Media release from the Minister of Health Tony Ryall

Health Minister Tony Ryall has announced Pharmac is to extend its successful approach to the management and procurement of community pharmaceuticals to hospital medicines.

This was a recommendation of the Ministerial Review Group.

Pharmac is already responsible for deciding which hospital cancer drugs are funded by district health boards (DHBs) and will now begin taking over procurement and management of all hospital medicines from DHBs.

"Pharmac has been successful in keeping down the cost of individual community medicines, while at the same time increasing the number of treatments funded and the volume of prescriptions filled," says Mr Ryall.

"There's strong clinical support for bringing hospital medicines into the Pharmac process. DHBs currently spend about $215 million a year on hospital medicines.

"Over time, we expect a national Pharmac procurement approach will achieve value for money as well as ensure national consistency so that patients get equitable access to these treatments wherever they are.

Set up costs are likely to be around $1 .5 million for Pharmac and for DHBs to improve their hospital IT systems and this will be met out of existing baselines.  

Mr Ryall also announced a role for Pharmac and the new Shared Services Agency in the management and procurement of medical devices.

"DHBs currently manage this spending but the Ministerial Review Group believed that over the longer term, Pharmac was the best option for managing this area.

Pharmac already manages pregnancy test kits, blood glucose testing and management devices, and urine testing devices for blood/protein and the government will now extend that role to insulin pumps.   

Mr Ryall says that over time Pharmac will become responsible for managing the prioritisation, assessment, standardisation and procurement of all medical devices.

"But the government will carefully pace any changes to address the caution of many clinicians about Pharmac taking over this role from DHBs.

"As clinical confidence in the process grows the government will consider additional classes of devices for Pharmac management on a case by case basis.

"This approach will ensure national access to a range of medical devices, beginning with insulin pumps.

"In the meantime, the new Shared Services Agency will begin the process of procuring a range of medical devices nationally that are already used in public hospitals, so as to achieve lower costs through the power of bulk purchasing."

The Ministry of Health, in consultation with Pharmac and the new Shared Services Agency will report back in two years with a detailed plan setting out a carefully sequenced path for Pharmac to take over managing other medical devices.