Funding medicines
The drug industry suggests that New Zealand is lagging behind in the supply of the medicines that people need, and the media tend to reinforce that message.
Spokespersons from pharmaceutical companies, especially multinational pharmaceutical companies, give the impression that there is a huge problem, and that more drugs should be added to the system. This is partly based on the assumption that “newer is better” and that generic medicines are inferior to “named” brands.
In fact, for years, New Zealand has been doing very well in controlling expenditure on medicines, which means that it is possible to make more medicines available to patients at a price they can afford.
This has largely been accomplished because of the policies of the Pharmaceutical Management Agency of New Zealand (PHARMAC ) and its skills in negotiating prices with pharmaceutical companies.
If we take a broad perspective on pharmaceutical policy, we see that in Australia one of the stated objectives of the Australian National Medicines Policy is to support the pharmaceutical industry. That is not true of New Zealand, where supporting industry is not among the aims of Medicines New Zealand (the national medicines policy of this country) and therefore their main focus can be on keeping the prices down.
Countries with large pharmaceutical companies often pay higher prices for their medicines. Australia is one such example and so is the UK, where there is a huge pharmaceutical industry and the government is therefore constrained to pay comparatively higher prices for medicines than countries like ours - and contribute more funding to support research and development – in order that the industry in the UK can be satisfied with the support it receives and keep contributing to the economy through its products, which have a wide international distribution.
In New Zealand, reduced expenditure on prescription medicines has been made possible by the lack of a home grown innovative pharmaceutical industry and through PHARMAC’s wide variety of advantageous contractual arrangements with pharmaceutical companies. These include “sole supply” contracts for off-patent drugs, by which large discounts are obtained in exchange for exclusivity, and “bundle” agreements where PHARMAC may list expensive new drugs in New Zealand’s Pharmaceutical Schedule (which specifies all drugs approved for subsidies) in return for the manufacturer discounting the prices of other products it supplies.
Public policy makers in New Zealand have played an important role in keeping the prices of medicines down, supporting PHARMAC’s work with other measures such as keeping down the cost of prescribing medicines.
However, the recent increase from $3 to $5 for each prescription, announced in the budget, seems to indicate a change in direction.
This raises several questions, one of which is whether the government is planning to move away from socialised medicine, which would be a great mistake in view of the success with which the present system is operating.
Though it was mentioned that the money obtained from this rise in charges will contribute to pay for nurses and extra operations, these improvements should not depend on out of pocket expenditure by the public
Whereas the pharmaceuticasl companies might argue that all medicines should compete in the market and market forces be allowed to control supply, I would strongly argue that access to medicines is a fundamental human right and that medicines are essential commodities for which it is legitimate to control prices
Recent research I conducted with my colleagues at the University of Auckland, published in BMJ Open, shows that General Practitioners are generally satisfied with the range and availability of pharmaceuticals for their patients.
However, the GPs involved in the study were also of the view that cost remained a barrier to access to medicines for some people. These included people not registered with a Primary Health Organisation (PHO), those on limited incomes (including teenagers and the elderly) and patients with extensive medicine regimes.
Other researchers uncovering the relationship between costs and consumers, notably a study by Jatrana et al published in the Journal of Epidemiology and Community Health in 2010 have revealed that, for some consumers, even seemingly small changes in the cost of medicines could lead to exacerbation of health problems. Ethnicity was also found to play a critical role in facilitating or impeding access to medicines, with the odds of deferring buying a prescription (because of cost) at least once during the preceding 12 months shown to be greater for Māori and Pacific people than for New Zealand Europeans.
The ultimate aim of PHARMAC is to provide cost effective medicines for New Zealanders. However, the very real benefit of its work flows on to patients only if related costs can be kept down. There is no point in controlling the cost of medicines while at the same time increasing prescription charges.
There is a need to eliminate financial barriers to the supply of medicines in order to ensure that the positive contributions of the healthcare system can be fully transferred to the patients and consumers.
Dr Zaheer Ud-Din Babar is the Head of Pharmacy Practice at The University Auckland’s School of Pharmacy. This article first appeared in The Dominion Post on 29 June 2012.
