Another Review of PHARMAC

With each major change of government in recent years, PHARMAC has been required either to list a particular drug (Herceptin under National), or undergo a review (the current government), or both a new listing (Interferon) and a review (in the early 2000s).

This degree of scrutiny speaks to the sensitive and contested area the agency occupies. As an agent of government it makes inherently controversial decisions (with life-and-death consequences in some instances), but at arm’s length from the political process.

This time, however, the debate around PHARMAC seems to be different. In thirty years of observing this area, I have never seen such a concerted assault on PHARMAC, with barely a week going by without a petition or a media story about the alleged baleful influence of PHARMAC on access to medications. There could be several reasons for this. Is more expected from a government of “compassion and kindness” after a decade of “soft austerity”? Is there a hungrier media and a pharmaceutical industry that is more energetic and savvier? Is it that PHARMAC taking over the procurement of cancer drugs from the DHBs presents a single target? Are social media platforms fuelling more populist, anti-establishment groups across a range of issues?

Whatever the reason, we now have a review headed by Sue Chetwin, former CEO of Consumer New Zealand, with a panel including Heather Simpson, Chair of the Health and Disability System Review, and with terms of reference focused on performance, transparency and accessibility, timeliness of decision-making, equity, new and emerging drugs, criteria for prioritisation, and safety.

On performance, PHARMAC has done well, making savings each year equivalent to its entire budget and sufficient in size to fund a major DHB. It has also taken on an ever-expanding menu of tasks (most recently medical devices) with both quality gains and cost savings.

On transparency and accessibility, it is surprising to the layperson to find that, while financially sensitive information is not open to scrutiny, the records of the key decision-making committee (PTAC) are available on the website. It is also the case that PHARMAC is subject to the Freedom of Information Act, and has a whole section of its website devoted to responding to a large number of requests.

Timeliness of consideration of a drug can be an issue, but often full information is not available to PHARMAC on the entry of a drug to the New Zealand market. This also relates to the government’s interest in new and emerging drugs. Over half of recently listed drugs internationally have been “expedited”, often under circumstances where information on key indicators such as longevity and performance relative to existing drugs is not immediately available.

Equity and prioritization are hard to judge. New Zealand has a low patient co-payment for prescription drugs. Ninety per cent of pharmaceutical use is accounted for by just twenty per cent of medication users, suggesting that those most in need are being targetted, including for multiple conditions requiring complex treatments.

Finally, safety. This is probably prompted by the concerns over PHARMAC’s attempts to substitute cheaper but equivalent generic drugs for more expensive brands. In research with which I have been associated on those with epilepsy, we have found this not to be a problem, although there can be a perception of harm (the nocebo effect) that is not discouraged by the industry.  

Apart from a major funding boost (which is outside the terms of reference for the review), where could PHARMAC raise its game? The industry, and the advocacy groups it fosters, are winning the public relations battle hands down. PHARMAC is in danger of becoming so demonised that it will lose the current tenuous political traction and social license it currently enjoys – because media can always find a human-interest story, with an associated morality tale, on issues of medication access.

But there is another side to this story. Almost all the drugs in question are very expensive, and many of them add limited clinical advantage to existing treatments. Looking through the records of the meetings of PTAC, one can see the careful way in which committee members weigh different sources of information as they become available. Unfortunately, that does not make headlines.

PHARMAC is a remarkable and, to date, unique New Zealand innovation. t is equally remarkable that the agency has survived since 1993 under sustained attack from the pharmaceutical industry. It has had the good fortune to occupy an ideological and pragmatic common ground between governments of very different pollical persuasion for over 25 years, in part because of the billion dollars a year in drug purchasing costs it saves.

Maybe that will see it through this review, as it has through previous challenges to its existence.

Peter Davis

Emeritus Professor of Population Health and Social Science

University of Auckland

Published on STUFF website, 6th March 2021

Invitation to Policy, the guide to Election 2020

I’m writing to invite you to try Policy, the complete guide to Election 2020, now online at

We thought you might be interested because you took part in our 2019 local elections tool Policy Local, as a candidate for the Auckland DHB election.

Policy makes voting easy: all the policies, parties and candidates, all in one place. 

→ See where the parties stand on key issues
→ Learn more about the candidates running in your area: 
→ Save the policies you like most, and view policies without party labels to browse free from bias
→ Share policies and candidates with friends and family 

We’ve summarised 900+ policies from 550+ documents and speeches, and surveyed 500+ candidates across every electorate. We’ve also launched resources for teachers and schools and a policy idea competition for students.

Please consider sharing Policy with your friends and family: research from the Electoral Commission shows that one in three non-voters cite ‘not knowing who to vote for’ as their main reason for not voting.

You can also follow us on FacebookInstagram and Twitter to stay up to date.

Ngā mihi,

Peter Davis

Future lies in expanded primary and community care and fewer hospitals

Peter Davis: Enhanced primary care networks would nurture the health and social care needs of their designated practice populations and keep them out of hospital. (Stock photo)

I wrote this article in September 2019, below is the first paragraph and and link to the piece.

OPINION: The interim report of the health and disability review panel confirms much of what we already know: while the New Zealand system performs adequately by international comparison, it is overly complex and lacks national coherence, its performance is not well monitored and enhanced, primary care and population health lag, digital technologies are underdeveloped and at odds with each other and there is a lack of responsiveness to Māori and Pasifika. And, overall, the system needs “future proofing”.

Read the whole article on

‘Bill English has slammed the big pay rise for the Super Fund boss. Here’s why he’s wrong’

The Spinoff, 24 February 2017

Adrian Orr’s 23% salary increase has been decried by everyone from the PM down. But Orr is no ordinary public service boss: he’s a savvy corporate investor, responsible for truly remarkable returns. His salary should match that reality, argues Peter Davis.

Through the early 2000s both Australia and New Zealand enjoyed good times, thanks to iron ore and dairy – black and white gold – respectively. While the former rewarded its populace with tax cuts and now faces a $40 billion annual deficit, the latter conserved its surpluses, allowing the government of the day to hand a tidy set of books to its successor. After buying back the national airline and railway, creating an indigenous bank, splitting Telecom and establishing Fonterra, it invested those surpluses in, among other things, comprehensive early childhood education, a family support package – and a sovereign wealth fund (otherwise known as the Cullen or Super Fund), an entity already present in other small economies like Norway and Singapore.

The Super Fund is an embarrassment to the present government. It is everything that the current government is not: imaginative and far-sighted. It involves investing surpluses rather than handing them back as tax cuts, it represents asset building rather than debt accumulation, it does not require cuts to public services, and it tackles a big future policy question (how to fund Superannuation). More than that, it represents successful public enterprise of a kind we rarely see in New Zealand. And it has received no assistance from the current government, such as investment of surpluses. Read more

Peter Davis

Chair of The Helen Clark Foundation, an independent public policy think tank.

Published in The Spinoff, 24 February 2017