive Hormones (5%) Cardiovascular System (11%) Hormone Preparations Organs Dermatologicals (2%) Systemic (13%) Blood and Blood Forming Alimentary TractTract and Metabolism (20%) Alimentary and Metabolism (20%) Hormone Preparations Systemic excluding Contraceptive Hormones (5%) Cardiovascular SystemSystemic Use Blood and BloodAgents Organs (13%) Infections Contraceptive Hormones (5%) Dermatologicals Forming Organs (13%) excluding Forming for Blood and -Blood (2%) (11%) Hormone Preparations Systemic Dermatologicals (2%) Cardiovascular System (11%) (11%) Cardiovascular SystemSystemic Use (5%) Infections Contraceptive Hormones (5%) Blood and -Blood Forming Organs (13%) excluding Agents for DermatologicalsAgents for Systemic Use (5%) Hormone Preparations Systemic Infections - (2%) (2%) Dermatologicals (21%) (11%) Nervous System Cardiovascular System Systemic Hormone Preparations Hormones (5%) excluding Contraceptive Hormone Preparations Systemic excluding Infections - Agents for Dermatologicals (21%) (11%) excluding Contraceptive Hormones Contraceptive Hormones (5%) Systemic Use (5%) Nervous System (2%) Cardiovascular System Systemic Hormone Preparations Nervous System (21%)Immunosuppressants (8%) Infections - Agents for SystemicSystemic Use (5%) Oncology - Agents for Infections Contraceptive Dermatologicals and Hormones (5%) excluding Agents(2%) Use (5%) Hormone Preparations Systemic Infections - (21%) (21%) Nervous System Agents for Systemic Use (5%) Nervous System and Immunosuppressants (8%) Oncology Agents Dermatologicals (2%) Hormones excluding Contraceptive Oncology Agents and ImmunosuppressantsUse (5%) Oncology - Agents for Systemic Hormone PreparationsSystemic (8%) Infections Agents and Immunosuppressants (8%) Respiratory System and Nervous System (21%) Allergies (5%) (8%) excluding Contraceptive Hormones (5%) Nervous System (21%)Immunosuppressants (8%) Hormone PreparationsSystemic Use (5%) Oncology - Agents for (8%) Infections Agents and Systemic Respiratory System and Allergies Allergies (8%) Respiratory System and excluding ContraceptiveAllergies (8%) Hormones Respiratory System and (7%) Nervous System (21%)Immunosuppressants (8%) Other (genito-urinary system, musculo-skeletal (5%) Other (GUS,M-SS,SO,SF) Oncology - Agents for Infections Agents and Systemic Use (5%) system, sensory organs, specialImmunosuppressants (8%) Oncology Agents and foods) (7%) Alimentary Tract and Metabolism (20%) Respiratory System and Allergies (8%) Nervous System (21%) Systemic Use (5%) Other (GUS,M-SS,SO,SF) (7%) Infections - Agents for Other (GUS,M-SS,SO,SF) Allergies (8%) Oncology Agents and Immunosuppressants (8%) Respiratory System and (7%) Nervous System (21%)

New investments

During the year PHARMAC made 39 new investments, with 11 new medicines and widened access to another 28. Significant investments were made for diabetes, asthma, HIV/AIDS, cancer and heart disease – all areas of high health need where new pharmaceutical technologies are becoming available. On its own, low dose aspirin, used for cardiovascular risk, accounted for 20% of all the extra prescriptions funded during the year. This was one of PHARMAC’s key investments in the 2005-06 financial year. Other medicines or groups with large increases included paracetamol (pain), penicillin class antibiotics (bacterial infections), non-steroidal anti-inflammatory agents (arthritis), antidepressants (depression and pain), and some other medicines used mainly for cardiovascular risk (metoprolol, statins, ACE inhibitors).

Blood and Blood Forming Organs (13%)

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The year in numbers

During 006-07… Prescribers wrote 31.9 million subsidised prescriptions At least .69 million people had their medicine subsidised Prescription volumes rose 11.8% (about 3.3 million individual prescriptions) 11 new medicines were funded Over 1 months, new investments will benefit 33,000 patients and cost $1.5 million Pharmaceutical spending rose to $599.37 million (0.07% within Budget)

As well as managing the funding that District Health Boards set aside for community pharmaceuticals, PHARMAC assists DHBs to purchase some products used in public hospitals. More detail on Page .

PHARMAC also continued working with DHBs on the funding of hospital-administered cancer treatments. Access was widened to the chemotherapy drug paclitaxel for breast cancer, providing access for 550 more patients each year which means increased spending of $12.5 million over five years. In April 2007, funding was approved from 1 July 2007 for a concurrent 9-week course of trastuzumab (Herceptin) for a specific type of breast cancer; the funding will take effect from the 2007-08 year onwards. You can read more about this decision on Page 22.

Rachel Grocott Health Economist & Team Leader, Assessment What’s a typical day at PHARMAC? Health economist and team leader Rachel Grocott reckons that’s it’s difficult to define, as the work can be so varied - especially because of her two distinct roles. She’s been at PHARMAC five years now; after graduating in economic honours at Otago University, she joined the Health Funding Authority, and then moved to the Ministry of Health. “I’m passionate about PHARMAC’s objectives (health outcomes and value for money). Working at PHARMAC is a great opportunity to make a real difference and use my skills in a field that really interests me. I love the variety of work, as well as the responsibility.” “A big part of my work is doing cost-utility analysis – providing information on which pharmaceuticals offer the most health gains from a limited budget. Cost-effectiveness is one of PHARMAC’s decision criteria, so it is important these analyses are done correctly and in a timely manner”. It’s harder finding time for her lunchtime gym work out now, so weekends have become even more important; Rachel likes to escape from Wellington with her husband in pursuit of their love of extreme sports and tramping.

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Brian Roulston Analyst Moving to the health sector was a major change of direction for economic statistician Brian Roulston, more used to measuring our Gross Domestic Product for Statistics NZ. His switch to PHARMAC meant relocating to Wellington – quite a step for this self-confessed one-eyed Cantabrian. After one year in the capital, he’s now enjoying the lively, international atmosphere and the city’s notoriously itinerant population; he’s not quite so keen on the way PHARMAC’s offices wobble in the wind. “Pharmaceuticals are a fascinating subject for a statistician, with so many difficult questions and being able to explore data before turning it into information that helps find the answers. Often answering one question simply leads to more questions and that prompts some lively debates, especially because we all have such different backgrounds. I don’t have a health background, but I do understand statistics and analysis, and I like contributing to evidencebased solutions that provide good foundations for decisions. That’s very satisfying.” At the weekends, Brian makes the most of Wellington’s geography, bliss for someone who likes exploring on foot or mountain bike. He’s clearly no longer quite so one-eyed about his home city, confessing it’s hard to beat going out to Wellington’s Heads on a blustery day.

Top 0 most prescribed medicines

Year ending June 2006 Most commonly prescribed subsidised drugs. Note: This does not include non-subsidised prescriptions (i.e. those paid for by the patient or those where the cost falls under the patient co-payment).

Chemical Name paracetamol aspirin simvastatin omeprazole amoxycillin amoxycillin clavulanate metoprolol succinate salbutamol diclofenac sodium cilazapril frusemide bendrofluazide quinapril fluticasone prednisone zopiclone calcium carbonate felodipine thyroxine flucloxacillin sodium Prescriptions 1,591,73 1,111,765 1,090,3 1,037,611 806,138 795,69 770,770 713,88 75,596 65,97 7,796 ,538 18,0 10,313 10,161 0,617 377,57 358,30 350,8 338,515 Main use

pain relief prevents heart attack and stroke (cardiovascular risk) impaired cholesterol (cardiovascular risk) heartburn, stomach ulcers bacterial infections bacterial infections raised blood pressure, heart disease asthma symptoms pain/arthritis raised blood pressure (cardiovascular risk) heart failure aised blood pressure (cardiovascular risk) raised blood pressure, heart disease, diabetes prevents asthma steroid treatment for asthma attacks, arthritis etc insomnia osteoporosis raised blood pressure, heart disease underactive thyroid gland bacterial infections

06’ rank 1 8 3 5 6 7 13 11 9 15 1 10 1 17 18 16 0 19

Changes in Therapeutic Group Expenditure The graph below shows increases and decreases in expenditure within the major therapeutic groups since 1993. There have been significant increases in the areas of Alimentary Tract and Metabolism (mainly treatments for gastric ulcers and heartburn), Blood and Blood Forming (mainly the cholesterol-lowering statins), nervous

Changes in Therapeutic Group Expenditure

Alimentary Tract and Metabolism Blood and Blood Forming Organs Cardiovascular System Dermatologicals Hormone Preparations - Systemic Excluding Contraceptive Hormones Infections - Agents for Systemic Use Nervous System Oncology Agents and Immunosuppressants Other (GUS,M-SS,SO,SF) Respiratory System and Allergies 0.0 25.0 50.0 75.0 $ millions 100.0 125.0 150.0 175.0 Jun 07 Jun 93

system (primarily mental health treatments), and oncology and immunosuppression (mainly cancer treatments). Decreases in respiratory (mainly asthma) and cardiovascular treatments reflect price reductions in those groups, as use has risen substantially since 1993.

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Wise Use of Antibiotics

PHARMAC’s longest-running public health campaign marked its 10th year with the first-time use of television advertisements to promote the campaign’s messages to a wider audience. Three computeranimated TV commercials were aired on free-to-air TV and directly transmitted into doctors’ surgeries via Health TV. A version was also adapted for Māori TV. The campaign returned to its roots with three key messages:

• Antibiotics don’t do colds and flu • If in doubt check it out,

And if an antibiotic is prescribed:

• Take the lot no matter what.

Evaluation of the previous year’s campaign showed the key messages continue to gain traction, but pockets of misunderstandings underline the need for the campaign to continue. At the beginning of the year, PHARMAC also completed work to secure supplies of pandemic antibiotics for any influenza pandemic, with stock to be held and managed through DHB hospital pharmacies. The graph below shows prescriptions for both broad and narrow-spectrum antibiotics increased slightly in 2006-07, reflecting the overall pattern of increase for all medicines. This is most likely due to more people having their prescriptions funded through the roll-out of reduced co-payments for patients.

Antibiotics

Cost (millions) $14.0 Prescriptions 1,400,000

$12.0

1,200,000

$10.0

1,000,000

$8.0

800,000

$6.0

600,000

$4.0

400,000

$2.0

200,000

$0.0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Ending 30 June Cost Amoxycillin Cost Amoxycillin Clavulanate Prescriptions Amoxycillin Prescriptions Amoxycillin Clavulanate

0