PROJECTS

Pharmaceutical Procurement Framework for High-Cost Medicine

The problem

New Zealand’s public health system pharmaceutical procurement framework favors medicines that provide diffuse benefits to large population groups, disadvantaging people who need specific high-cost medicines to treat rare conditions. Recent advances in pharmaceuticals have targeted to small population groups. Often such targeted medicines are costly but produce large benefits for some individuals compared to traditional broad-spectrum medicines.

How we helped

Castalia analyzed ways to better incorporate high-cost narrowly-targeted medicines into the overall decision framework of the pharmaceutical subsidy scheme. We also highlighted how restrictions built into the pharmaceutical benefits scheme, instead of producing savings, led to unnecessary fiscal costs. For example, we studied several high-cost medicines which the scheme funded only for in-house hospital use in order to control costs rather than because in-hospital administration was necessary. We showed that hospitals were unnecessarily admitting people just to receive the medicine.

Impact

Our pharmaceutical procurement framework report contributed to a change in the government’s approach. Government funding for pharmaceutical benefits has been substantially increased compared to recent trends, recognizing the need to improve access to innovative high costs medicines.