Pharmac is seeking public feedback on a new funding approach specifically geared for high-cost medicines for rare disorders. The use of a contestable fund, worth an estimated $5 million a year, will be tested this year, Pharmac chief executive Steffan Crausaz says.

Suppliers will compete for the fund, which could then lead to lower prices for traditionally expensive medicines, Mr Crausaz says in a media release.

Once the details are ironed out, Pharmac could start receiving proposals from pharmaceutical companies by the end of 2014 and funding could begin early next year, he says.

Increasing competition to drive down price

Mr Crausaz says the fund was triggered by concerns the medicines buying agency has received during consultation over the past few months.

“We think that by promoting competition among suppliers, prices will reduce and as a result, patients will get funded access to them,” he says. “I hope the [pharmaceutical] industry takes this opportunity to help us find a way to make these medicines more available to patients.”

Contestable fund is capped

According to the discussion document on the new funding model, the $5 million contestable fund will be sourced from savings made through the Named Patient Pharmaceutical Assessment pathway.

An estimated $8 million is allocated for this pathway every year, but, with 26 medicines now listed under the Pharmaceutical Schedule, it is thought $5 million of this allocation will not be needed.

Mr Crausaz says the new fund is intended to be consistent with the Pharmac model. Because the contestable fund is already capped, it won’t limit Pharmac’s ability to fund other treatments for less rare conditions, he says.

A cautious welcome

In an email, New Zealand Organisation for Rare Disorders executive director John Forman says he welcomes the good news but notes the proposed model has some “fish-hooks.”

Mr Forman says the $5 million budget is not enough, considering the organisation estimates somewhere between $20 and $25 million is needed to give all patients with rare diseases the drugs they need. The timing of the announcement prior to this year’s election is also “a cause for suspicion”, he says.

In the previous election, a review of exceptional circumstances – touted as a response to orphan drug concerns – was established, but it failed to deliver.

This new fund would not be acted upon until after this year’s election and there is concern this new “promise” might also get buried, Mr Forman says.

Feedback needed

Interested parties who would like to provide their input on the fund should contact Rachel Melrose via email (enquiries@pharmac.govt.nz) or fax (04 460 4995).