Community pharmaceuticals : Expenditure trends

NZIER report to Medicines New Zealand.

This report is an update to the report released in 2018, which analysed PHARMAC’s expenditure trends. It includes expenditure data for the years 2018/19 to 2020/21. This report describes the analysis of trends in the Combined Pharmaceutical Budget (CPB) and the community pharmaceutical expenditure component of the CPB. This expenditure data was based on publicly available information from Vote Health Budget Estimates, Official Information Act (OIA) responses received by Medicines New Zealand from PHARMAC, press statements from the Minister of Health on PHARMAC budgets (2017 and 2018) and PHARMAC annual reports. Expenditure data was checked for accuracy against PHARMAC annual reports and, in the case of Vote Health Estimates, against estimates published on the NZ Treasury website.

The objective of the analysis was to identify changes in the absolute and relative levels of expenditure on the CPB and community pharmaceuticals net of rebates and movements in the Discretionary Pharmaceutical Fund (DPF), taking into account inflation and population growth, and in comparison, with other measures of health expenditure.
The analysis does not assume that there is a ‘right’ amount to spend on pharmaceuticals but intends only to provide information for decision-making.

The analysis also did not include any consideration of outcomes of pharmaceutical investment; effectiveness of PHARMAC’s functions or funded pharmaceuticals; effects of changes in the price of pharmaceuticals; the level of need for funded pharmaceuticals; the difference between the relative effectiveness of pharmaceuticals and other health services; or changes in the specific composition of community pharmaceutical expenditure. Interpretation of results may require that these additional issues be considered.