Challenges and opportunities in New Zealand’s
pharmaceutical scene
Kevin Sheehy – Chief Executive, Medicines New Zealand
Dalton Kelly – Chief Executive, New Zealand Cancer Society
Assoc. Prof. Ken Whyte – University of Auckland Medical School
Changes &
opportunities in NZ
Pharmaceutical
Scene: An individual
clinician’s view.
Ken Whyte
Respiratory, Transplant
& Sleep Physician
Demographic time bomb
Christensen K et al, Lancet 2009;374:1196
Increasing demands: kidney dialysis
projections
Pharmac & NZ successes
 Controlling pharmaceutical spending
 For majority of conditions has delivered adequate
therapies & benefits at reduced cost
 Developed a “commercial” model that both sides
(funder & Pharmaceutical Industry) understand
 Clinicians griped but could live with system for
most therapies – system struggled with genuinely
“new” therapies and high cost treatments.
 Pharmac overall has “Brownie points” in the bank
with the health system (providers/funders/users)
Pharmac & NZ
weaknesses?
 Treasury small – Health budget finite
 Minimal resource for health economic analysis:
 Poor costing data for NZ health & disability costs
 Total lack of University health economic departments
to train & offer analytical resource for
Pharmac/Industry/Government/Patient groups
 Pharmac very limited resource ( MOH similar)
 Failure to debate the ethics of health funding
and delivery.
Ethical approach – not clear?
 Utilitarianism
 the greatest good for
the greatest number
 The worst off have no
 Maxmin Principle
(Rawls – Justice as Fairness)
 to the greatest benefit of the
least advantaged, open to all
under conditions of fair equality
of opportunity
priority
In health care (+/- social care) – should a life saving or altering therapy,
(even if very expensive) take priority over treating a lesser problem in a
larger number?
Variety of tools tried to measure but crude tools in reality & struggle to
assess life altering/saving therapies.
Precedent, equity & transparency – if one high cost treatment funded
($/QUALY) then others of same benefit should be funded
The Clinician’s dilemma
 Advocate for individual patient
 In rare or very disabling conditions often no
other advocates for the patient group
 Awareness of resources and societal
demands
 Pharmac’s response:
 Exceptional circumstances
 Now named patient approach (NPPA) from 1/3/12
 In past no clear societal decision in health funding
re Utilitarianism versus more “graded” approach
Looming threats
 Break down of the
Pharmaceutical model:
 In short term many therapies
will come off patent so $$$
looks good
 Large pharmaceutical
companies portfolios shrinking
 Small niche companies (often
funded by venture $$) targeted & often “individual”
therapies (small volume &
great cost)
 Shrinking room for Pharmac to
trade over a portfolio to allow
new therapies affordable entry
in NZ
 Dramatically life altering &
saving replacement therapies

This leads to an increasingly
complex and probably insoluble
dilemma around allocation of
resources.
 Orphan diseases*: rare, yet many
(estimated 5000-7000) & both
randomised trials and cost benefit
analysis not feasible as such small
numbers – yet up to 2+% of
population suffer when all added
together!
* life-threatening or chronically
debilitating diseases which are of such
low prevalence that special combined
efforts are needed to address them
Replacement therapies?
 Pompe’s disease
 Cystic Fibrosis – disabling,
(progressive muscle
weakness leading to
disability & death):
fatal 25-40yrs with very
poor quality of life & huge
cost:
 algluosidase alfa drug,
 For some sufferers –
Lumizyme© - “adult”
 $250,000 per year for initial
improvement & slowing of
progression
prospect of replacement
therapy from infancy with
dramatically altering life
quality & expectancy:
 Therapy for life - ?1-75 yrs
 Societal costs of care
altered by therapy?
 Cost versus benefit –
normal versus disabled life.
Go forth and multiply?
Medical Devices?
 Triumvirate of material scientists/smart
engineers/health scientists
 near limitless “new” developments
 Rapid redundancy – limited time for trials
 Traditional RCT model difficult:
 Placebo difficult
 Time frames to assess QALY often long
 Cost benefit analysis for in-patient devices
(theatre, wards etc) differ for individual
services & different hospitals.
“Publicly” funded utility trials rather than manufacturer funded?
Pharmac & NZ future?
 Pharmac model needs to be pro-active &
change before “melt-down” & loses
credibility?
 Pharmac taking on Medical devices maybe a
step too far?
 Pharmac has always been under-resourced
(proud & lean is not always productive!)
 NZ Society has to debate the ethics & make
decisions – Pharmac can only delay