No hospital pass
PHARMAC’s roots lay in acquiring pharmaceuticals at sharp prices for community use, with general practitioners, medical specialists and pharmacists its main path for delivering medicines to the public.
But that was to change as the Government sought to extend to the country’s network of hospitals, and the medical devices they use, the efficiencies PHARMAC had gained in community medicines supply.
The changes had their origins in the publication of the 2010 Ministerial Review Group (MRG) report, led by former Treasury boss Murray Horn. In looking at procurement and efficiencies in the health system, the MRG report noted the achievements of PHARMAC and recommended it be given a wider role, including vaccines, hospital medicines, and hospital medical devices.
“In particular, the MRG considers it both possible and desirable to develop a Pharmac-like process for assessing the cost-effectiveness of medical devices and prioritising them for public funding,” the report noted.
From 1 July 2013 PHARMAC officially assumed responsibility for making decisions about which new pharmaceuticals would be funded for use in district health board hospitals. Previously, the agency had entered into national contracts for supply to hospitals on a case-by-case basis.
This was a major expansion of PHARMAC’s responsibilities. For Carl Burgess, chair of PHARMAC’s Pharmacology and Therapeutics Advisory Committee from 2003 to 2012, it was the most significant development during his tenure with the agency.
“Suddenly we were considering a whole new group of drugs which we wouldn’t have considered before,” he says.
PHARMAC assembled a committee of clinicians, pharmacists and its own staff to review hospital pharmaceuticals and consider which should be added to the Hospital Medicines List (HML), a subset of the Pharmaceutical Schedule.
“We had to go through every single drug; it took us just over a year,” he says.
The Government’s motivation went further than just securing better deals on pharmaceuticals for the district health boards. It was also designed to deliver consistency across the country in the medicines DHB hospitals offered to patients.
“The hospitals did their own purchasing. You had inequality to the extent that you had certain drugs, say for schizophrenia, where if the person was a resident in Nelson they couldn’t get that drug,” says Burgess.
“If they came across the Cook Strait, they could get the drug in Wellington.”
PHARMAC had already been managing DHB hospital expenditure on pharmaceutical cancer treatments (PCTs) through the Pharmaceutical Schedule, as well as determining access criteria for them.
The remit widened further when PHARMAC took over managing the funding for the National Immunisation Schedule, including purchasing vaccines, from the Ministry of Health, in the middle of 2012.
PHARMAC’s founding general manager, David Moore, describes it as a “natural fit” for the agency. Vaccines are purchased from pharmaceutical companies so PHARMAC can apply its tried and tested contracting and negotiating processes and the vaccines are administered by the same community and hospital-based professionals handling other medicines PHARMAC secures access to.
The agency was now part of the effort to prevent some of the potentially fatal diseases that can affect unvaccinated children, such as polio, measles and mumps. Dealing with infectious disease outbreaks such as hepatitis A, the gastric infection rotavirus and influenza has also required a new level of responsiveness from PHARMAC.
In 2014, the first year PHARMAC ran the contracting process for the full National Immunisation Schedule, it had to respond to a hepatitis A outbreak in Ashburton and the Hutt Valley, listing an additional vaccine on the Schedule.
A move to list a rotavirus vaccine for all children from 1 July 2014 was linked to a 75 percent reduction in children up to two years old being admitted to Auckland hospitals for the illness.
Each year, PHARMAC is responsible for purchasing more than 1 million vaccines as part of the national influenza vaccine programme.
“The vaccines story demonstrates the power of the PHARMAC model – improving access to vaccines, listing more vaccines and streamlining distribution, all while containing the fiscal impacts, so that more New Zealanders can live longer and healthier lives,” noted PHARMAC’s 2017 Year in Review.
Says current PHARMAC Board chair Stuart McLauchlan: “That good foundation that was set we’ve been able to leverage into other areas.”
Last updated: 13 September 2018