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Logo of bmjThis ArticleThe BMJ
BMJ. 2007 August 18; 335(7615): 318.
PMCID: PMC1949446
Medicines Funding

Value for money is nothing new

Matthew Brougham, acting chief executive

Pursuing value for money in medicines funding is neither tough nor new.1

PHARMAC (New Zealand's funder) has focused strongly on it for 14 years. We are mindful of funding trade-offs through explicit use of a fixed budget—a desirable and powerful incentive to ensure that value for money remains paramount.2

PHARMAC has used the tools referred to by Jack for several years, including reference pricing, tendering, rebates, and risk sharing arrangements.3 4 Built around a strong core of independent clinical5 and economic assessment, the strategies have successfully improved value for money, freeing up resources for funding of other medicines or health services.

The idea of an individual refund for ineffective treatments is interesting, but one PHARMAC hasn't implemented because of definitional and monitoring concerns. The mechanism is an attempt to deal with a fundamental mismatch between pricing and value (health outcomes) to populations—an issue that can generally be more cost effectively managed in other ways.


Competing interests: None declared.


1. Jack A. No cure, no cost. BMJ 2007;335:122-3. (21 July.) [PMC free article] [PubMed]
2. Brougham M, Metcalfe S, McNee W. Our advice? Get a budget! HealthCare Papers 2002;3:83-6. [PubMed]
3. Braae R, McNee W, Moore D. Managing pharmaceutical expenditure while increasing access. The Pharmaceutical Management Agency (PHARMAC) experience. Pharmacoeconomics 1999;16:649-60. [PubMed]
4. Davies A, Metcalfe S, Moodie P, McNee W. PHARMAC responds to Stewart Mann on dihydropyridine calcium channel antagonists. N Z Med J 2005;118:U1621 [PubMed]
5. Pharmaceutical Management Agency (PHARMAC). Pharmacology and therapeutics advisory committee (PTAC).

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