New Zealand Herald, 22 August 2023

PHARMAC is New Zealand’s medicines and medical devices procurement agency. It is almost exactly 30 years since PHARMAC was founded, proving to be one of the longest-lasting agencies in the health sector – and yet in the heat of an election campaign it is in danger of becoming a potent target.

Politicians or former MPs as varied as Katherine Rich (a former National Party MP) and Winston Peters have PHARMAC in their sights, and media outlets as diverse as Radio New Zealand and NBR and social media have carried critical pieces, together with advocacy groups and medical charities.

And this is against the background of a recent review of PHARMAC which, on the one hand, was labelled as “damning” by some yet, on the other, drew qualified praise from the Royal New Zealand College of General Practitioners concluding that it does not consider the PHARMAC system to be “broken”, but at the same time the system is in need of some change.

What is it about PHARMAC that can draw this kind of ire? Essentially the organisation has the unenviable task of subsidising medicines for the entire population on a fixed budget in circumstances where the demand for such treatment is almost infinite – as new drugs come onto the market, new conditions are discovered needing care, and the population ages.

In a sense PHARMAC has been a victim of its own success. It has been so successful in price negotiations with pharmaceutical companies that the savings it has made amount to something like ten per cent of the entire health budget. And governments have banked those savings for use elsewhere in health, while failing to increase the agency’s budget. This has been partly rectified in the latest budget round.

The proximity of Australia is also to a degree unhelpful. Just as tradespeople, professionals and other staff can go over the Tasman and increase their pay by at least a third, so citizens believe that they can do the same and gain treatments they could not in New Zealand. Indeed, we would have to treble our drugs budget just to match the prices Australia pays.

These issues have always been present, but what has made it sharper – aside from budgetary constraints – is the recent increase in expensive, specialised medicines, many of them passed by expedited review, a process which provides much less information and has been found to accept medicines for clinical use that have later to be recalled.

It is also the case that probably only a third of new, high-priced medicines are likely to make a substantial clinical difference, and yet these are understandably welcomed by patients and advocacy groups who might be desperate for any “good” news, no matter how uncertain and marginal.

For example, the drug assessment agency in the US – the FDA – recently passed an Alzheimer’s drug despite the opposition of its entire expert advisory group. Presumably it felt that the small cognitive improvements reported from clinical trials, even despite the identified adverse side effects, were something it should pass on after years of limited hope.

Overall PHARMAC has had considerable success. Quite aside from saving the taxpayer a lot of money, 10% of people receiving medications absorb 84% of total funds (suggesting that those most in need are being addressed), fewer than 5% of patients report financial obstacles to receiving their medications (suggestive of universal access), and the organisation has also had a role in keeping unsafe drugs off the market and working with expert groups to ensure that drugs are only brought onto the market once their clinical application is clear.

It is sometimes said that our system of democratic politics needs to be defended from itself since it relies so much on bringing underlying, potentially destructive, conflicts to the surface, and these need to be handled with civility. Yet, such conflicts can endanger our institutions, as we have seen in the rise of populism under Trump in the US and Boris Johnson in the UK, greatly fuelled by a competitive media environment and turbocharged by the algorithms of social media.

PHARMAC seems to be such a potential lightning rod in the current election season, bringing to the fore an element of the “dark shadow” of adversarial politics.

Why is this so? In many respects access to medicines is a litmus test of a decent society, particularly if a medication can make the difference between life and death. It is a modern “gift relationship” between the citizen and the state. So, it raises fundamental issues about what it is to be a good society.

At the same time medicines are promoted by a commercially savvy industry; they can be very expensive and can come with conflicting therapeutic claims.

So, there is a job to be done here reconciling these contrasting pressures, and PHARMAC has that responsibility. As the college of general practitioners said in their submission, the system is not “broken” – but it has work to do to maintain public confidence.

Peter Davis, Emeritus Professor of Population Health and Social Science, University of Auckland.

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