PHARMAC tender reveals vibrant market for pharmaceuticals

PHARMAC tender reveals vibrant market for pharmaceuticals

The number of companies bidding to be suppliers through the PHARMAC tender has grown to its largest size ever.

PHARMAC runs a tender each year, asking pharmaceutical suppliers to provide pricing proposals for off-patent medicines listed on the Pharmaceutical Schedule. The current tender round, which opened in November, has now closed with a record response.

Director of Operations Sarah Fitt says PHARMAC received nearly 3500 offers to supply pharmaceuticals, and these were provided by 54 companies. The number of offers is 1000 more than the previous year. This is the largest number of offers, and the largest number of companies ever involved in the PHARMAC tender.

“What this shows is that New Zealand has a vibrant and healthy pharmaceutical supply market,” says Sarah Fitt. “The tender has run for more than a decade and is a major part of PHARMAC’s savings programmes. But it can only do this if it operates in a healthy and competitive commercial environment.”

Annual savings from last year’s tender were $34.4 million, including $4.1 million savings for DHB Hospitals – more than a third of the total savings PHARMAC reported in 2012/13.

“Having a growing range of pharmaceutical companies in New Zealand means that there is strong competition for medicine supply. This is important because it is through this competition that PHARMAC is able to secure some of the lowest prices for off-patent medicines in the world.”

“Savings from the tender become available for reinvestment in new medicines. Essentially it frees up funding that was previously committed, enabling greater health outcomes to be achieved overall.”

Products in the tender this year range from some of the most commonly-prescribed medicines in New Zealand such as paracetamol, through to medicines only used by a handful of people. The common factor is that the medicines must be off-patent, which means that multiple manufacturers can make the medicine and compete for its supply.

With the current tender bidding process closed, PHARMAC is now assessing the bids and will be announcing the successful bidders over the coming months. Assessment includes each product being considered by the Tender Medical Subcommittee, which is made up of external experts such as pharmacists and prescribers. The subcommittee checks each product’s suitability, looking at whether changes like the size, colour, or taste of a product will cause any issues.

The tender awards successful bidders with national sole supply contracts, usually for three years. The contracts require suppliers to hold at least two months of stock and to keep PHARMAC informed of any potential supply issues, so that steps can be taken to ensure ongoing supply of the medicine if required.

ENDS

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