New Funding Applications
PHARMAC has an established process for assessing new pharmaceutical funding applications.
The full list of funding applications received since 1 July 2002 is available here (17 pages, 99 KB)
Once a new funding application has been received from a supplier, the application is referred to one of PHARMAC's Therapeutic Group Managers (TGMs), who will seek more information and collate it for the application to be considered by the Pharmacology and Therapeutics Advisory Committee (PTAC).
PTAC can then either refer the application back to the TGM for further information, or make a recommendation on whether to fund the medicine and what priority level it should be given by PHARMAC.
The TGM then negotiates with the supplier to reach a provisional agreement. PHARMAC then consults with the health sector on the proposal and takes this feedback into account before submitting the final proposal to the PHARMAC Board.
If the proposal is accepted, the health sector is notified and the Pharmaceutical Schedule updated.
Pricing Strategies
PHARMAC uses a range of purchasing strategies to enable the best value to be obtained from the Pharmaceutical budget.
Reference pricing
Reference pricing means that all pharmaceuticals in any given therapeutic sub-group, to which PHARMAC decides to apply reference pricing, are subsidised at the level of the lowest priced pharmaceutical in that sub-group. Reference pricing is based on the classification of pharmaceuticals into different therapeutic groups and further into sub-groups.
A therapeutic group is defined as a set of pharmaceuticals which are used to treat the same or similar condition(s). A therapeutic sub-group is defined as a set of pharmaceuticals which produce the same or similar therapeutic effect in treating the same or similar condition(s).
Tendering
PHARMAC uses a Tender to negotiate sole-supply contracts for off-patent pharmaceuticals. This involves issuing tender documents to pharmaceutical suppliers inviting their bids for a set list of pharmaceuticals. Usually the Tender awards three-year sole supply contracts to successful bidders.
Nearly a third of the approximately 2600 chemicals listed on the Pharmaceutical Schedule are sourced through the Tender.
Caps and Rebates
Contracts with suppliers will sometimes include an agreement to cap expenditure at a certain level, with the supplier agreeing to reimburse the cost of the pharmaceutical in excess of the cap in the form of rebates to PHARMAC.
Page updated on 24 Jun 2008
Linked documents
New Funding Applications (17 pages, 99 KB)
Applications received for new investments since 1 July 2002: As published in the Guidelines for the Pharmacology and Therapeutics Advisory Committee (PTAC) and its Subcommittees 2002, PHARMAC is, from 1 July 2002, making the existence of applications for new investments…
