Kathy Spencer: Long awaited review of Pharmac - what to look for

An interim review criticised Pharmac's slow decision-making, it's secrecy and lack of progress in achieving equitable outcomes. Photo / File

Opinion

OPINION

If you are diagnosed with cancer or a rare condition, Pharmac and the way it operates can suddenly take on huge significance in your life.

Most of us are oblivious to how this small government agency decides what medicines we can access through our public health system, and how much we'll pay for them. The medicines our GPs prescribe for us are usually available from the chemist with a $5 charge, so it's not something we need to think about.

However, when you have a serious health condition, and the medicines you need are new and expensive, it can be a totally different and devastating story.

After nearly 30 years in operation, the way that Pharmac purchases medicines on our behalf is finally being reviewed by this Government.

The review panel, led by Sue Chetwin, should be congratulated for last year's interim report, which highlighted several shortcomings – the most important being the way that Pharmac prides itself on its low spending above improving health outcomes.

The panel questioned how Pharmac prioritises medicines for treating rare disorders and cancers – medicines that can be expensive, but offer large health gains to small numbers of people.

It also criticised Pharmac's slow decision-making, its secrecy, lack of transparency, and lack of progress in achieving equitable outcomes.

The panel said: "It is difficult to measure Pharmac's performance other than in relation to the cost savings it says it has made, and then only at a high level. Pharmac's performance monitoring is limited and does not report against its objective of best health outcomes."

Slow decision-making serves the objective of saving money by deferring expenditure, helping to wear drug companies down on price, and allowing more time for patents on medicines to run out.

The panel was told it can take anywhere from nine months to 10 years to get a medicine through Pharmac's funding process.

Imagine having a doctor tell you that a new medicine could extend your life after a cancer diagnosis, or allow your child with cystic fibrosis to breathe freely, but that it could be years before Pharmac decides to fund it.

Spinraza, for example, is a medicine that can make a difference of the ability to walk for a small number of children with type 2 spinal muscular atrophy. Pharmac's failure to fund Spinraza has led some New Zealand families to move to Australia where the medicine has been available for nearly four years.

The medicine Kadclya, a treatment for breast cancer, was first recommended by Pharmac's advisory committee in 2014 but it took until 2019 for Pharmac to agree to fund it. Meanwhile, it had been available in England since 2013 and in Australia since 2015.

Sue Chetwin has led a panel through a review of Pharmac. Its final report is with the Health Minister and is due for release. Photo / Brett Phibbs, File

These lengthy delays happen routinely.

On the issue of secrecy, the panel said: "Pharmac closely guards its information, leaving the public poorly informed about the decisions it makes. In part, Pharmac does this to maintain leverage in price negotiations."

Pharmac's secrecy and lack of transparency have been amply demonstrated by its refusal to provide information to the review panel, making it "extraordinarily difficult" to assess Pharmac's performance. That takes secrecy to the next level.

Unfortunately, the Government excluded the critical issue of Pharmac's funding from the review.

Excluding funding is highly problematic because Pharmac always blames its "fixed budget" for its failure to fund certain effective medicines faster, or at all.

Pharmac gives the impression that its hands are tied on funding. However, the reality is that Pharmac and the DHBs together decide what the budget should be: they recommend an amount for the Minister of Health's approval, and that approval is invariably given.

But because saving money is prized above all else, Pharmac recommends extremely modest budget increases for itself.

Pharmac uses its self-inflicted small budget to drive hard bargains with drug companies and, at the same time, to tell the New Zealand public it can't afford to fund medicines that are available in other countries.

Kathy Spencer. Photo / Supplied

The review panel's final report is being considered by the Minister of Health. When it is released, look for specific recommendations on the following:

• Being required to match comparable countries (such as Australia and the UK) in the time it takes to give New Zealanders access to new, effective medicines.

• Being required to prioritise people with rare disorders and cancers and publish information showing how it has improved health outcomes for these groups.

• Regular reviews of Pharmac's budget to ensure it can deliver on the required timeframes.

Pharmac should become a champion for New Zealanders with the highest health needs.

Those who need the system most should be able to rely on it: they should not have to spend their life savings on medicines, beg for public donations, march in the street, or move to Australia.

• Kathy Spencer was a deputy director-general in the Ministry of Health, a general manager in ACC, and a manager in the Treasury.