Managing pharmaceutical expenditure while increasing access - The Pharmaceutical Management Agency (PHARMAC) experience

The role of the Pharmaceutical Management Agency (PHARMAC) is to manage pha rmaceutical subsidy expenditure in New Zealand. PHARMAC has adopted a proac tive approach. It selects the drugs that are to be subsidised and declines to subsidise others. It has established reference pricing across many drug groups, has entered into a range of innovative commercial contracts with ph armaceutical companies, and has encouraged greater price competition among pharmaceutical companies in order to lower prices and control expenditure r isk. These initiatives have all been part of an overarching strategy to improve the value of the government's expenditure on pharmaceuticals. PHARMAC has a lso developed techniques of cost-utility analysis to assess the value of ex penditure. PHARMAC has slowed pharmaceutical expenditure growth, culminating in a fall in expenditure in the 1998/1999 year. At the same time, patient access has continued to expand, with more prescriptions being written and new drugs b eing subsidised. Therefore, PHARMAC has made dramatic strides to improve th e value of the government's expenditure on pharmaceutical subsidies and its actions have meant that more funds have been available for investment in o ther hearth services, than would have occurred if previous policies had rem ained unchanged.