The Pharmac Review – so where to from here?

by Chris Tse, Chair of Brain Tumour Support NZ
2 June 2022

How quickly things can change. One day our government ministers are telling us “Pharmac is the envy of the rest of the world” and the following day they are saying “the days of the Independent Republic of Pharmac are over.” Can a government change their tune so quickly? It seems this one can.

The comprehensive, 130-page final report from the Pharmac review panel was released to the public on Tuesday 1 June 2022 by Health Minister Andrew Little, three months after the panel had delivered it to the government. The report highlights deficiencies in Pharmac across a number of areas, including: governance and accountability; decision-making; funding of cancer medicines; and the way it treats people with rare disorders.

There is a large focus on equity in the report, which is not surprising as this was heavily weighted in the review’s terms of reference. The review panel made mention of three priority populations impacted by health inequities: Maori; Pasifika; and disabled people. It also devoted a large section of the report to rare disorders.

Even operating within the narrow terms of reference, the panel still managed to produce 33 recommendations for the government. We can only imagine the number of recommendations they would have come up with if the scope of the review had been widened, in particular to include the elephant in the room – Pharmac’s capped pharmaceutical budget.

In some ways the focus on equity has dampened down the final review findings. The need to address equity for disadvantaged groups is hugely important, but what about the equity in health outcomes between New Zealanders and citizens of other developed countries?

When Pharmac declines to fund a life-saving drug, the funding is declined for all New Zealanders, not just certain groups or ethnicities. The drug is therefore accessible only to those who can afford to pay for it while those who can’t go without, and there is perhaps no greater inequity than that. It would have been preferable to see more analysis of New Zealander’s health outcomes compared with international benchmarks to give a true picture of how we’re really performing.

Nevertheless, there is still a lot which has been covered in the review panel’s final report and they are to be commended for both the depth of their analysis and their recommendations.

Where Pharmac has failed

The largest number of recommendations is under the area of Pharmac’s governance and accountability with a total of nine out of the 33. This is a major concern because it points to a culture problem within the organisation.

A lack of transparency; a resistance to sharing information; a defensive communication style; lack of board oversight in decision-making; failure to consult with people who have lived experience; and poor communication with the public are just some of the criticisms highlighted in the report. None of these criticisms would come as a surprise to patient advocates who have gone into battle with Pharmac over drug funding decisions.

Failures in Pharmac’s decision-making processes are of equal concern as this has to do with the bread-and-butter work that they are supposed to be doing. Both the time it takes to make funding decisions and the quality of those decisions have come under the panel’s scrutiny.

Again, patient advocates have long questioned the quality of Pharmac’s decision-making, especially when it is at odds with scientific evidence; real-world outcomes; and the decisions of health technology assessment agencies overseas. Advocates were not surprised to read in the report that Pharmac’s factors for consideration, which are often the make or break of a medicine being funded, “are not serving their intended purpose” and “fail to make a substantial impact.”

More surprising, and incredulous perhaps, was the revelation that Pharmac staff appear to have the most say in what medicines are assessed and how they are prioritised. The report states: “The prioritisation and ranking of medicines seem to happen within a small group, to which other staff are occasionally invited. Among those whose voices not heard are members of PTAC, specialist advisory committees, the Consumer Advisory Committee (statutory committees), or people with direct personal experience of conditions or disorders.”

It was good to see Pharmac’s claims of how much money it saves New Zealand tax payers each year debunked by the review panel. This has long raised the ire of patient advocates who know that much of the savings touted by Pharmac and credited to their “savvy price negotiation tactics” are in fact the result of waiting for a pharmaceutical to come off patent and buying the cheaper generic replacement. This largely explains why medicines are funded much faster in countries such as the UK, Canada and Australia before they are funded here. In the meantime, Kiwis are forced to wait, lives are cut short and patients and their families suffer.

Cancer medicines

There are whole sections in the report devoted to both cancer medicines and rare disorders. As a rare cancer (responsible for 1.3% of cancers diagnosed in New Zealand) brain tumours fit within both of these categories.

In the cancer medicines section, the review panel correctly identifies the challenges faced by Pharmac (and all drug funding agencies around the world) when it comes to new cancer treatments, however it falls short of offering some practical solutions to deal with the problem.

The report cites “weaker evidence for new cancer medicines” as posing a problem for Pharmac because it puts pressure on them to fund treatments with inferior safety or efficacy “that could leave patients worse off than if they hadn’t received that treatment.”

In fact this is part of the solution that other countries have adopted to make new and innovative medicines more affordable and available to patients faster. Proxy clinical trial endpoints such as Progression Free Survival (PFS) are used instead of Overall Survival in order to shorten the time required for the trial to reach its conclusion, hence achieving significant savings in drug development costs.

Accelerated approvals used by the US Food and Drug Administration (FDA) are issued on a conditional basis which means patients get access to the new drug faster. If confirmatory trials fail to prove efficacy then the conditional approval can be withdrawn. It would have been better for the review panel to dig deeper into some of these innovative systems used internationally to assess whether any would be beneficial to New Zealand’s situation rather than dismiss them outright.

The report highlights “significant investment over the last decade” by Pharmac, listing 52 new cancer medicines they have funded since July 2010. However a closer look reveals several old drugs on the list, such as thalidomide, irinotecan and oxaliplatin. In the brain tumour space, the chemotherapy drug temozolomide is listed twice, despite that drug being first approved in 2005 with only subsequent tweaking of the special authority allowing it to technically make the list.

Cancer is one disease area where the review panel attempts to measure New Zealand against other countries. Here it concludes without doubt that “New Zealand lags many other countries in the provision of cancer medicines.”

It cites a 2021 Merck Sharpe & Dohme-funded report which shows that New Zealand’s per capita spend on cancer medicines was lower than other high-income Asia-Pacific countries, and that of 38 new cancer medicine indications approved by the FDA from 1998 to 2000, New Zealand only funded around 30%.

However in describing the medicine funding gap between New Zealand and Australia it referred to a Te Aho o Te Kahu (Cancer Control Agency) report released earlier this year which identified 19 medicine indication funding gaps. This report vastly underestimates the funding gap between the two countries as it used an assessment tool (ESMO-MCBS) to measure substantial clinical benefit, eliminating many medicines that failed to score highly on that scale, despite those medicines being prescribed by oncologists here.

In the brain cancer space, the monoclonal antibody bevacizumab was not able to be rated by the ESMO-MCBS tool and the agency’s clinical advisors, none of whom are specialists in brain tumours, rated it as “no substantial clinical benefit over best supportive care”. This is despite several of New Zealand’s leading oncologists prescribing bevacizumab to brain tumour patients here, anecdotally both extending and improving the quality of their lives.

Overall, I found the panel’s recommendations for cancer medicines underwhelming and do not see them meeting the challenge of assessing and funding the wave of new cancer treatments coming to market now and in the future.

Rare Disorders

In contrast, the section on rare disorders contains some ground breaking recommendations which promise to produce a step change in outcomes for New Zealanders living with rare disorders. It was heartening to see the panel look beyond just the funding of pharmaceuticals and take a big picture view of the rare disorders environment.

The lack of an official New Zealand definition of a rare disorder is the logical place to start. Pharmac defines a rare disorder as having an incidence of < 1 in 50,000 which is ridiculously out of step with the rest of the world where the average definition is 1 in 2,500 people.

The lack of accurate data on the prevalence of rare disorders in New Zealand is another stumbling block and strengthens the case for a rare disorders registry. If you can’t measure the extent of the problem, it becomes difficult to find and allocate the resources towards solving it.

It’s worth noting that brain tumour patients face many of the same problems as people with rare disorders, such as: delayed or mis-diagnosis; lack of effective treatments; and lack of clinical trials. They also lack accurate data on incidence and prevalence. Benign brain tumours, which can also be life limiting, are not counted in the NZ Cancer Registry figures and a brain tumour registry which counts all brain tumour types regardless of malignancy is desperately needed.

It is heartening that the review panel recognised the inequities experienced by people with rare disorders, including rare cancers, across the entire health system.

The report states: “Pharmac has tended to make decisions explicitly based on a utilitarian perspective (how to get the greatest impact for the most people from a fixed budget). In its most pure form, utilitarian approaches create tensions with equity frameworks, which require an uneven distribution of resources to avoid unfair or unjust differences in outcomes between people.”

In other words, Pharmac’s heavy focus on cost savings by “buying the cheapest drugs for the most people” inherently disadvantages the rare disorder patient population which requires very expensive medicines for a very small number of people.

The recommendation to the Ministry of Health to develop a national rare disorders strategy is a significant win which the rare disorders community has long been advocating for. So too the recommendation that Pharmac involve the lived experience of patients with rare disorders in the decision-making process.

There are seven recommendations for rare disorders in total and if all of these are implemented, which the government has pledged to do, it will be a significant win for this long suffering group of New Zealanders.

It's all about choices

One could argue that no matter how much Pharmac is forced to improve its culture and processes, it still has to operate with a fixed pharmaceutical budget, so access to medicines will always be limited.

Unfortunately this is indeed the case, and it is cause for a nagging feeling of disappointment among patient advocates that the combined pharmaceuticals budget was not included in the terms of reference of this review.

Health Minister Andrew Little, in response to a question at the release of the Pharmac review said: “The reason we have budgets is because we have limited resources and we have to make choices about where a government spends.”

This government chooses to spend less per capita on medicines than comparable developed countries in our region, most notably Australia, and is willing to accept the inevitable consequence of poorer health outcomes for New Zealanders.

“Oh, but Australia is a much richer country than us,” I hear you say.

Again, this is true, but this did not stop New Zealand mounting a world-leading COVID-19 pandemic response, with public health outcomes far superior to countries much larger and wealthier than us. This response had a budget of NZ$100 billion to be funded through government bonds financed by central bank monetary policy. The annual pharmaceutical budget amounts to just 1% of this figure at NZ$1.2 billion.

So yes, it is all about choices. The government chose to spend money on the COVID-19 response but they choose not to spend 1-2% of that on pharmaceuticals.

And pharmaceuticals matter. In the case of brain cancer, patients undergo multiple treatment modalities from surgery to radiation treatment to chemotherapy or other systemic therapies. Despite this array of treatments, survival outcomes are poor. Glioblastoma, the most common form of adult primary brain tumour, has a median survival of 15 months and a 5 year survival rate of 5%.

Gains are going to made with new medicines. No-one is researching new ways to do surgery, and improvements in radiotherapy are generally centred around limiting toxicity. It stands to reason that the cure for brain cancer is most likely going to come from within the pharmaceutical industry.

When it does, I hope that the New Zealand health system and Pharmac are ready and waiting to make the cure available to our long-suffering patients. They deserve it.

Chris Tse is the chair of Brain Tumour Support NZ (BTSNZ), a senior advisor to the International Brain Tumour Alliance (IBTA), and a CNS patient expert at the European Organisation for the Research and Treatment of Cancer (EORTC). Chris receives no financial remuneration from the pharmaceutical industry. The views and opinions expressed in this article are his own.