Pharmac’s failed culture is overdue for a shake-up

Tuesday, 28 November 2023

A protest against Pharmac in 2021, one of many calling on the the drug-buying agency to change its approach to medicines for people suffering from rare conditions.

Heather Roy is a professional director and consultant. She is a former ACT Party member of Parliament and minister, and a former reserve force officer in the NZ Army.

OPINION: There’s an old joke that hospitals would run so much better if they didn’t have to worry about patients.

Sometimes jokes cut a little too close to the bone and this particular one sprang to mind when the culture within Pharmac was publicly questioned recently.

The scrutiny began when internal Pharmac emails were released to journalist and medicines advocate Rachel Smalley about herself. They revealed unprofessional and offensive remarks made by senior public servants, including the CEO, at the government’s medicine and medical device buying agency.

A second Privacy Act request by Malcolm Mullholland of Patient Voice Aotearoa showed similar results. Rachel Smalley’s experience was obviously not the isolated incident the Pharmac CEO assured her chairperson it was.

Over the 30 year history of Pharmac many advocates, patient groups, clinicians and others have attempted to reform the way funding decisions are made and lobby government for more medicines funding. This has largely fallen on deaf ears at Pharmac and with successive governments. I know that from personal experience as the independent chair of industry body Medicines New Zealand for several years.

Sarah Fitt, the chief executive of Pharmac, who was heavily criticised for her involvement in an email discussion about medicines advocate Rachel Smalley.

Pharmac has long been considered a national taonga, negotiating rock bottom prices with pharmaceutical companies for affordable medicines. The public consider this a good thing for New Zealand Inc, until they or someone close to them need a life-enhancing or life-saving medication that isn’t funded or isn’t available to them in this country.

The Pharmac funding model prioritises savings on the upstream costs of medicines rather than the downstream impacts and costs to patients and their families, the wider health system and the economy. The cost of medicines should only be part of the decision calculation.

What the model doesn’t adequately consider is the cost of not treating people, such as the personal and societal burden of inability to work and the impact of chronic diseases on other, more costly health services. The list is long.

There are other flaws with the way Pharmac makes decisions and these have been highlighted by patient groups, industry bodies and advocates including Rachel Smalley.

In 2021 the government had a review of Pharmac. The final report with 33 recommendations was delivered to the Minister of Health in February 2022. Nine months later Pharmac responded. The CEO thanked “everyone outside who challenges us and helps us to be better”. That was before the emails were released.

The September 2023 Access to Medicines report, commissioned by Medicines New Zealand compares New Zealand and Australia from 2011 to June 2023. Australia publicly funded 2½ times more modern medicines than NZ, they were funded faster in Australia (on average 468 days post registration compared to 769 days in New Zealand), and there are 131 modern medicines publicly funded for Australian patients that are not available publicly to New Zealand patients.

On the global stage, 460 new medicines were launched between 2012 and 2021. OECD data shows New Zealand reimbursed just 7% of these through public system funding. We are at the bottom of the list of OECD countries for this and other measures for access to modern medicines.

Patient Voice Aotearoa chairman Malcolm Mulholland, a leading critic of Pharmac, has also spoken out about what he considers dirty tactics used to discredit his message.

Lack of access, lack of funding and long waits for decisions are bad news for sick Kiwis awaiting treatment. Nothing will change in an organisation with entrenched cultural problems.

Successful organisations exhibit a business-wide shared understanding of their culture and values. Everyone from the board to the leadership team and staff know, can describe and live the culture and values.

Pharmac has no shortage of guiding documents. They said they had listened to the review findings. They said their values of connection, listening with intent to be authentic in engagement, and courage to do things differently and better now and for the future would guide them.

The Pharmac board failed in its governance duties. The board sets the culture of the organisation. Proclamations of disappointment by the chair in the wake of the Rachel Smalley episode are not good enough. An apology from the CEO and assurances of isolated incidents – disproven almost immediately – are not good enough.

The then Minister of Health also failed to govern by not holding the board to account. The Pharmac board governance manual gives the minister the ability to immediately stand board members down.

They all failed to recognise that the behaviour we walk past is the behaviour we accept.

For unwell Kiwis who wait and wait, there is a glimmer of hope. All three parties in the new Government campaigned on improved medicines access. The National-ACT coalition deal states the coalition government will progress the ACT policy to “update Pharmac’s decision-making model to ensure it appropriately takes patient voice into account and reform the funding model to account for positive fiscal impacts on the Crown of funding more medicines”.

Let’s hope the wait isn’t long and the modern medicines wait list is funded swiftly.