The great Pharmac backflip

Written By: - Date published: 9:55 am, June 25th, 2024 - 17 comments
Categories: health, national, same old national - Tags:

That was predictable.

The focus groups have spoken and the Government has completed its 360 degree backflip and decided to fund Pharmac so that National can meet its pledge to introduce 13 new cancer drugs.

As I said earlier the failure to fund the policy in the budget was very poor form. This was the policy that was a core feature of National’s health policy and the justification for cancelling the fees free prescription policy, even though that policy not only improved the health of the poorest amongst us but also saved us millions in hospital costs and freed up valuable hospital beds.

Cutting the fees free policy and pocketing the money while not funding the promised cancer drugs looked especially mean. And opened them up yet again to the criticism that they have to fund those tax cuts for landlords some how.

National had four options:

  1. Get another entity such as Te Whatu Ora to purchase and distribute the drugs.
  2. Set up a brand new entity to purchase and deliver the drugs.
  3. Direct Pharmac to purchase the drugs, thereby destroying its model and undermining its independence.
  4. Give Pharmac a lot more money so that it could work down its list and introduce new drugs including the cancer drugs.

National has gone for option 4 which is the most expensive but most rational response.

As I said previously National has done this before. In 2008 it promised to force Pharmac to fund Herceptin for 12 months for breast cancer sufferers. This gained it accolades at the time although former National Health Minister Jonathon Coleman subsequently conceded that the policy was wrong. He admitted that nine weeks which were funded previously was actually just as effective as 52 weeks. Clearly politicians should stay out of decisions best made by health professionals.

You would have thought that National would have learned from the experience but clearly it did not. It was completely unprepared when it gained power and had no idea how to implement the policy. It was a feel good media announcement totally lacking in any planning about deliverability.

Yesterday’s announcement, worth $604 million over four years, is going to blow a rather big hole in the country’s finances. It is unfunded and will have to be met either by further cuts or by more debt.

Clearly National’s polling has taken a hit and in political terms this was something they had to do to address the damage being caused by an uncosted and unthought through policy there only for the feel good factor.

17 comments on “The great Pharmac backflip ”

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  1. bwaghorn 1
    25 June 2024 at 10:00 am

    If they borrow for this it must be classed as borrowing for tax cuts , surely?

  2. Incognito 2
    25 June 2024 at 10:12 am

    Sorry

  3. observer 3
    25 June 2024 at 10:43 am

    "You would have thought that National would have learned from the experience but clearly it did not."

    They learned exactly what they wanted to. Use cancer for votes. It worked.

    Nobody seriously believes they care about the consequences after winning power, do they? Lie, win.

    (The main difference with 2008 is that Teflon Key could deal with the criticism comfortably, but Luxon can't handle it. A familiar pattern, and ultimately National's caucus will have to face up to it).

  4. Mike the Lefty 4
    25 June 2024 at 11:11 am

    The short story is that it was a populist vote gathering exercise that National thought they could backflip on and get away with it. They were shamed into fulfilling it in the end. Note Chris Luxon's Peter Pan act (oh how clever I am) on RNZ Morning Report today. Not one word of remorse.

  5. Kay 5
    25 June 2024 at 11:20 am

    My biggest fear is, Pharmac will use this as an excuse to mess around with drugs that are already funded, because this top up still won't be enough. They have form in this, and many of us don't have any confidence at all that they won't pull these stunts again.

  6. barry 6
    25 June 2024 at 11:47 am

    Actually the way it has worked out has probably been the best outcome. Pharmac has got more money in a way that doesn't influence its purchasing power.

    Pharmac's success in bargaining down prices is due to its shortage of money. If the government just increases its budget then the drug companies charge more, and we don't get much more health benefit. The drug companies will charge as much as they can get away with and it is only generics that moderate their greed. The new medicines don't have cheaper alternatives in most cases.

    Making it clear that the new money is for new medicines means the price of existing medicines is less likely to be affected.

    Whether this is the best use of the health dollar is another question. Do we have enough specialists to effectively prescribe the new medicines? Is money spent better prolonging the life of a few unlucky cancer patients, or saving children from preventable diseases, or stopping people dying in ED?

    Luckily I don't have to make that decision, but I prefer it is not up to politicians either. The advice should come from experts, and it should be the role of government to make it happen.

    • observer 6.1
      25 June 2024 at 12:17 pm

      Yes, the long-term consequences are enormous, perhaps not yet realized. The government has just committed itself to a massive increase in spending, and not only for one year.

      Now we watch and wait for the cuts elsewhere to enable this.

  7. tsmithfield 7
    25 June 2024 at 11:58 am

    Why is it being asserted as a "backflip"? I don't see any mention of the drugs being funded in the 2024 budget according to this news article prior to the election. So, I struggle to see any sign of a backflip, unless you can point to an article that shows a specific promise to fund it in the last budget.

    It seems like there has been a media beat-up in this respect.

    Anyway, whatever the politics, I am sure you are glad for all the people who will get better medication as a result of this increase in funding. To me, it just makes sense. Health is a lot less expensive if people can have up-to-date medicine that keeps them out of hospital longer.

  8. joe90 8
    25 June 2024 at 2:17 pm

    worth $604 million over four years,

    What we could have had.

    “Overall our boost will increase Pharmac’s funding by more than $1 billion over the next four years, a total increase of 62 per cent since Labour took office in 2017.

    https://www.labour.org.nz/news-release_labour_pledges_billion_dollar_medicines_boost

  9. adam 9
    25 June 2024 at 5:40 pm

    Middle class wins again.

    What an angry working class to do.

    Oh that right, make the decision between medication or food.

    And get shamed for either choice.