In New Zealand the Government is the primary funder of pharmaceuticals with 21 District Health Boards holding the budget for both the community Pharmaceutical Schedule (PS) and hospital purchases.

A crown owned agency PHARMAC (Pharmaceutical Management Agency) which was formed in 1993 determines which pharmaceutical products will receive a Government subsidy and the level of that subsidy. This effectively establishes the market price and accordingly PHARMAC is seen and acts as a procurement agent with monopsony powers.

Most medicines listed on the PS are fully subsidised and it is Government policy not to partially fund new listings on this schedule. The individual patient is required to pay the Government prescription charge, or co-payment, which ranges up to $15.00 per prescription but in most cases this is reduced to $3.00 because the patient has enrolled in a PHO (Primary Health Organisation) or hold a Community Services Card.

For the 06/07 financial year the PS received $600million of public funding which was 5.8% of the total Government spending on health. In addition to prescription medicines the PS includes across the counter medicines, special foods and ancillary devices.

This level of investment in medicines does not compare favourably with other OECD countries. Expenditure on the Australia Pharmaceutical Budget scheme accounts for 14% of total Government health expenditure and the OECD average is approximately 18%. This severely restricted funding regime means that many modern effective medicines are not available to New Zealand patients. Recent analysis* has found that of the 83 innovative new prescription medicines listed on the PBS in Australia between May 2000 and October 2006, PHARMAC listed only 22 of those. Successive New Zealand Government’s have created a very hostile market for innovative medicines.




* Michael Wonder, Senior Health Economist, Novartis: Access by patients in New Zealand to innovative prescription-only medicines; how have they been fairing in recent time in relation to their trans-Tasman counterparts?