Govt shunned meds advice
Cancer drugs boost would mean other health tradeoffs and cost $1b, Treasury warned
Treasury officials warned the finance minister that paying for promised cancer medicines would cost $1 billion, forcing tradeoffs in primary care and mental health – advice Cabinet ignored.
The investment was the result of a National Party election promise to buy 13 cancer medicines available in Australia but not New Zealand. That morphed into a $604 million boost to Pharmac announced on June 24.
The agency would independently buy more than 50 medicines, expected to help about 175,000 people in the first year.
While a patient advocate says the investment has brought nothing but good news, doctors fear it will come at the expense of general practice.
Documents obtained through the Official Information Act reveal Treasury strongly advised Cabinet against the policy up until June 13, saying it would cost $1b over five years and leave very little to play with, come May 2025.
“Treasury considers that a $1b investment would have greater impact [both in health outcomes and in the number of people supported] in areas such as primary care or acute mental health services,” a Treasury analyst told health officials on June 7 in a draft comment to go with a report to Cabinet. “After accounting for all Budget 2025 pre-commitments ... only $636m per annum, or 26% of Budget 2025 allowances would be available to cover cost pressures and government priorities,” it said in bolded highlighted text.
In a final report to Finance Minister Nicola Willis on June 11, Treasury said going ahead “will force difficult funding tradeoffs with other areas of the health system” and suggested an extra investment “could be prioritised in areas such as primary care or acute mental health”.
It also said the plan would benefit 1000 people at most, break the Pharmac model and create “significant legal, financial, implementation and precedent-stetting risk” as well as removing commercial leverage.
Sticking to the election promise could also hinder the Government’s long-term fiscal strategy and “represent poor public financial practice,” Treasury advised.
The final $604m plan preserved Pharmac’s independence, but only accounted for the boost to the agency’s medicines budget, not ongoing costs for either Health NZ or Pharmac.
Instead Health NZ was allocated $38m for one year of rolling out the drugs in the country’s hospitals, but nothing beyond that.
Health Minister Dr Shane Reti said funding for Health NZ would be ongoing. “We want to see exactly what the costs are going to be ... but I can reassure you that there will be funding for implementation for further years.”
Willis would not directly address a question on whether $1b was the total predicted spend over five years and declined to be interviewed.
Asked how the Government’s priorities might be impacted by the spend, Willis’ office pointed to comments made in the House on
August 6: “... There is currently less than a billion dollars remaining in the operating allowance for Budget 2025,” Willis said.
Labour health spokesperson Dr Ayesha Verrall said there was an “emerging crisis in the health budget”. “You see how underfunding the health system for some shortterm political gain, ie tax cuts has led to a situation where they now have so many fires to fight in the health system that ultimately Budget 25 looks incredibly difficult.”
However, Willis has said she was confident she could find more savings, telling the House on August 6 the Government quickly found $5.9b per year to redirect to “higher-value uses like police and Gumboot Friday in Budget 2024”.
National’s cancer drugs policy was announced with fanfare on the election campaign but resulted in an outcry when there was no funding for – nor mention of – the promise in Budget 2024 on May 30.
Patient advocate Malcolm Mulholland said the spend was “extremely well justified” and would change lives for people who would otherwise have been forced to set up Givealittle pages or sell their homes to pay for medicines.