Conflict in the Middle East: Impact on the supply chain

When we become aware of a supply issue, we check if another funded medicine can be used instead, or if we need to get the medicine from a different supplier.

We create a management plan, which looks at how long the supply issue could last, how much stock of the alternative medicine there is, and how clinicians use the medicine in practice.

We work with Health NZ to support management of any supply issues for medical devices. Health NZ leads the process for sourcing an alternative medical device that is clinically suitable for their needs. We provide escalation support if needed. 

New Zealand’s medicines and medical device supply system has proven resilient through major global disruptions.

Pharmac’s contracts require most suppliers of medicines and vaccines to hold a minimum of two months’ worth of stock in New Zealand at any given time. For medical devices, three months’ worth of stock must be held in New Zealand.

Suppliers are required to tell Pharmac if their stock levels are going to drop below the holding levels set out in their contract.

Health New Zealand can buy medical devices that aren’t contracted by Pharmac, which also provides extra flexibility when there is a supply issue affecting medical devices.

If a supplier is going to run out of stock of a medicine, vaccine or medical device that they’re contracted to provide, they need to work with us to find a replacement.

Unlike other medicines, Pharmac manages the ordering and distribution of funded vaccines (excluding the COVID-19 vaccine). Depending on the vaccine, we usually hold between 4- and 6-months’ stock at any time.

For seasonal flu vaccines, a set number of doses is ordered each year and is available for the flu season. The strains of flu can change each year so we plan our ordering to align with this.   

Pharmac works with suppliers to make sure New Zealanders continue to get the medicines, vaccines, and medical devices they need.

Where a contracted supplier is unable to supply a medicine, vaccine, or medical device, the supplier is responsible for the reasonable costs of securing an appropriate replacement.

When supply issues happen, there can be extra work involved for Pharmac and Health NZ to manage the situation and minimise impacts on patients. Our contracts allow us to recover a standard amount to help cover these administrative costs where necessary.

We recognise the importance of early and proactive engagement. When a supplier lets us know as soon as possible about a potential issue and works closely with us to find solutions, we can manage the situation more smoothly. In these cases, the administrative costs are lower and may not apply at all.