Guyon Espiner investigates Pharmac: The secret list

Desperate patients are being left in the dark as to when Pharmac will fund medicines. Guyon Espiner asks why the drug-buying agency operates with such secrecy.

This is the second story in a four-part investigation into how Pharmac works and whether its model is costing lives. The first story is here: The NZ Buyer's Club. The third story is here: Pharmac switches epilepsy drug against Medsafe advice. The fourth story is here: diabetes drugs 'third world' - doctor.Listen to Guyon Espiner discuss this investigation here: Drugs and Money

Three weeks after their son Otis was born, Emma and Eddie Porter found out he was likely to die before them. Their specialist told them he had cystic fibrosis and a life expectancy of 37, but they were in luck - the type of gene mutation causing Otis' condition meant he would respond well to medicine. "There's this amazing medicine called Kalydeco which will effectively switch off the cystic fibrosis - that's how it was explained to us," Eddie recalls. "In the next sentence he explained, 'It's not funded in New Zealand and if you were to buy it, it's going to cost you $360,000 a year'."

Five years ago, drug company Vertex made an application to government drug-buying agency Pharmac to have Kalydeco funded for New Zealanders. It took until this month for Pharmac's main advisory committee to recommend it for funding. Now Kalydeco joins more than 100 medicines and devices on Pharmac's waiting list, where about 30 medicines have been languishing for more than five years, 10 have been waiting more than a decade, and one medical device has been parked for 15 years.

The list leaves patients with cancers, rare disorders or common conditions such as diabetes and allergies, without funded access to approved drugs. While they wait, New Zealand continues to rank at the bottom of the developed world for access to medicines.

The ranking of the items on the waiting list is top secret, so the Porters have no idea how long it will be until Otis can access Kalydeco. "It could be anywhere from 10 days to 10 years," Eddie says. "We don't know where it's ranked on that list. We don't know what else is on that list. We don't know how long the list is."

Pharmac's chief executive Sarah Fitt says the rankings will never be released. "It's the most commercially sensitive piece of information we have." She says it could affect how drug companies deal with Pharmac. "If they know that they are high on the list, they are not going to necessarily want to negotiate better pricing."

But the tactic means while Pharmac plays the long game in its commercial negotiations, patients play the waiting game and, with little information, they often wait in the dark.

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Pharmac is frequently lambasted for its secret waiting list and the length of time drugs spend on it. This is what the Breast Cancer Coalition wrote in a submission to the health select committee earlier this year: "Pharmac consistently shows a deplorable lack of urgency in granting access to medicines for New Zealand cancer patients."

Breast cancer drug Fulvestrant was recommended for funding by Pharmac's main advisory committee in 2006. It has been on the waiting list so long, the drug company that makes it lost interest and let its registration with MedSafe lapse.

A visiting Portuguese breast cancer expert, Fatima Cardosor, wrote earlier this year that she was "very surprised" Fulvestrant wasn't funded in New Zealand, describing it as "not very expensive" and a "very valuable therapy" in the oncologist's toolkit.

Talk to oncologist Chris Atkinson, the medical director of the Lung Foundation, and he says Pharmac's process is "far too slow". He questions why New Zealand needs to litigate the effectiveness of drugs that other developed nations have already funded.

"We don't have to reinvent the wheel, we've got to look at what is provided in similar countries," he says. "This is not equitable. It is not fair. It is not what New Zealanders would stand up for."

Allergy NZ advisor Penny Jorgensen joined the chorus of disapproval last week when she said Pharmac's continued refusal to fund an EpiPen (which can save the lives of people who have an allergic reaction leading to anaphylaxis) was "bizarre". EpiPens cost about $150 and expire each year, putting them beyond the reach of some families' budgets.

The EpiPen has been on Pharmac's waiting list since 2004, giving it the dubious title of the medicine or device that has spent longest on the list.

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Otis turned two this week. To watch him play at home, in a brick and tile unit in the middle-class Auckland suburb of Onehunga, he looks like any other toddler, but fewer than 500 people in New Zealand have cystic fibrosis. It's a life threatening genetic disorder that mainly affects the lungs, leaving patients with difficulty breathing and frequent lung infections. Only about 30 people in the country have the type - caused by a mutation in the G551D gene - Otis has.

Eddie and Emma Porter have a three-hour, daily regime they carry out with Otis, which includes physio, monitoring his diet closely and taking precautions to avoid infection.

The drug they want for him, Kalydeco, would change all of this and is funded in almost every other OECD country. "The people on Kalydeco, they go to hospital less, they get far less infections, they don't have the degradation of quality of life," Eddie says. "What that looks like is potentially decades added to what at the moment is a life expectancy of 37."

There's plenty to worry about when you have a two-year-old with cystic fibrosis, but waiting for a life-changing drug with no information about how long you'll be waiting is perhaps the hardest part for Emma. "Make it more transparent so we know what's going on, so we can plan our life."

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Pharmac chief executive Sarah Fitt sits on the ninth floor of the drug-buying agency's head office in central Wellington, where life and death decisions are made - just not always quickly.

"We think we can move very fast when we want to - when the evidence is there and we can reach commercial negotiations," she says.

Commercial negotiations are at the crux of her reasoning as to why medications and devices approved for funding can languish for years on Pharmac's waiting list.

She never disputes that the drugs on the waiting list work, what she talks about is price. "It's the value they deliver for the price that they're asking. That's what it comes down to. How much are you prepared to pay for the the outcome you're going to get? That's what comes with having a capped budget, you have to make those decisions and make those trade offs. It's not easy."

On the EpiPen she says Pharmac hasn't managed to strike a deal it likes: "Those devices cost a few dollars to make in reality. They don't cost anywhere near the price they're charging."

On Kalydeco, the drug Emma and Eddie Porter want for their son Otis, she says the $360,000 price tag is unrealistic. "I think that is the crux of the problem. Why is it $360,000?"

And what about Fulvestrant, the breast cancer drug that sat on Pharmac's list so long, the maker gave up and let its MedSafe registration lapse? "We're trying to encourage the supplier to re-register it," Fitt says. But 13 years on a waiting list? "Well, [that was] before my time."

Fitt will admit that sometimes leaving a drug on the waiting list is a negotiating tactic. Pharmac parks it there until it comes off patent and is available as a cheaper generic copy. "That's one part of what we do. But we're not going to want to wait, say, 10 years for something to come off patent," she says.

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Graeme Jarvis, chief executive of Medicines New Zealand, which represents the 18 drug companies in New Zealand, disputes some of Fitt's assertions that high prices can be key to how long medicines remain on the waiting list.

While Pharmac say funding Kalydeco for 30 patients in New Zealand would cost about $8 million a year from its budget of about $1 billion, Jarvis believes Pharmac's negotiating power would allow it to get it for about half that. "Price is always negotiable," he says. "These prices that I often hear quoted are the list price, but for the modern medicines there's usually about a 50 percent discount because of the rebates paid by the companies."

When the agency says how much it spends on a drug, it gives the gross cost. But drug companies offer Pharmac a discount in the form of a rebate. Pharmac says it must keep the rebates confidential so drug buying agencies from other countries can't demand the same price Pharmac negotiates for New Zealand.

Jarvis claims he doesn't know the margin drug company Vertex would make on Kalydeco. What he will say is that prices must reflect the fact drug companies take an average of 12 years to go through the research and development process, including clinical trials, for each medicine. Then there is the MedSafe registration process, which costs between $10,000 and $100,000, depending on how risky the medicine is.

He also poses a question, which is repeatedly asked when Pharmac is discussed: "How much money are you prepared to spend for someone's life, or to extend their life?"

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For Eddie and Emma Porter, it's not a theoretical question. "It's a huge amount of money [for Kalydeco]," Eddie says. "The other side of it is, that's a huge amount of quality of life for your child.

They are evaluating their options, including moving to Australia, where Kalydeco has been publicly-funded for five years. But the Porters are also heading a campaign, Kiwis for Kalydeco.

What hope can Pharmac offer the family? "The evidence is evolving. The price could come down. The evidence could improve," Sarah Fitt says. But she can't give them the answer they really want. "We can never give a date. I mean, it always depends. When you've got a capped budget, you're always looking at what savings you can make."

This leaves the Porters desperate but still battling. "There are two paths and one is vastly different to the other," he says of his son's life with and without the drug. "It's too important not to fight for."