Pharmac maths
Newshub has a story about a new treatment for Crohn’s disease and some other autoimmune conditions, ustekinumab (brand name Stelara). This is an artificial antibody that blocks a couple of immune-system signalling chemicals.
The treatment is not funded by Pharmac; that’s the point of the story. We aren’t told how much it costs, but Matt Nippert looked it up and the US list price is US$12,332 per month. At that price, Pharmac’s entire annual budget of NZ$1.045 billion would pay for just over 5000 people to receive ustekinumab, or about a quarter of people with Crohn’s or ulcerative colitis in NZ. Funding it for 630 people would make it Pharmac’s highest single expenditure [to the extent you can tell, because there are secret discounts not included in the published figures]. I think this sort of information is critical to interpreting the call for Pharmac to fund ustekinumab, and it should routinely be part of reporting.
Pharmac obviously isn’t going to fund this at list price, and they could probably get a discount. Canada seems to pay only about NZ$30,000 per year for the drug. At that price you could fund it over 4000 patients before it got to be Pharmac’s single highest expenditure. That’s still quite a lot of money that would need to be subtracted from expenditures on other drugs.
New Zealand’s medical system saves a lot of money through Pharmac. Some of this is by negotiating lower prices. Some is by not funding drugs that don’t really work. Another unavoidable component of this saving, though, is not buying effective drugs that are too expensive, and waiting until the price drops. I’m not going to claim that Pharmac always gets the decisions right, but it actually does pretty well, and every thousand dollars it spends on a more expensive prescription is a thousand dollars it can’t spend on multiple less-expensive prescriptions. We could increase Pharmac’s budget, but if I were going to drop another couple of billion dollars a year on the health system, I think I’d worry about surgery and cancer waiting times first.
Figures that everyone should know (or, at least, everyone with reckons on pharmaceutical subsidies): Pharmac spends about a billion dollars a year. That’s an average of roughly $200 per person per year, or $16000 per person per lifetime.
Thomas Lumley (@tslumley) is Professor of Biostatistics at the University of Auckland. His research interests include semiparametric models, survey sampling, statistical computing, foundations of statistics, and whatever methodological problems his medical collaborators come up with. He also blogs at Biased and Inefficient See all posts by Thomas Lumley »
Useful comment. But oh so rare. PHARMAC gets routinely pasted, but for the observer it is hard to tell how much company funding and PR companies are assisting on the one side, and what the argument is on PHARMAC’s side. What is missing here is whether or not the drug on offer is so much better that it deserves displacing current practice at much greater cost. We get a clinician saying something on this, and a patient family members, but not PHARMAC. As I understand it, this is common practice; PHARMAC tries to engage media with their side of the story, which may be not just cost but also relative efficacy, but it rarely gets a mention. These stories are modern-day morality tales that allow the media to paint a black and white picture of a hard-hearted drug agency denying plucky NZers life-saving and world-leadinig pharma treatment!
4 years ago
The median spend per person would be interesting.
4 years ago
I’ve never seen the median published, and it would actually be a bit of effort to work out.
Last year, 3.77 million people were prescribed some funded medication, so 20-25% have zero expenditure.
For chronic use, basic blood pressure and cholesterol treatment lowering would run maybe $30/year, hormonal contraception slightly more than that.
4 years ago