Interim Report

On 2 December 2021 Hon Andrew Little, Minister of Health, released the Interim Report to the public. 

Message from the Chair

The independent interim report into pharmaceutical medicines buying agency Pharmac has found issues relating to transparency of decision making, and fairness and equity of outcomes.

This is the first independent report into Pharmac since it was established more than 25 years ago. The review panel was asked to consider how well Pharmac performed against what it was asked to do and whether its performance could be improved. It was also asked to look at timeliness of decision-making, transparency, and equity of outcomes, particularly for Māori, Pacific people, disabled people, and those with rare disorders.

Pharmac is a relatively small agency staffed by highly skilled people with a reputation for achieving cost reductions and maximising the value of the annual pharmaceutical budget. It also operates in an environment where it is a very small player on the world stage, and where there is increasing numbers of sophisticated new drugs hitting the market.

Our report is not intended to undervalue the hard work that Pharmac’s staff do. However, Pharmac is coming under increasing challenges from consumer and patient advocates, clinicians and pharmaceutical companies who complain about the timeliness of decisions, the transparency of how it operates and equity issues. These are concerns the panel share.

While the interim report does not make recommendations, it signals the areas of main concern and where the panel is now doing more work.

Over the period of the interim report the panel has met many stakeholders and heard many heartfelt stories. Sadly during the time of the review some of those who shared their experience with us have passed away. In particular the panel would like to acknowledge the contributions of Wiki Mulholland from Patient Voices Aotearoa and Neil Graham from Chronic Lymphocytic Leukaemia Advocates New Zealand.

Pleasingly the observations noted in the report were reached with full agreement from panellists. Our challenge now is to make recommendations that will support Pharmac to become more effective at delivering equitable outcomes for all New Zealanders.

Stakeholder engagement and an initial assessment of Pharmac decision-making processes show:

• Pharmac is underperforming in helping to remove inequitable health outcomes
• Its prioritisation approach appears to disadvantage Māori, Pacific people, disabled people and those with rare disorders
• Te Tiriti o Waitangi principles are largely unseen in decision-making processes
• There may be an excessive focus on containing costs - and a concern the cost-saving model may not be the right one to meet future health needs
• Decision making is opaque and is perceived as being slow
• Engagement with consumers and patient advocacy groups needs to be more meaningful
• Convoluted procurement processes put off pharmaceutical companies
• A perception New Zealand is falling behind other developed countries

The panel notes the health and disability reforms provide an opportunity for Pharmac to work in a more integrated way to contribute to better health outcomes for all New Zealanders.

In the next phase the panel will:

• Make recommendations following the observations made in this report to support Pharmac to become more effective
• Look at Pharmac’s legislative requirements in terms of the new health and disability system and the Pae Oranga Bill (Healthy Futures)
• Make recommendations on Pharmac’s governance arrangements
• Address outstanding aspects of the terms of reference
• Look further at funding for people with rare disorders

Sue Chetwin, Chair Pharmac Review

The independent panel is chaired by consumer advocate Sue Chetwin. Its members include corporate governance and public law consultant Frank McLaughlin, health economist and governance expert Heather Simpson, pharmacist prescriber Leanne Te Karu, GP and Otago University Department of Preventative and Social Medicine, Associate Professor Sue Crengle and disability advocate and epidemiologist Dr Tristram Ingham.

Click here to see a video message from the Review panel Chair, Sue Chetwin [MP4, 31 MB]

You can read the report here: 

Pharmac Review Interim Report (PDF) [PDF, 1.4 MB]

Pharmac Review Interim Report (Word) [DOCX, 1.2 MB]

Pharmac Review Interim Report (Māori) [DOCX, 567 KB]

We are in the process of translating the Executive Summary of the report into Easy Read format. This will be uploaded onto the website as it is ready. 

The review will continue its analysis, including drawing on the content from the submissions we received.

We welcome your thoughts on our interim report.

The Pharmac review and secretariat can be contacted by email at pharmacreview@health.govt.nz.