Pharmac offside over cost-cutting

The Government drug-buying agency Pharmac has alienated doctors and the health industry in its quest to save money, says Medical Association chairwoman Pippa MacKay.

"They have done what they set out to do, by spreading the money around as much as possible, and in that they have been quite successful, but they alienated everybody in the process.

"They have been extremely aggressive with prescribers and the industry, and it has not been a good environment."

Dr MacKay was responding to a series of criticisms of the agency in the New Zealand Medical Journal, which Pharmac has largely rejected.

The papers described Pharmac's use of reference pricing - basing drug subsidies on the cheapest drug in a group - as a flawed policy tool with an excessive focus on cost over patient health that had failed to reduce the growth in drug spending.

London University professor Nick Bosanquet questioned the uniquely bad relationship between the industry and the Government in New Zealand and asked why drug companies were leaving or cutting back.

"Unless Pharmac exercises its sole buying power fairly, it will block New Zealand out of participation in one of the main growth areas in the new economy."

Dr MacKay said Pharmac placed financial concerns ahead of patient welfare.

A reference pricing decision last year that forced more than 80,000 people to change their hypertension medication was nothing more than an uncontrolled experiment in which some people's health suffered.

She criticised Pharmac's approach to consultation, although she said there were signs that it was trying to improve its relationship with doctors and the industry.

Pharmac general manager Wayne McNee said it was not the agency's job to consider the state of the health industry.

"When Pharmac came into being there was a 20 per cent growth in pharmaceutical expenditure, and that was unsustainable. It was necessary to get expenditure under control, and that has been done."

He said Pharmac's use of reference pricing for the hypertension drugs saved $150 million over five years.