Debate on Crown Entities, Public Organisations,and State Enterprises — Pharmaceutical Management Agency

I have a number of grave concerns about Pharmac’s performance, on a number of levels, and it is really difficult to know where actually to start. A lot of the difficulties relate to the fact that the agency has quite a strict financial mandate, which I will read out for colleagues. The mandate is “to secure, for eligible people in need of pharmaceuticals, the best health outcomes that are reasonably achievable from pharmaceutical treatment and”—this is the emphasis here—“from within the amount of funding provided.” Unfortunately, that phrase “from within the amount of funding provided.”, has become the gospel, the driver, for Pharmac. It has simply lost sight of the human factor when it is balancing the books. Countless men, women, and children have been denied access to medicine that would improve their health and quality of life. A study came out last year that looked at the difference between Australians and New Zealanders, and Australians have far more access to new medicines—in fact, to 58 more—than New Zealanders do.

To keep in budget, to keep to this financial mandate, Pharmac has a number of clever little business practices. They are all very effective; they stimulate competition and pit companies against each another. There is a lot of horse-trading behind the scenes, and that can often yield surprising results with the drugs being funded. All of that is to get the price down to the best deal. One much-loved tactic is just to stall and slow the process right down, so a drug can wait years for funding to improve. In fact, I tell colleagues that it takes 2 years for a drug to get funded, and often that tactic is used to stall the funding of the drug until a patent expires on a medicine, which allows cheaper generics to come through. In the meantime, New Zealanders have missed out on a crucial medication.

This was the case for Taxol last year, when it came through for funding. It had been on the waiting list as a breast cancer drug. It is very important in treating aggressive breast cancer. It had been on the funding list for at least 2 years, then suddenly in September or so last year it became funded. The reason was that its patent had expired and generics had come through, so Pharmac was able to drive a hard bargain and get a good price. Good on Pharmac! But, more important, women had missed out on access to Taxol as a very important chemotherapy agent used in breast cancer.

I think that this typifies everything that needs addressing. As an example, I am going to talk about statins. I sent out a press release last week. Statins are crucial medications that lower cholesterol levels and manage cardiovascular events. New Zealand has a high rate of cardiovascular disease; it is the No. 1 killer in New Zealand. Statins are used widely around the world, and there is very firm evidence that they prevent heart disease and death. New Zealand’s use of statins has lagged behind that of the rest of the world, and it has really been quite shameful. New Zealanders have suffered.

I went to a medical law conference a few weeks ago, and the chief executive from Pharmac held up a graph—he was really quite pleased with himself—that showed a huge gap from about 2002 to 2005 where New Zealanders were missing out on statins, and he admitted as much. People had suffered because of that. “But, look,” he said, “we have caught up.”, and the graphs converged from 2005. People died because of that gap, and he was actually a bit misleading. He said that from 2005 our statin access was similar to that of Australia, but he is wrong. It is actually quite different. Australians have unlimited access to at least five different statins, including one of the most potent statins available. New Zealand, in contrast, has only three statins available—two of which are quite restricted, and the list does not include the stronger statin that Australia has.

So I think the statin legacy that Pharmac has given us is quite a shameful legacy. A readers’ survey had also come through, where 7,000 New Zealanders on statin medication had their cholesterol checked. Only 25 percent were actually in the targeted area according to the guidelines. In other words, we have very poor control, in contrast to 51 percent of Australians. Our control is worse, which means that our protection against cardiovascular disease is reduced.

The next graph that Pharmac’s chief executive held up was a graph showing that we had been saving a lot of money in statins. I think, again, that that is false economy. People have died because of a lack of statins, and the money we are spending now we might as well throw down the toilet because our protection is poorer. I think Pharmac needs to come to terms with that. Cheap is not always necessarily best, and certainly access is important to New Zealanders.

Probably lots of backslapping goes on with Pharmac every time the Budget comes through, and every year it comes in under budget because of its financial mandate: it cannot spend over budget. Last year it came in under budget by $19.4 million, which is astonishing. Over the last 5 years a total of almost $50 million has been underspent by Pharmac. That money could have been spent for medicine access for New Zealanders—and was not.

Report noted.

Te Reo Whakapuaki Irirangi (Te Māngai Pāho)