The Herald editorial is unusually sensible today
Contrary to widespread belief, it appears Pharmac does not have a formula such as the “quality adjusted life year” (QALY) used in Britain. That system enables the benefit of a drug to be measured by the extra years of life it offers, adjusted for the level of health the patient has for those additional years, and the cost of the drug can be divided by the QALY to see how it compares to all other medicines that may be provided from public funds. Britain has decided to fund Keytruda, as has Australia and others.
Pharmac’s system is not simply a cost-benefit evaluation, says its chief executive, Steffan Crausaz. He explains that it uses nine criteria such as “the health needs of all eligible people in New Zealand” and “such other criteria as Pharmac thinks fit”. That probably includes discretion to reject a new drug if the price demanded by the manufacturer seems out of all proportion to the costs of its discovery, development and clinical trials. While those costs can be high, and it is reasonable for manufacturers to use their successful drugs to also cover the costs of their unsuccessful research, price gouging is too easy for some of their products. Read more »