Thank you.
I'm not sure how much you know about the New Zealand medical system, but it is a largely socialized medical system. It has many similarities to the Canadian system. You might want to ask some more questions about that later on, but we thought we would go straight to the way in which pharmaceuticals in New Zealand are registered and funded so that you would have a good basic understanding of that.
In a nutshell, we have a regulatory agency called Medsafe, which in United States terms is the FDA equivalent. This body makes decisions about which medicines may be marketed on the basis of their safety and effectiveness. That process in New Zealand works well on the whole. Registration occurs quite quickly, particularly when we compare it to the way in which it happens elsewhere in the world.
Then we have the medicines funding agency, Pharmac, which I think we've not heard much of in Matthew's presentation, but which he will be talking to you about. It's responsible for funding the vast majority of medicines in New Zealand. The private market of New Zealand is tiny and insurers generally fund only what Pharmac approves. Pharmac comprises a secretariat and a clinical committee called PTAC, which is short for the pharmaceutical technical advisory committee, which also has various speciality clinical subcommittees.
Although Pharmac bases its operations on a health technology assessment, or HTA, framework, specifically using cost-utility analysis, there are a number of elements of HTA best practices that are not applied.
For example, the clinical committee that I spoke of, PTAC, is not independent of the secretariat. These problematic aspects have led to a system that has been criticized by patients and clinicians for being unresponsive to patients' needs, inconsistent in its decisions, and responsible for major delays in accessing new treatments. In this, New Zealand sits well behind other OECD nations.
One of Medicines New Zealand's recommendations for greater transparency is that the clinical committee be independent of the secretariat as a way of putting in place normal checks and balances needed in a funding system of this type.
The other point I would make, just at a high level, is that Pharmac is exempt from key elements of the New Zealand Commerce Act. Because of this, it can negotiate very aggressively. It does deals, and it trades by bundling contracts. For example, we'll fund this drug for X if you'll sell us this other drug for Y, and it can and does pursue sole-supply relationships. Sole supply means that Pharmac can contract a company to supply 100% of the market, for three years normally, and it often changes the entire patient population to the next cheapest option once that contract ends. Doing that brings some issues with it.
That, I hope, sort of sets the scene for you.
I'm going to hand over to Graeme now to talk briefly about the strengths and the weaknesses, as we see them, of the New Zealand Pharmac setting.