When I arrived in New Zealand 25 years ago, I was struck by the almost visceral hostility between the pharmaceutical industry and Pharmac.
I came from Britain, where relations between government, the pharmaceutical industry, and the NHS were sometimes confrontational, but there was an understanding that industry, regulators and the health services had an obligation to try to work together. Negotiations over prices and access could be difficult, but they took place within an established framework in which both sides understood each other’s responsibilities.
The establishment of the National Institute for Clinical Excellence (NICE) in 1999 introduced a more systematic approach to assessing the clinical and cost-effectiveness of medicines, with defined procedures for consulting manufacturers, clinicians and patients. Its decisions were not always universally welcomed, but the process offered greater transparency and predictability than I would encounter in New Zealand.
Pharmac was still recovering from a series of existential legal challenges brought by pharmaceutical companies in the 1990s, and the resulting mistrust seemed to permeate every aspect of the relationship. The agency had established itself as a formidable negotiator, achieving considerable savings for the taxpayer, but the resentment it generated within the industry was bitter and profound.
There was a dark side to those savings
New Zealand patients faced prolonged delays or went without treatments already available in countries such as Australia and the UK. For some, that meant years of unnecessary suffering, deterioration in their health, and the possibility of shortened lives because effective treatments were inaccessible. The financial savings could be calculated precisely. The human cost was palpable but much harder to measure.
In my early years here, a substantial part of my professional work involved managing the consequences of pharmaceutical companies reducing their operations and representation in New Zealand. Companies were reassessing the resources they were prepared to commit to a market where securing access to new medicines had become exceptionally difficult.
The consequences extended beyond the loss of jobs and local industry expertise. Companies considering where to invest in medical research and clinical trials had little incentive to favour New Zealand when the commercial environment was so difficult. In my experience, this contributed to a reluctance to invest here, with implications for research opportunities, the development of local clinical talent, and patients who might otherwise have gained earlier access to promising treatments. New Zealand retained some research capability, but I believe significant opportunities were lost.
I also recall senior Pharmac figures directly telling me and others that they would welcome patients moving to Australia if the medicines they needed were funded there but not in New Zealand, as their departure would reduce the burden on the New Zealand taxpayer. I found those remarks astonishing, particularly coming from people responsible for decisions that could have such profound consequences for patients and their families.
When I worked with the Researched Medicines Industry Association (RMIA) in the early 2000s, its strategic objective was simply the abolition of Pharmac. Given the antagonism between the agency and the industry, I could understand the frustration behind that position, even though I did not share it.
My view then, and to some extent it remains today, was that many countries could benefit from a model that combines independent assessment of medicines with national purchasing power and the ability to negotiate prices on behalf of taxpayers. There were sound reasons for establishing Pharmac, and it has been remarkably effective in containing pharmaceutical expenditure.
My concerns were primarily about how the model was being applied, the negotiating culture that had developed around it, and most significantly, the willingness of successive governments to use Pharmac’s independence to distance themselves from responsibility for medicines funding.
Politicians Washed Their Hands
By giving Pharmac a fixed budget and leaving it to make difficult decisions about which treatments could be funded, politicians could largely wash their hands of the consequences of failing to provide sufficient resources to keep pace with pharmaceutical innovation. When patients discovered that treatments available in Australia or Britain were not funded in New Zealand, much of their frustration was directed at Pharmac rather than at the governments responsible for determining how much money the agency had to spend.
Other countries faced similar pressures over affordability and the assessment of new treatments, but their funding arrangements differed. New Zealand’s combination of a tightly constrained budget and a powerful central purchasing agency placed an unusually heavy burden on Pharmac. The agency’s ability to negotiate favourable prices was frequently celebrated, while people paid far less attention to whether the overall funding envelope was adequate to meet patients’ changing needs.
The controversy surrounding Herceptin in 2008 highlighted the uneasy relationship between Pharmac’s independence and political accountability. Following a prolonged campaign by women seeking access to a 12-month course of the breast cancer treatment, the incoming National government decided to fund it outside Pharmac’s usual processes. Pharmac had supported a shorter nine-week regimen, based on its assessment of the available clinical evidence.
The decision showed that politicians could intervene when pressure became sufficiently intense, though it also raised legitimate questions about the consistency of medicines funding decisions and the precedent for other patient groups seeking access to treatments. It exposed the difficulty of maintaining an independent decision-making process when elected governments retained ultimate responsibility for available resources and could choose to make exceptions.
The relationship between Pharmac, the industry and government today bears little resemblance to the one I encountered 25 years ago.
The RMIA eventually became Medicines New Zealand, reflecting a broader effort to reposition the industry as a participant in healthcare policy rather than merely a collection of companies negotiating prices with government. Pharmaceutical companies have also become more willing to explain the evidence supporting their products, the economics of medicine development and the contribution that innovative treatments can make to the wider health system.
The commercial interests remain, of course, but both sides seem better able to acknowledge each other’s responsibilities.
Pharmac has undergone changes of its own. Its consultation processes have evolved, patients have a more visible role in its decision-making, and, in my experience, negotiations have become less confrontational. Changes in leadership and organisational culture have also made a difference, with some of the more abrasive personalities from earlier years giving way to people who appear more willing to engage with the industry and listen to patients’ concerns.
Pharmac hasn’t become an entirely open or universally trusted institution. Its handling of specific funding decisions and its engagement with patient communities have attracted serious criticism, and disagreements about pricing, clinical evidence and affordability remain inevitable. But, the organisation I encounter today is noticeably different from the one I first came to know.
The Rise of The Patient Advocates
One of the most significant influences on this change has been the rise of organised patient advocacy, which has shifted the balance of a debate once conducted largely among officials, politicians, and pharmaceutical companies. Patient Voice Aotearoa, established by Malcolm Mulholland and his late wife, Wiki, has been particularly influential in bringing patients’ and families’ experiences into public discussion about medicines funding. Malcolm and other advocates have challenged successive governments and Pharmac over delays in access to treatments, drawing attention to the human consequences of decisions that might otherwise be discussed in terms of budgets and clinical assessments.
Some of their campaigns have been uncompromising, and patient advocacy does not remove the need for difficult decisions about evidence, effectiveness and affordability. What they have done is make it much harder to consider those decisions without acknowledging the people whose lives may be affected. Malcolm’s 2025 appointment to chair Pharmac’s Consumer and Patient Working Group was a remarkable development, given the agency’s earlier relationship with patient advocates.
The COVID-19 pandemic changed the relationship again. The development and deployment of vaccines, particularly Pfizer’s, demonstrated how quickly scientific innovation could respond to a global health emergency when research organisations, manufacturers and governments worked together. Governments that had traditionally approached pharmaceutical expenditure with considerable caution found themselves negotiating directly with manufacturers to secure access to products central to their public health response.
The experience was not without controversy, and public scepticism about pharmaceutical companies did not disappear, complicated by a spike in vaccine hesitancy. But the pandemic provided an unusually visible demonstration of the value of medical innovation and the importance of securing access to it when needed. It also changed how many politicians thought about the pharmaceutical industry, even if that change has not always been reflected in subsequent funding decisions.
David Seymour’s advocacy for increased medicines funding and reform of Pharmac is a particularly notable example. Whatever one’s view of his wider political programme, his willingness to make access to medicines a prominent political issue marks a departure from the days when Pharmac’s ability to contain expenditure was often treated as the only measure of its success.
As the November general election approaches, funding and access to medicines are central to the policies of parties across the political spectrum. National has proposed a further $604 million for Pharmac over four years, while ACT wants to increase the share of the health budget devoted to medicines to reach parity with Australia by 2033. Labour and the Greens have expressed support for increased investment and longer-term planning, though without comparable funding commitments or timetables. Te Pāti Māori has also proposed substantial increases in medicines investment.
Whatever the differences between their proposals, medicines funding has become an election issue in a way I could scarcely have imagined 25 years ago.
Even more encouraging is the prospect of cross-party cooperation. During the recent leaders’ debate, Christopher Luxon and Chris Hipkins were pressed on the need for a longer-term, bipartisan approach to funding for health and medicines. Their subsequent willingness to engage in cross-party discussions, however qualified, raises the prospect of greater continuity in an area of policy that cannot sensibly be planned around three-year electoral cycles.
Pharmaceutical development, clinical research and investment decisions take many years, and uncertainty arising from shifting political priorities discourages investment in New Zealand. A more durable political consensus on medicines funding would not remove the need for difficult choices, but it could provide greater predictability for patients, clinicians, Pharmac and the companies developing new treatments.
Access to Innovative Pharmaceutical Medicines
Earlier this year, I led the development of a white paper, Access to Innovative Pharmaceutical Medicines in New Zealand, sponsored by Bristol Myers Squibb and launched at Parliament in March. Drawing on stakeholder consultations across the health sector, it included 28 recommendations on access to medicines, funding, and the relationship between pharmaceutical innovation and broader health system objectives.
What interested me during that process was the extent of the common ground among participants who approached the subject from quite different perspectives. There were disagreements, as one would expect, but the discussion was generally constructive, and there was a shared recognition that the consequences of medicines funding decisions extend beyond Pharmac’s own budget.
Treatments that prevent hospitalisation, delay disease progression, or enable someone to remain in employment yield benefits elsewhere in the health system and the wider economy, yet funding decisions do not always consider them. While not every new medicine represents good value, we still have to make difficult choices about competing healthcare priorities.
I find this broader understanding of medicines’ place in healthcare most encouraging, especially compared with the arguments that dominated the discussion a quarter of a century ago.
Looking back, I remain convinced that abolishing Pharmac would have been a mistake. The advantages of its purchasing and assessment model are considerable, but they depend on adequate funding, a willingness to engage constructively with manufacturers and patients, and recognition that medicines are part of a much wider health system.
The prominence of funding for medicine in this election campaign is a hopeful sign that this may finally be changing. A considerable gap remains between political commitments and timely access to effective treatments, and the next government will inherit the same difficult questions about affordability and competing priorities that have confronted its predecessors.
Having watched these relationships develop over the past 25 years, I find the shift in the nature of the debate striking. Whether politicians are now prepared to accept greater responsibility for the adequacy and sustainability of medicines funding, rather than leaving Pharmac to bear the burden of public dissatisfaction, will be an important test of what follows the election.
Peter Boyes is a strategic communications adviser specialising in healthcare and public policy, and Director of Boyes Public Relations.
Leave a Reply