NZ Government Pharmaceutical Procurement Review

The New Zealand Government is taking steps to improve its procurement of national medicine supply through a review process. The Pharmaceutical Management Agency, better known as Pharmac, is a New Zealand Crown entity that decides which medicines and pharmaceutical products are subsidised for use in the community and public hospitals.

Recent supply and quality issues have raised questions about the strength of Pharmac’s procurement model, prompting calls for it to be reviewed, with a scope of providing greater flexibility.

Pharmac’s current procurement model centres on sole-supply agreements, where a drug company submits a bid to supply the whole of the New Zealand market for medication. Pharmac then awards one the sole contract, generally to the best-priced bidder. This model has raised concerns around brand swap, where the one sole supplier may be unable to provide one drug, so substitutes for it for another brand.

In response to criticism, Pharmac had opened its own consultation process, to discuss moving away from sole supply status, which it said would enable greater flexibility through more competitive procurement.

But on Monday, The NZ Government announced a review into Pharmac as a whole, including its speed and transparency of procurement as well as the equity of access to medication to Maori and Pacific people. The independent panel heading up the review will be chaired by consumer advocate Sue Chetwin. An initial response is expected around the end of August.

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