Even two years ago, some politicians were still willing to describe Pharmac as “the envy of the world” — as Health Minister Andrew Little did bizarrely in December 2021 while at the same time releasing a scathing interim report into the government’s drug-buying agency.
Once a standard phrase routinely trotted out by government representatives, only a delusional politician or bureaucrat would praise Pharmac in such glowing terms today. The past few years have put it under immense pressure — not least because stories of patients denied drugs that are publicly funded overseas have become depressingly familiar fixtures in the news media.
One such story was published by Stuff at the beginning of January. Toby Fuller, a 25-year-old from Wellington who has multiple myeloma, a type of blood cancer, is on the last line of funded maintenance chemotherapy available to him in New Zealand. Without access to other drugs after Revlimid, he said, he wasn’t expected to live to 30.
He’s been told his best next option is daratumumab, a monoclonal antibody which is publicly funded both in the UK, where he was born, and Australia, where he could immigrate.
Last September, a consultant haematologist at Auckland Hospital, Rodger Tiedemann, described daratumumab as having “revolutionised the treatment of myeloma. It received accelerated approval in the US in 2015. Two randomised studies demonstrated that it reduced the risk of myeloma disease or death by an impressive 60 per cent. It has since been funded in 49 countries. But not here.”
The founder of patient advocacy group Myeloma NZ, retired clinical haematologist Ken Romeril, has described the drug as a “paradigm shift” and a “gamechanger”.
When patients are given access to drugs such as daratumumab, a cancer like multiple myeloma — which was effectively a death sentence just a few decades ago — can be treated as a manageable chronic disease, much as diabetes is. As Myeloma NZ has noted: “Not funding effective treatments for myeloma is very unfair. Patients with other chronic diseases like diabetes are treated for their entire life.”
If Fuller pays for the drug himself in New Zealand, Stuff reported, it would cost him roughly $220,000 (including GST) for the first year (before administration costs are added).
Daratumumab is administered weekly at first, then two-weekly, then monthly (usually by subcutaneous injection or IV infusion). After a year, less frequent treatments mean the annual price for the drug falls to around $120,000.
These eye-watering amounts accurately represent the major financial hurdle facing private cancer patients, but they also risk giving a completely distorted view of how much it would cost Pharmac to fund the drug.
When it comes to discussing the price of medicines, journalists are only able to give the “list price” (or “rack rate”) for the drugs that patients are obliged to pay for private treatment. They can’t say anything useful about how much less Pharmac might expect to pay for them because the agency jealously guards information about what rebates it has received on the drugs it has previously funded (on the grounds of commercial sensitivity).
However, when journalists present only the list price, they also unfortunately reinforce public perceptions that the drugs Pharmac is being asked to fund are grossly unaffordable.
Dr Malcolm Mulholland, the chair of Patient Voice Aotearoa, told The Platform that Pharmac’s silence about how much it pays for drugs is a “massive issue” that has been used by its representatives to “curry favour with the public [by persuading them] that the cost of a drug is too high”.
Mulholland says the “most egregious example” was when Pharmac’s chief executive, Sarah Fitt, was quizzed on the cost of the cystic fibrosis drug Trikafta by the Health Select Committee in 2021.
Fitt told the committee that Trikafta costs “about $270,000 per patient per year, so the total list price would be about $270 million a year and our total budget is just over a billion. It is an extremely expensive medicine.”
There are two obvious problems here.
First, as Mulholland notes, Fitt had multiplied the $270,000 cost by 1000 patients when “there are only just over 500 patients in New Zealand with cystic fibrosis and fewer than 500 would benefit from the drug”.
Second, Fitt knew that, via rebates, Pharmac would probably be able to negotiate a significant discount on the list price she quoted of $270,000.
As it happens, Fitt had earlier in the select committee hearing stated that Trikafta would benefit between 450-500 patients with cystic fibrosis but it was the quote about $270 million that was reported in the media.
She had to later acknowledge to the committee she had misquoted the price per patient, and submitted a new figure of $430,000 a year. The next year, she revised it again, advising, “The current annual estimate is around $330,000 per patient.”
Again, Pharmac would undoubtedly end up paying far less than that sum.
Mulholland says: “We advise that Pharmac will receive a minimum 50 per cent discount on a drug (we had heard of rebates as high as 90 per cent) of the Australian list price, not the American list price. Due to the American insurance system, what they pay for a drug tends to be greatly higher than what is paid elsewhere.”
Unfortunately, the information Pharmac is willing to offer the public goes no further than the average of the rebates it has received on the purchase of more than 580 drugs — which in the 2020/21 year came to 48.34 per cent.
Asked whether rebates were more likely to be higher for older or newer drugs, Mulholland replied: “It is my understanding that a greater rebate is offered on newer drugs, rather than the older drugs. This is to do with access to the market — the companies want their drugs to enter into markets and so therefore they offer a lower price.”
So, in Toby Fuller’s case, it is entirely likely Pharmac would pay no more than $110,000 for daratumumab for his first year of treatment, and $60,000 thereafter. And possibly less.
Without better understanding of the prices Pharmac effectively pays for drugs, it is simply impossible for New Zealanders to have an informed debate about the desirability of funding individual treatments.
The independent review panel — set up to investigate how well Pharmac performs against its objectives — acknowledged in its interim report in December 2021 that the agency’s secrecy was motivated by a desire to maintain its “leverage in price negotiations” but that approach leaves “the public poorly informed about the decisions it makes”.
It wasn’t clear to the reviewers “how Pharmac weighs the trade-off between public transparency and commercial leverage, and whether anyone is maintaining oversight of this trade-off”.
And it’s not just the public who are kept in the dark. The review panel said in its final report in 2022 that it couldn’t even get pricing information on the six drugs it had used as case studies.
The review noted: “We were not told the price of the medicines or the potential budgetary impact of funding them. The limited information available to us did not enable us to say whether the analysis Pharmac undertook was proportionate to the potential amount it would have to spend.”
One of the review’s recommendations was to require Pharmac “to ensure its contractual obligations do not preclude the sharing of commercially sensitive information with the key monitoring agencies such as Health NZ / Māori Health Authority [and] the Treasury”.
In other words, it appears that even these powerful ministries aren’t privy to that information. Patient advocacy groups describe Pharmac as “a law unto itself” with good reason.
In his new role as the Associate Minister of Health (Pharmac), Act leader David Seymour has taken on specific responsibility for overhauling the agency. In fact, reforming Pharmac has been one of his party’s concerns for several years — with an emphasis on encouraging “transparency” over drug funding choices a constant theme.
Act is not the only party in Parliament that has asked for more transparency. In March 2022, Te Pāti Māori co-leader Debbie Ngarewa-Packer took Sarah Fitt to task for her incorrect answers to the Health select committee the previous year about the price of Trikafta.
Ngarewa-Packer pointed out that the list price Fitt had presented didn’t take into account the likely 50 per cent rebate Pharmac would get.
Fitt responded: “Debbie Ngarewa-Packer’s assertion that we could get a 50 per cent reduction in price is unfortunately unlikely.”
Not impossible; just “unlikely”.
In December 2022, Pharmac announced Trikafta would be available to cystic fibrosis patients from 1 April 2023 — joining more than 30 other countries where the drug is publicly funded.
Newshub noted: “While the drug is listed at $324,000 per person per year, Pharmac negotiated a significant, but commercially sensitive, discount.”
The news report indicated 388 cystic fibrosis sufferers would benefit.
Graham Adams is an Auckland-based freelance editor, journalist and columnist. This article was originally published by ThePlatform.kiwi and is published here with kind permission.
He’s been told his best next option is daratumumab, a monoclonal antibody which is publicly funded both in the UK, where he was born, and Australia, where he could immigrate.
Last September, a consultant haematologist at Auckland Hospital, Rodger Tiedemann, described daratumumab as having “revolutionised the treatment of myeloma. It received accelerated approval in the US in 2015. Two randomised studies demonstrated that it reduced the risk of myeloma disease or death by an impressive 60 per cent. It has since been funded in 49 countries. But not here.”
The founder of patient advocacy group Myeloma NZ, retired clinical haematologist Ken Romeril, has described the drug as a “paradigm shift” and a “gamechanger”.
When patients are given access to drugs such as daratumumab, a cancer like multiple myeloma — which was effectively a death sentence just a few decades ago — can be treated as a manageable chronic disease, much as diabetes is. As Myeloma NZ has noted: “Not funding effective treatments for myeloma is very unfair. Patients with other chronic diseases like diabetes are treated for their entire life.”
If Fuller pays for the drug himself in New Zealand, Stuff reported, it would cost him roughly $220,000 (including GST) for the first year (before administration costs are added).
Daratumumab is administered weekly at first, then two-weekly, then monthly (usually by subcutaneous injection or IV infusion). After a year, less frequent treatments mean the annual price for the drug falls to around $120,000.
These eye-watering amounts accurately represent the major financial hurdle facing private cancer patients, but they also risk giving a completely distorted view of how much it would cost Pharmac to fund the drug.
When it comes to discussing the price of medicines, journalists are only able to give the “list price” (or “rack rate”) for the drugs that patients are obliged to pay for private treatment. They can’t say anything useful about how much less Pharmac might expect to pay for them because the agency jealously guards information about what rebates it has received on the drugs it has previously funded (on the grounds of commercial sensitivity).
However, when journalists present only the list price, they also unfortunately reinforce public perceptions that the drugs Pharmac is being asked to fund are grossly unaffordable.
Dr Malcolm Mulholland, the chair of Patient Voice Aotearoa, told The Platform that Pharmac’s silence about how much it pays for drugs is a “massive issue” that has been used by its representatives to “curry favour with the public [by persuading them] that the cost of a drug is too high”.
Mulholland says the “most egregious example” was when Pharmac’s chief executive, Sarah Fitt, was quizzed on the cost of the cystic fibrosis drug Trikafta by the Health Select Committee in 2021.
Fitt told the committee that Trikafta costs “about $270,000 per patient per year, so the total list price would be about $270 million a year and our total budget is just over a billion. It is an extremely expensive medicine.”
There are two obvious problems here.
First, as Mulholland notes, Fitt had multiplied the $270,000 cost by 1000 patients when “there are only just over 500 patients in New Zealand with cystic fibrosis and fewer than 500 would benefit from the drug”.
Second, Fitt knew that, via rebates, Pharmac would probably be able to negotiate a significant discount on the list price she quoted of $270,000.
As it happens, Fitt had earlier in the select committee hearing stated that Trikafta would benefit between 450-500 patients with cystic fibrosis but it was the quote about $270 million that was reported in the media.
She had to later acknowledge to the committee she had misquoted the price per patient, and submitted a new figure of $430,000 a year. The next year, she revised it again, advising, “The current annual estimate is around $330,000 per patient.”
Again, Pharmac would undoubtedly end up paying far less than that sum.
Mulholland says: “We advise that Pharmac will receive a minimum 50 per cent discount on a drug (we had heard of rebates as high as 90 per cent) of the Australian list price, not the American list price. Due to the American insurance system, what they pay for a drug tends to be greatly higher than what is paid elsewhere.”
Unfortunately, the information Pharmac is willing to offer the public goes no further than the average of the rebates it has received on the purchase of more than 580 drugs — which in the 2020/21 year came to 48.34 per cent.
Asked whether rebates were more likely to be higher for older or newer drugs, Mulholland replied: “It is my understanding that a greater rebate is offered on newer drugs, rather than the older drugs. This is to do with access to the market — the companies want their drugs to enter into markets and so therefore they offer a lower price.”
So, in Toby Fuller’s case, it is entirely likely Pharmac would pay no more than $110,000 for daratumumab for his first year of treatment, and $60,000 thereafter. And possibly less.
Without better understanding of the prices Pharmac effectively pays for drugs, it is simply impossible for New Zealanders to have an informed debate about the desirability of funding individual treatments.
The independent review panel — set up to investigate how well Pharmac performs against its objectives — acknowledged in its interim report in December 2021 that the agency’s secrecy was motivated by a desire to maintain its “leverage in price negotiations” but that approach leaves “the public poorly informed about the decisions it makes”.
It wasn’t clear to the reviewers “how Pharmac weighs the trade-off between public transparency and commercial leverage, and whether anyone is maintaining oversight of this trade-off”.
And it’s not just the public who are kept in the dark. The review panel said in its final report in 2022 that it couldn’t even get pricing information on the six drugs it had used as case studies.
The review noted: “We were not told the price of the medicines or the potential budgetary impact of funding them. The limited information available to us did not enable us to say whether the analysis Pharmac undertook was proportionate to the potential amount it would have to spend.”
One of the review’s recommendations was to require Pharmac “to ensure its contractual obligations do not preclude the sharing of commercially sensitive information with the key monitoring agencies such as Health NZ / Māori Health Authority [and] the Treasury”.
In other words, it appears that even these powerful ministries aren’t privy to that information. Patient advocacy groups describe Pharmac as “a law unto itself” with good reason.
In his new role as the Associate Minister of Health (Pharmac), Act leader David Seymour has taken on specific responsibility for overhauling the agency. In fact, reforming Pharmac has been one of his party’s concerns for several years — with an emphasis on encouraging “transparency” over drug funding choices a constant theme.
Act is not the only party in Parliament that has asked for more transparency. In March 2022, Te Pāti Māori co-leader Debbie Ngarewa-Packer took Sarah Fitt to task for her incorrect answers to the Health select committee the previous year about the price of Trikafta.
Ngarewa-Packer pointed out that the list price Fitt had presented didn’t take into account the likely 50 per cent rebate Pharmac would get.
Fitt responded: “Debbie Ngarewa-Packer’s assertion that we could get a 50 per cent reduction in price is unfortunately unlikely.”
Not impossible; just “unlikely”.
In December 2022, Pharmac announced Trikafta would be available to cystic fibrosis patients from 1 April 2023 — joining more than 30 other countries where the drug is publicly funded.
Newshub noted: “While the drug is listed at $324,000 per person per year, Pharmac negotiated a significant, but commercially sensitive, discount.”
The news report indicated 388 cystic fibrosis sufferers would benefit.
Graham Adams is an Auckland-based freelance editor, journalist and columnist. This article was originally published by ThePlatform.kiwi and is published here with kind permission.
3 comments:
Fitt has proven she isn't Fitt for purpose. Hopefully a eview will see her see the train coming and she will step off the Pharmac income train.
Pharmac seem to have succeeded in convincing that we are the lucky ones because they maintain so much secrecy, and deprive us of medicines other comparable countries have, in the interests of a good deal. Are we just suckers? Who actually knows? How can these people be held to account? Will David Seymour take them on?
EP... I think Seymour intends to take on Pharmac in a thorough way and sort it out. Aided by Todd Stephenson, who was vaulted to #4 on the Act Party list from nowhere... and the fact his particular expertise is in Big Pharma, where he worked for 17 years in Australia, isn't a coincidence.
It's going to be difficult for Pharmac to bamboozle them. They'll be a formidable team.
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