N.Z. paying more for medicines—report

Press, 17 October 1986, Page 5

N.Z. paying more for medicines—report

PA Wellington New Zealand is paying more for its medicines than it should, according to a report prepared for the Health Department. The report, prepared by the financial analysts, Coopers Lybrand, found New Zealand was paying more for most of its medicines than six other countries. It also showed that price comparisons with the Australian market suggested prices there were substantially lower than those in New Zealand for selected high-use medicines. The Health Department was expected to spend $409 million on the purchase of drugs this financial year. The amount spent on medicines has risen sharply in recent

years. In 1984 the cost was $220 million. The report recommended the abolition of price control which it said had contributed very little to containing prices and recommended the creation of independent pharmaceutical price negotiating called Pharmbuy. There needed to be a clear separation between the policy responsibilities and commercial responsibilities of the Health Department’s Clinical Services Division. That separation of functions would help establish clear commercial objectives and a clear responsibility for the effective negotiation of medicine prices. It should be established outside the department, the report said. The department at present has five pricing offices with a primary function of paying pharmacists for the prescriptions they have dispensed. The report recommended a computerised data processing system which would help the processing of claims. It sug-

gested the adoption of standardised prescription forms and said the extra data collected would help in price negotiations and provide medically significant information. The Government has ordered that price control on medicines be removed in December. This would require the Health Department to establish an interim system of negotiating prices and manufacturers before the Pharmbuy system could be introduced. The analysts’ report suggested there could be further economies in New Zealand’s pharmaceutical benefit scheme. This would include the encouragement of economy by doctors when prescribing, the eventual introduction of a limited list of medicines based on prescribing data, and the introduction of retail competition. • They appeared to offer the potential for significant cost savings and the generation of important medical information that would help in the formation of future health policy.