The Government has made its own problem with Pharmac – Steve Maharey

Cancer patients will see an increased rate of new drugs entering the country. Photo / Getty Images

THREE KEY FACTS:

• National campaigned on funding 13 cancer treatments available in Australia, but these were not announced as part of Budget 2024.
• An alliance of haematologists and health groups wrote to the Prime Minister and other ministers, urging them to honour the pre-election pledge to the 21,000 Kiwis with blood cancers.
• Finance Minister Nicola Willis has expressed regret the new drugs couldn’t be funded in this Budget but restated her determination to see the promise honoured.

AN ALTERNATIVE VIEW: Bryce Edwards’ Political Roundup

Steve Maharey is a former chair of Pharmac and an ex-Labour Government minister

OPINION

The Government has a problem of its own making when it comes to Pharmac.

To recap. Pharmac was established in 1993 by National to buy pharmaceuticals (medicines). Anyone wanting Pharmac to buy a medicine makes an application. Pharmac then goes through a process (this is all on their website) of assessing the medicine then ranking it on an “options for funding” list.

Pharmac negotiates with the relevant pharmaceutical company and settles on a price. It works within a fixed budget, employs 150 people and gets advice from a network of some 400 hundred health professionals.

Because the fixed budget is never enough to buy all the medicines people want, Pharmac has attracted a lot of criticism. Its decisions are said to be too slow and lacking transparency, its staff are heartless – the list goes on. Any organisation can improve its performance (and Pharmac has) but the real problem for Pharmac has never been the way it operates. The problem is the level of funding.

This is where the current Government got itself into difficulty. It promised it would make fundamental changes to the way Pharmac operates.

One of the changes it promised to make was to step outside the usual Pharmac process and fund 13 cancer medicines it said were recommended by the Cancer Control Agency.

Finance Minister Nicola Willis. Photo / Mark Mitchell

As part of its election platform, the now Government said it would provide $280 million over four years to purchase these 13 medicines. But, when the details of the 2024 Budget were announced, there was no funding.

At first the Government said they could not afford the $280 million because they had been left a fiscal cliff of $1.7 billion by the previous Government. They were referring to time-limited funding that covered a range of medicines already in use. Ongoing funding had to be found, they said, before anything new could be allocated.

It is odd that the Government was not aware of this situation. The previous Government had time-limited the funding because it intended to reset the entire health budget this year. This was widely understood.

That the Government did not provide the $280m for 13 cancer medicines in the Budget has (and this is speculation) nothing to do with funding. After all, they supported other, less worthy causes.

I suspect they began to have second thoughts about the wisdom of the promise.

Let’s look at a few of the problems they might have come across. It is not the Cancer Control Agency’s job to choose medicines to buy. The list they provided did nothing more than identify medicines not available in New Zealand. They were not suggesting the medicines were effective or suitable for New Zealand patients. In addition, the list is already out of date.

Of the 13 listed, as many as five are of no interest to pharmaceutical companies. They are not seeking funding for them from Pharmac. Of course, they may change their minds now that they know the Government will buy all 13.

The Pharmac model relies on negotiation. If the price and priority of a medicine is known to the pharmaceutical company, negotiations are impossible.

Having made a promise, the Government has a difficult choice to make. It could order Pharmac to buy the medicines and thereby collapse the model. It could ask someone else to buy the medicines and again collapse the model. Or it could give Pharmac substantial extra funding beyond $280m so it can work its way down the options for funding list until it gets to the cancer medicines (assuming the medicines make it to the list).

No choice offers an easy solution to the problem the Government has set for itself.

Yet it has promised it will fund the medicines “soon”. If it does, we can expect there will be no funding for anything else. To be clear, it would mean no funding for anything other than cancer medicines over the next four years.

Prioritising cancer medicines could also impact on other parts of the health system. What about prevention, workforce development, capital investment, pay equity, equipment and IT, to name but a few other priorities crying out for funding?

Challenging as it would have been, the Government might have been best to admit their mistake in promising 13 new cancer medicines. Now it is too late. Expectations have been raised and dashed. Any positive reaction to the Budget has been shadowed by the backlash. The must do what they promised.

For the 1000 patients who are waiting for medicines that might extend their lives (none of the medicines are cures), a promise fulfilled will be welcome news. The pharmaceutical companies will also be supportive. The whole country will wish them well.

But the Government and governments to come will find that the Pharmac model has done irreparable damage. An alternative way of purchasing medicines will need to be found. We will discover, however, that the level of funding will remain the central problem. And without Pharmac, the amount of funding needed will be significantly higher.