An independent review of Pharmac criticises its slowness to approve funding for new drugs, lack of transparency, and discrimination against Māori and Pasifika
Wiki Mulholland should have turned 44 last week. Instead her family held a tangi for her at their home in Palmerston North.
As a young Māori leader she won Ngā Manu Kōrero national speech competition; she won the National Organs Championships, she represented New Zealand at the UN Youth Forum, she helped build the Hastings skate park and youth centre. She turned down invitations to run for Parliament.
There had been many hopes and expectations on her shoulders – but in the final months of her battle with breast cancer, her greatest joy and achievement was spending time with her husband Malcolm, their three children, and newborn baby grandson Manaia.
For the three years after being diagnosed with cancer, she had been a significant champion of public funding for new cancer drugs like Ibrance and Kadcyla. But more than that, she and Malcolm led a campaign to highlight perceived failings at Pharmac.
It was they who first called for an independent inquiry into concerns about the national drug-buying agency’s slowness to approve funding for new drugs, lack of transparency, and discrimination against Māori and Pasifika. “Wiki had the biggest heart,” her husband says. “And if she saw injustice, she wasn’t frightened to hold back. And I know that’s what drove her with Pharmac.”
This week, just three days after Wiki Mulholland’s tangi, the independent Pharmac review delivered its first, interim report. And despite Health Minister Andrew Little’s assertion that Pharmac is “the envy of the world”, the report is scathing.
Malcolm Mulholland says the report shows that the culture at Pharmac is broken – and responsibility for that sheets home to the chief executive, Sarah Fitt. She should step aside, he says.
One of the report’s most trenchant criticisms is of how opaque the national drug-buying agency’s processes are. The report publishes the gross spend on the top 10 drugs, but acknowledges there are likely big rebates on these drugs, that Pharmac and the drug companies refuse to disclose in order that the firms can maintain their hardball negotiations in other countries.
“Despite their considerable size and profitability, pharmaceutical companies are strongly focused on getting new medicines listed for public funding because it enables early and rapid market uptake of those medicines and maximises profits while protected by patents,” the report says.
“To take an example, heart medication such as ACE inhibitors, statins and omeprazole were originally innovative, but competitors developed other medicines with the same or similar therapeutic effect, and eventually the originals lost their intellectual property protection and became generic medicines that could be copied by others. In the process, medicines that might once have commanded hundreds of dollars a dose could be purchased for a dollar or two – or even a few cents – a dose.
“Pharmaceutical companies generate large profits from relatively few products. The top 10 medicines in New Zealand, for example, had gross sales of $NZ501.53 million in the 12 months to 30 June 2020.”
Pharmac would tell the review team only that the rebates averaged 25 to 75 percent of the sticker price – a range that is almost entirely meaningless, given that Fitt says there are zero rebates on some drugs, and more than 90 percent on others.
Pressed further by Newsroom, she discloses that the average rebate is 52 percent on rebated products. In total, pharmaceutical companies are giving back $600 million in rebates to Pharmac, knocked off a total $1.6b in gross sales prices.
That indicates that more than $450m in (mostly) newer medicines don't yet have any negotiated rebate.
"I'm not saying drug companies are angels – they're not. But what I what I would say is that we've got to sort out our own house first."
– Malcolm Mulholland
She insists Pharmac's culture is not broken, as Malcolm Mulholland alleges. Yes, there are problems with the timeliness of their approvals, yes it's true the number of Māori on their staff has dropped to four, even as their total staffing has increased to 146. Yes, they need to be more transparent – but she talks of progress they're already making in all these areas.
For instance, Pharmac introduced a Māori and Pasifika equity measure into its funding criteria at the start of the year – and as a result, it now funds two diabetes medicines that otherwise would not have made the cut.
"We're continuing to get some information that the uptake of diabetes medicines have been much higher for Māori and Pasifika than we were expecting – to the point that it's way over what we were expecting, but that's good news. We just have to manage the consequences!
"But by putting in a pro equity criteria, we didn't know if that would work, but from what we've seen, it has worked."
The review team will deliver its final report to Health Minister Andrew Little in March 2022, recommending improvements to Pharmac's failings in transparency, speed and equity. But ahead of that, Fitt offers one concession on the commercially sensitive deals it negotiates with drug companies: "We will commit to work with the pharmaceutical companies to increase transparency on both sides," she promises Newsroom.
Mulholland concedes the biggest problem in funding more drugs is not with Pharmac, but with its capped budget – which is outside the scope of the independent review. And he acknowledges that the pharmaceutical companies are making enormous profits off public funding of expensive drugs. "I'm not saying drug companies are angels – they're not. But what I what I would say is that we've got to sort out our own house first."
He says there is a particular challenge for Maori and Pasifika, in their poverty. "We saw this in the breast cancer community: people who weren't Māori and Pasifika had more means to self-fund, and therefore they were able to access the drug, and therefore they had a longer life expectancy. Whereas for Māori and Pasifika that wasn't the case.
"And I think that it's one of the really damning features of Pharmac. So can I just use one example of a funding decision that they made: they decided to fund Keytruda for melanoma. Don't get me wrong, that's a good decision.
"But melanoma predominantly affects a non-Māori population, whereas if you have lung cancer which affects a high proportion of Māori, Keytruda is not funded for lung cancer. There's the disparity."
One of the last things Wiki did was organise a big funder for the hospice that had cared for her in her final months. Supporters all contributed and so, Malcolm was able to drop off six to eight big boxes of cooking, tissues, stationery, toiletries – all things the Arohanui Hospice needed.
In her final weeks, Wiki's focus was on spending the best time she could with her family. "She wanted to be around as long as she could for our kids," he says. "Her lesson for the kids was, never give up. That was pretty big for them."
There is more change he'd like to see: "For Pharmac to be the best drug procurement agency it can be; for politicians to read, to listen and to act on the report. Don't just let it gather dust.
"Then I think we can hold our heads up proud and say Pharmac is the agency it needs to be. But right now it's so far from it."