Spending more money on medicines would pay for itself, report finds
Future governments are being urged to spend more on medicines and reap big savings.
An economic analysis commissioned by Business NZ has found every additional dollar spent on medicines delivers an almost $2 economic return.
Business NZ chief executive Katherine Rich said the report from Business and Economic Research Limited (BERL) was clear.
“If you spend more money on medicines and treatments as a government you will reap significant economic and fiscal benefits – and society will reap benefits as well.”
She said the report showed that New Zealand’s spend on medicines – 4.9 percent of the health budget – was “way behind” comparable countries.
The OECD average was 13.3 percent, she said, while Australia put 12.2 percent of its health expenditure into medicine – which showed.
“You can get more drugs, more modern drugs in Australia, which is a 3.5 hour plane ride for many Kiwis.”
Rich said New Zealand had spent years debating the cost of medicines.
“The wider question is the cost of not funding them.
“Better access to medicines keeps people healthier, in work for longer, and more productive while they are there. It also reduces avoidable pressure on hospitals and other high-cost services. The economic dividend is substantial.”
The BERL report estimated an additional $2.7 billion annual spend on medicine was needed to reach the OECD benchmark and “capture the economic and fiscal gains”.
However, it said the economic return built quickly. The report found benefits to Gross Domestic Product would overtake the cost within three years.
Rich said she wasn’t arguing for more overall health spend, but for more of the budget to go towards medicines over time.
“We just need to change the proportion to direct more over to medicines to prevent some admissions to hospital and boost quality of life and in many case, cure.”
Rich pointed to the now funded cystic fibrosis drug – Trikafta – as an example.
The report states that it received funding from pharmaceutical companies AbbVie, GSK, and Roche. It said while the sponsoring companies contributed high-level subject matter expertise, the analyses, findings, and conclusions expressed in the report are entirely those of the authors.
She said Business NZ had become concerned in recent years about the lack of medicines in New Zealand compared to other modern countries and the length of time to approve new medicines.
She said the report was designed for policymakers and political decision-makers, not to bolster the coffers of pharmaceutical companies.
“The reason Business NZ has looked at this as a topic is that we would argue that health is our biggest asset as a country – personally and for our families – and it is important to look at the evidence in favour of significantly upping the amount that we spend on medicines, particularly those that cure and add to a quality of life.”
Business NZ director of advocacy Catherine Beard told Checkpoint it was “appalling” how little New Zealand spent on medicines, with the report showing that more investment would reduce sick days and boost productivity.
“So reduced absenteeism and there’s another word, presenteeism, which means when you’re at work but you’re not firing on all cylinders because you’re not 100 percent well.”
The report said every dollar invested returned $1.93 to the economy and $1.15 to the Crown.
Beard said the return to the Crown took a little longer than the economic boost, with higher tax revenue and reduced pressure on health services expected to offset the cost to the Crown in about 20 years.