The board now says: "Auckland DHB sincerely and unreservedly apologises to Dr [Lance] Gravatt and the Gravatt family for the shortcomings. Auckland DHB accepts that a number of aspects of the shortcomings represented substandard care of Zachary at Auckland City Hospital."
In a joint statement with the Gravatts, the DHB said the family believed Mr Gravatt could have survived with better treatment.
The DHB's view was that he might have survived "with different treatment". It said meningococcal disease was an aggressive disease and the shortcomings in care did not cause Mr Gravatt's death. The disease in many cases resulted in death, "despite the best of care".
Dr Gravatt said the payment was confidential. "For us, it's not about the money. They are finally issuing a sincere and unreserved apology.
"It's quite a fulsome acceptance by the DHB of the things that we have felt strongly didn't go right and should have gone better. No amount of money is ever going to bring Zac back."
The money will go into Te Arai BioFarma, the boutique pharmaceutical company the Gravatts set up with others last year. The company aims to supply affordable medicines, especially vaccines from Cuba's Finlay Institute, which was in the early running to supply a vaccine for New Zealand's meningococcal B epidemic, and India's Serum Institute, a large international supplier.
"The inspiration and motivation for this mission comes in part from the legacy of our son, Zachary, who ... died tragically of a vaccine-preventable disease," said Dr Gravatt, a PhD in chemistry who was formerly the head of drug company AstraZeneca's New Zealand business.
The company hopes to supply a vaccine that protects against meningococcal disease B and C strains that is sufficiently cost-effective to be put on the national schedule of state-funded vaccinations. One of the present meningococcal C vaccines costs about $90 and is used widely with state funding only in outbreaks, such as Northland's in 2011.
Vaccine plans
The Gravatts' pharmaceutical business aims to supply low-cost vaccines to prevent infection with:
• Meningococcal disease B and C strains.
• Influenza - a Nasal spray vaccine.
• Measles, mumps and rubella.
• Haemophilus influenzae B (hib).