PHARMAC Never Changes

When New Zealand and pharmaceuticals are mentioned in the same sentence, that sentence usually contains the phrase “only other developed country besides the United States to allow direct-to-consumer advertising.” What usually goes unmentioned is that the similarities end there; New Zealand is, in most other respects, one of the world’s most difficult environments for innovative drug makers.

In late May, the country’s pharmaceutical price control authority, PHARMAC, released its “Prescription for Pharmacoeconomic Analysis: Methods for cost-utility analysis.” This is the first time that the guidelines have been thoroughly updated since 1997. It’s unlikely that the document will do anything to change the agency’s image as the most cost-conscious price-control body in the world.

Among other things, when calculating the budgetary impact of new drug that is expected to lose patent protection in more than ten years, PHARMAC assumes that generic entry will occur in 25 years. In fact, the patent term is 20 years from date of application and average effective patent life (time from approval to expiry) is 8.7 years.

The new guidelines may be found at http://pharmac.govt.nz/pdf/PFPAFinal.pdf