Pharmac economic analysis and savings claims

19 October 2018

A report by Sarah Hogan

In the 2017 financial year, PHARMAC claims to have achieved $52 million in savings for New Zealand. PHARMAC further claims that between 2005 and 2016, it saved the District Health Boards nearly $6 billion.

This short note for Medicines New Zealand, provides an explanation and critique of these claims, and a summary of the economic analysis, negotiating strategies, and decision criteria used by PHARMAC. It also looks at the consequences of PHARMAC’s approach and includes examples that illustrate the trade-offs that are less visible in funding decisions.