How medicines are funded
We have a process for all funding applications to ensure that every application is treated fairly.
Our job is to prioritise which new medicines will deliver the best possible health outcomes for New Zealanders.
On this page
- Diagram: How a medicine is assessed for funding by PHARMAC
- Receiving a funding application
- How we decide what to fund
- We get clinical advice about the application
- We assess the application
- Options compared
- Tough choices
- Public consultation
- Final decisions
- Tracking progress
- Who to contact
How a medicine is assessed for funding by PHARMAC
Description of "The journey of a funding application"
A medicine supplier, health professional or an everyday New Zealand can apply for a medicine or a related device to be funded.
- Prepare your application by collating all relevant information.
- Discuss your application with someone from PHARMAC.
- Submit your application via PHARMConnect.
- Review: PHARMAC reviews and evaluates the evidence, including others' submissions on the same medicine.
- Advice: PHARMAC receives recommendations from independent clinical experts from across New Zealand's healthcare sector who sit on the Pharmacology and Therapeutic Advisory Committee (PTAC) and its subcommittees.
- Assess: PHARMAC considers the clinical advice and assesses the medicine. Reasearch and economic analysis take place.
- Compare options: PHARMAC compares and ranks medicines, high to low.
- Prioritise: A prioritised list of medicines for funding is created.
- Identify: PHARMAC identifies which medicines on the list to take forward.
- Negotiate: PHARMAC negotiates price with suppliers.
The Minister sets a fixed budget, so the agreed price must be affordable.
- Provisional agreement: PHARMAC and the supplier confirm a provisional agreement.
- Consult: We ask New Zealanders what they think.
- Consider submissions.
- Final changes: PHARMAC staff make any changes necessary following the consultation submissions.
- Final decision: The PHARMAC board or delegate makes a final decision.
- Notification: PHARMAC notifies the decision to health professionals and the public.
- Listed: If approved, the medicine or medical device is listed on the Pharmaceutical Schedule.
PHARMAC's Factors for Consideration are used throughout this process.
You can see the status of your application in the Application Tracker
Disclaimer: The process set out in this diagram is intended to be indicative of the process that may follow where a supplier or other applicant wishes a pharmaceutical to be funding on the Pharmaceutical Schedule. PHARMAC may, at its discretion, adopt a different process or variations of the process. For example, we decide whether or not it is appropriate to undertake consultation on a case-by-case basis.
Note that implementation of a decision includes both positive and negative funding decisions. These may include notification of a Schedule listing or listing that an application has been declined.
Receiving a funding application
Funding applications can be for a new medicine or wider access to a medicine that is already funded.
Anyone – a consumer, a health professional or a pharmaceutical supplier – can make a funding application to PHARMAC.
Most applications for new medicines are submitted by pharmaceutical companies because they have access to the full range of information PHARMAC needs to assess new medicines applications.
> Read about how to make an application
How we decide what to fund
At every stage in the process below, we use the Factors for Consideration to guide our thinking. This means when deciding whether to fund a medicine or device, we consider:
Need – what’s the impact of the disease or condition that the medicine would address?
Benefits – what benefits and/or side effects would the medicine deliver?
Costs and savings – what costs and savings would result from a decision to fund the medicine?
Suitability – does the medicine come in a form that makes it easy to take/use for the intended patient group? For example, what’s the size, shape and taste of the medicine and how is it administered, eg orally or by injection?
We consider each factor on three levels – as it applies to:
- the individual requiring treatment
- their family/whānau and wider society
- the broader health system.
Not all Factors for Consideration are equally relevant to every funding decision we make. That’s why we use them as a guide, and don’t apply them rigidly.
Our job involves weighing up all these different considerations. We also seek expert advice to help us come to a decision.
> Read more about the Factors for Consideration
We get clinical advice about the application
To help us with our decision making, we get advice from our expert clinical advisors. This can be from:
- our primary advisory committee, the Pharmacology and Therapeutics Advisory Committee (PTAC) or
- one of a number of Subcommittees that provide advice on specific therapy areas.
Our advisors will recommend whether we should progress or decline the funding application. It is ultimately PHARMAC’s decision on whether to progress an application.
> Read more about PTAC and its subcommittees
We assess the application
Following clinical advice, the funding application undergoes an assessment. This includes economic analysis, our Factors for Consideration framework and seeking more information as needed.
> Read our more about our economic analysis policy
Options compared
After performing an extensive assessment of an application, we then use a prioritisation process to compare and rank funding applications.
The relative priority of funding one medicine compared with other medicines can change over time. Any of the following can change the relative priorities of funding choices:
- the relative health benefits
- the relative health need of the patient group that the medicine treats
- a change in price of the medicine (e.g. through negotiations with the suppliers)
- new clinical data
- the mix of other funding applications being considered.
> Read more about prioritisation
Tough choices
Because we operate within a fixed budget, we have to make tough choices about which medicines to fund.
> Read more about the Combined Pharmaceutical Budget
We negotiate the best deal we can with suppliers and agree a provisional agreement.
Public consultation
We ask for the public’s feedback on our proposals to fund, or widen access to, a medicine or group of medicines.
> Find the latest consultations
Final decisions
We incorporate the feedback we received from consultation into our final proposal.
This proposal then goes to our Board to make a final decision on whether to fund a medicine. The Board can choose to delegate that responsibility to the Chief Executive.
> All decisions are notified on the website
Tracking progress
Anyone can follow the progress of every funding application using our Application Tracker.
> Search the Application Tracker(external link)
Who to contact
If you have any questions about the funding process, email enquiry@pharmac.govt.nz
Last updated: 29 June 2020
