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Source: Pharmac

PHARMAC is seeking feedback from medical groups, DHB hospital pharmacies and other interested parties on:

  • A proposal to tender certain pharmaceuticals for principal supply;
  • The implications of awarding Principal Supply Status; and
  • The draft process and terms and conditions for the 2020/21 Invitation to Tender (2020/21 Tender).

PHARMAC welcomes all feedback on the draft 2020/21 Tender. Feedback received by the deadline may be considered by the Tender Medical Evaluation Subcommittee of PTAC and would be considered by the PHARMAC Board (or its Delegate, where applicable) prior to making a decision on this proposal.

> Download a PDF version of this consultation [PDF, 185 KB]


Since 1997 PHARMAC has been using the strategy of tendering pharmaceuticals for sole supply of pharmaceuticals for a fixed period of time. Regular tendering has proven to be an effective way to encourage competition among suppliers of pharmaceuticals. As in the past, the community and hospital tender processes would be run in unison, however, the pharmaceutical list for community and hospital supply may be different.

The Draft 2020/21 Tender proposes awarding Principal Supply Status rather than Sole Supply Status or Hospital Supply Status. In previous tenders, DHB hospitals were able to purchase alternative brands under the Discretionary Variance provisions. For this tender, we are proposing to extend this to cover community pharmaceuticals as well. We consider this change will allow PHARMAC to better support healthcare professionals when prescribing medicines for their patients. 

We are seeking feedback on the approach outlined in the following pages, in particular on:

  • The proposed tender process and timeline;
  • The actual or potential clinical implications of awarding PSS to the pharmaceuticals listed in Schedule Two, including the impact of a brand switch on patients and clinical staff;
  • Your views on which chemicals included in Schedule Two (or associated medical conditions) might have a particular need for funding of an alternative brand, and what the criteria for funding an alternative brand should be; and
  • Your views on whether any product included in Schedule Two might have more than 5% of patients needing to access an alternative brand.

All responses are due by 4 pm (New Zealand Time), Monday 31 August 2020

Feedback should be provided by submitting an email or letter to the Tender Analysts: 


Letter: Tender Analysts
PO Box 10-254
Wellington 6143

Feedback we receive is subject to the Official Information Act 1982 (OIA) and we will consider any request to have information withheld in accordance with our obligations under the OIA. Anyone providing feedback, whether on their own account or on behalf of an organisation, and whether in a personal or professional capacity, should be aware that the content of their feedback and their identity may need to be disclosed in response to an OIA request.

We are not able to treat any part of your feedback as confidential unless you specifically request that we do, and then only to the extent permissible under the OIA and other relevant laws and requirements. If you would like us to withhold any commercially sensitive, confidential proprietary, or personal information included in your submission, please clearly state this in your submission and identify the relevant sections of your submission that you would like it withheld.  PHARMAC will give due consideration to any such request.

Distribution of Consultation Documents

Although this consultation letter has been widely distributed, should you consider that a particular person, group or agency should receive this letter and/or future tender documents, please feel free to contact PHARMAC or refer it on directly. All tender documents and consultations are also available from the PHARMAC website at We also invite any person or group to contact PHARMAC should you wish to meet to discuss the proposals contained in this consultation letter.

Details of the proposed 2020/21 Tender

In accordance with PHARMAC’s objective (to secure for eligible people in need of pharmaceuticals, the best health outcomes that are reasonably achievable from pharmaceutical treatment and from within the amount of funding provided), PHARMAC is consulting on a proposal to tender certain pharmaceuticals for Principal Supply Status (PSS) to community pharmacies and/or DHB hospital pharmacies.

Attached to this letter (as Schedule Two) is a list of pharmaceuticals that we are considering tendering for Principal Supply Status. Pharmaceuticals are sorted into therapeutic groups and then listed alphabetically in each group by chemical, form and strength. Each pharmaceutical has a ‘C’ and/or ‘H’ next to it to indicate whether it is proposed to be tendered for community and/or hospital supply.

In general, the proposed 2020/21 Tender process would be similar to previous tenders. However, the 2020/21 Tender would result in awarding Principal Supply Status (PSS), instead of Sole Supply Status and/or Hospital Supply Status. This will provide PHARMAC with greater flexibility to fund alternative brands where clinically indicated. We have outlined the key aspects of Principal Supply Status and our preliminary views on how/when we may utilise the alternative brand allowance.

A copy of the draft 2020/21 Invitation to Tender is available on our website or by contacting PHARMAC.

Download the draft 2020/21 Invitation to Tender [PDF, 597 KB]

Key Aspects of Principal Supply Status:

  • PSS could be applied across community and/or hospital markets (as detailed in Schedule Two).
  • The tender winning brand would be the only brand subsidised in the community and/or purchased by DHB hospitals (subject to any alternative brand allowance) for up to approximately 3 years. The PSS period would conclude on 30 June 2024 for all Tenders awarded from the 2020/21 Tender.
  • Other brands could continue to be marketed, sold and dispensed during the PSS period, but they would not necessarily receive a subsidy in the community.
  • Any pharmaceutical that currently carries a manufacturer’s surcharge in Section B (that is, the additional patient charge above that of the patient co-payment) would become fully subsidised if a tender was awarded for that pharmaceutical.

Alternative brands

  • The proposed shift to PSS would enable PHARMAC greater flexibility to fund alternative brands for those who may experience, or are at heightened risk of, adverse clinical outcomes as a result of a brand change. Use of alternative brands under the current tender agreements only exists in relation to DHB hospital purchases.
  • DHB hospitals would continue to be able to purchase alternative brands up to a certain percent of volume, as they currently do under the Discretionary Variance provisions of Hospital Supply Status.
  • PSS would allow PHARMAC the flexibility to fund alternative brands in the community:
    • In some cases, this would be through listing (or maintaining the listing of) other brands under Special Authority criteria.
    • In others, we would manage case-by-case approvals through our exceptional circumstances framework.
    • Regardless of the mechanism used, we intend to develop and communicate clear clinical criteria for funding of alternative brands.
  • Brand changes are generally well-tolerated, and we expect that the need for funding of alternative brands will vary by product and will not always be predictable. With that in mind, we are interested in receiving feedback on:
  • Our preliminary view is that alternative brand funding might be needed in three different circumstances:
  • The draft contractual terms for the 2020/21 tender do not put a cap on the number of patients for whom PHARMAC might fund an alternative brand, however the draft contractual terms include a threshold (indicated by the “ABA Limit” in Schedule Two) at which be reimbursed for lost market share. Accordingly, we are interested to understand if you consider that there are any products that we are proposing to tender where more than 5% of patients might need access an alternative brand.
  • Note that although these changes would give PHARMAC the option to fund alternative brands, continued supply of a particular alternative brand is not always able to be guaranteed.
  • Which chemicals (or indications for a chemical) or patient groups might have particular need for funding of an alternative brand (and why), and
  • For those situations, whether you consider that clinical destabilisation can be objectively determined, and if so, how.
  • If a patient has experienced adverse clinical outcomes as a result of a brand change,
  • If a patient has unique clinical circumstances that would put them at heightened risk of adverse clinical outcomes, and wishes to avoid a brand change, or
  • If a patient’s circumstances mean that they require a temporary delay to the brand switch (e.g. pregnancy or pending surgery).
  • We are interested in receiving feedback on what the criteria for those circumstances should be, and whether there are other circumstances that we need to consider as well.
  • the current ex-manufacturer subsidy per unit of measure as at 1 July 2020;
  • the number of subsidised or partially subsidised units sold in the community in the year ending 30 June 2020;
  • an estimate of the annual community market value at current subsidies (estimated by multiplying the volume of units subsidised in the year ending 30 June 2020 by the relevant listed unit subsidy as at 1 July 2020); and
  • comments specifically relating to the Tender Item and/or its current listing on the Pharmaceutical Schedule. 

Explanation of terms, symbols and abbreviations 

Most terms and abbreviations used are self-explanatory: “tab” means tablet, “cap” means capsule, “liq” means liquid, “inj” means injection, “suppos” means suppository, “grans” mean granules and “OP” means original pack to be dispensed.

The following table explains the symbols used in the draft pharmaceutical list: 




Pharmaceutical line items where a sole supply contract is in force are underlined.  The price and subsidy for these pharmaceuticals are fixed until 30 June 2021 unless otherwise stated in the Comments column and a listing of a new brand could only occur after that date.


To be tendered for Principal Supply Status (community pharmaceuticals).


To be tendered for Principal Supply Status (DHB hospital pharmaceuticals).


A reference in the Invitation to Tender that denotes the pharmaceuticals for which DHB hospitals may claim a subsidy through Section B of the Pharmaceutical Schedule. 


PHARMAC has been advised of the possible existence of a patent.


There is no fully funded product available for this line item (in relation to community supply).


Additional Stock Pharmaceuticals (ASP) means a Pharmaceutical, marked with an “@”, for which the supplier of the successful Tender Bid would be required to hold additional stock.


A rebate currently exists.

Last updated: 4 August 2020