Gareth Morgan and Geoff Simmons, Health Cheque authors
The argument of Medicines New Zealand was finally laid before the public last week (Pharmac’s outlet- mall approach injurious to health – and to trade, June 8). They hoped to counter some of the “scare tactics and poorly informed claims being made by some observers”. Oopsy, they must mean us.
Medicines New Zealand is arguing for increased transparency in how Pharmac operates. It claims that, as a monopsony purchaser and a Government agency, Pharmac should be open to public scrutiny.
Unfortunately, it is difficult to get more public scrutiny without handing over Pharmac’s negotiating advantage with drug companies. This would be the equivalent of handing Pharmac a knife to take to a gunfight.
Medicines NZ begins its argument by re-running unbalanced statistics on the New Zealand drug spend. Partly because of our low national income and partly after years of cost control under Pharmac, it is true that New Zealand spends relatively little on drugs. But what it fails to point out is that the cost- effectiveness of Pharmac’s spend is very high.
As Medicine NZ points outs, Pharmac’s “outlet mall” approach is unlikely to provide the best healthcare available. But we can’t afford the best healthcare for everyone. Pharmac gets us the best healthcare for the money we do have.
Our low spending on drugs is because Pharmac has been doing exactly the job we asked it to: controlling costs and getting the best value. It is understandable that the drug industry would prefer us to have the same profligate approach to spending as we do in the rest of the health sector, but this would be shooting ourselves in the foot. Particularly at a moment like now when we are all tightening our belts.
The medicines industry has also accused Pharmac of strong-arm negotiating tactics. Somehow it is difficult to feel sorry for it. Pharmac is set up for exactly this purpose, in a bid to squeeze value for our drug dollar. Are we hearing this right? Are the drug multinationals really asking us to take it easy on them? We don’t know about you but to us that sounds like Pharmac deserves a medal.
Given the history of drug tactics this claim is laughable. Their ways of influencing doctor’s prescribing habits are well known. Most countries have drug budgets out of control, because drug companies can pick off health organisations or individual doctors and bargain with them directly. By buying collectively, we are able to squeeze a better deal. This tactic is done everywhere in the business world, so why shouldn’t we do it too?
THE drug industry also insinuates that Pharmac manipulates the information available in decision- making processes. This again is ironic for it is a tactic well-known drug companies themselves are well-versed in. Drug companies are known for running thousands of trials and selecting the best ones to go public with.
No wonder Pharmac is selective in the evidence it reviews. Finding unbiased science in the drug industry is like finding a needle in a haystack. The drug industry claims that in an evidence-based process there should be no need for secrecy. Why does it not apply that particular standard to itself and show us the results of all its trials? Oh, that’s right, it can cite commercial sensitivity. Apparently Pharmac isn’t allowed the same honour, because it is a public-sector organisation.
More recently, evidence has appeared that drug companies, through their advertising budgets, influence the messages in the journals that most doctors rely on to stay up to date with the latest medical information. Pharmaceutical purchasing really is a gunfight. Neither side may use gentleman’s tactics, but you have to ask who you would rather trust, Pharmac or the drug companies.
Finally, the drug companies are arguing that we are stifling innovation by not paying for our fair share of patented drugs. Apparently New Zealand is free- riding on the goodwill of other countries for technological advances.
Most health systems in the world chase health benefits at any cost, a fact that drug companies have profited off for years. But the game is up: most health systems, including our own, are slowly realising they can’t be all things to all people. Pharmac puts pressure on drug companies to demonstrate value – healthy-life years gained in other words – for the money spent.
This brings a discipline that exists in most markets, and has to be increasingly applied in healthcare if our system is to remain affordable. Innovation is no good if it doesn’t deliver value for money.
Which brings us to the one issue that we and Medicines New Zealand agree on, and they would do well to stick to it in their arguments. Instead of kneecapping Pharmac, the rest of the health sector should be more like it. We should make decisions on where the best return on our health dollar is, right across the sector.