Community pharmaceuticals : Expenditure trends

14 January 2019

By Prince Siddharth

NZIER report to Medicines New Zealand.

An update of the review of community pharmaceutical expenditure trends still shows a further drop in the proportion of the health budget devoted to pharmaceutical purchasing compared to previous years. Inflation, population growth and a widening of purchase responsibility means that PHARMAC has effectively a little more than half the portion of the health budget it had a decade ago for community pharmaceuticals. PHARMAC needs a $375m boost to keep up with the increase in funding to DHBs. The government budgeted 4.7% of DHB funding for community pharmaceuticals in 2017/18, which used to be 8.1% of DHB funding in 2006/07. Recent changes in policy suggest that this trend is likely to continue.

There are always choices where to spend the next health dollar.

NB: The previous iteration of the report released in 2017 stating the boost required by PHARMAC to keep up with the increase in overall health funding had been overstated. This iteration of the report correctly states the funding boost required for the whole time series period. But, the trend remains - expenditure on community pharmaceuticals as a proportion of the overall health budget is decreasing.