Pharmac in dock over subsidy choices

Many women feel let down by the decision on funding the cancer drug Herceptin. Picture / Glenn Jeffrey

Right now there are 1848 medicines in the Pharmaceuticals Schedule - a list of drugs subsidised by the Government, through drug-funding agency Pharmac.

But it's the drugs it doesn't fund that sees Pharmac often making the news.

In July, the agency drew criticism from patient groups and, not surprisingly, the pharmaceuticals industry over its decision not to fund the breast cancer drug Herceptin for women in the early stages of the disease.

Pharmaceuticals manufacturer Roche, who had been negotiating with Pharmac over the cost of the medicine, said it was disappointed with the decision, but would continue to work on securing funding.

National Party health spokeswoman Jackie Blue, who has called Pharmac "miserly" in the past, said the agency had let hundreds of women down.

"The United Kingdom, Australia, Canada ... have exhaustively examined the evidence and found Herceptin to be cost-effective. Why is it that the rest of the world is moving towards funding this drug but New Zealand is backing off?" she asked.

But most other countries, including the UK and Australia, are not working within a capped budget, Pharmac said in a statement at the time.

Funding Herceptin, it pointed out, would cost $25 million a year, compared to an annual budget of $35 million to $40 million for all other cancer drugs.

"Committing $20 million to $25 million on Herceptin will limit the ability to fund other health services ... so a careful choice has to be made."

No matter how careful it is, it seems clear that Pharmac will never be able to please all of the people all of the time.

But acting chief executive officer Matt Brougham says it is really district health boards which face the tough decisions over whether to follow Pharmac's recommendations.

Pharmac decisions are not binding in the case of drugs used in hospitals, and in the past district health boards (DHBs) have found ways to pay for treatments.

"We don't actually hold the funds - it's DHB money and effectively they're having to trade off between how much they spend on pharmaceuticals and how much they spend on other health services. They're the ones who are put in a difficult position."

Pharmac uses what it calls "quality-adjusted life years", or QALYs, to measure the cost-effectiveness of drugs. These are the common currency of health, says Mr Brougham.

A QALY is the measure of how much a drug will improve a patient's life, relative to how much it costs.

Fosamax, an osteoporosis drug approved for funding last year, had a cost per QALY of $1000. In comparison, the QALY cost of Cox-2 inhibitors, which treat arthritis, would have been between $450,000 and $1 million.

There were major clinical risks attached to these drugs - including a link to heart attacks - which could have resulted in extra costs to the system.

This was among the reasons cited by Pharmac for declining to fund them.

Other factors Pharmac considers include whether there are any alternative treatments, whether the medicine carries risks of its own (such as the heart attack risk of Cox-2 inhibitors) and whether it fits in with the Government's current priorities for funding.

John Forman, spokesman for the Access to Medicines lobby group, says Pharmac decisions should be underpinned by "strong guiding principles" like justice and duty of care, rather than budget constraints.

"The current system has a simple direction to do the best with the money available, and that's just not good enough," he says.

Mr Brougham said Pharmac's fundamental duty is to work within the budget. But that isn't necessarily bad.

Surely more money would be a good thing? "The total amount you spend on pharmaceuticals isn't really the issue. To use a crude term, [DHBs] should get the biggest bang for their buck. Then you're releasing dollars that can be used to fund other health benefits."

But critics have pointed out that it can be galling for patients missing out on life-improving drugs, when Pharmac ends up having money left over at the end of the year. The agency underspent by $25 million in the financial year ending 2002, $3 million in 2003, $8 million in 2004 and $400,000 last year.

Mr Brougham said: "It's very difficult when you've got 1500 chemicals on the Schedule."

So what's next for Herceptin? The lack of supporting data is a key obstacle in approving its funding, Pharmac said at the time. But more information has since been provided to the Pharmacology and Therapeutics Advisory Committee, who met on August 17.

"Now what we're waiting for is the minutes from that meeting, and those should be coming out sometime next month," says spokeswoman Dr Dilky Rasiah.

- NZPA