Want to know what impact Pharmac’s funding decisions have on the value customers get from their health insurance?

Pharmac has recently started funding drugs for the treatment of advanced melanoma, Opdivo from 1 July 2016 and Keytruda from 1 September 2016. These drugs were previously only available to those with the ability to pay for them out of their own pocket or via a health insurance policy, such as Private Health, that offers cover for non-Pharmac subsidised chemotherapy drugs.

How does this change impact our Private Health Cancer Care benefit?

Because these drugs are now publically funded it would be natural to think this could reduce the value customers receive from our Cancer Care benefit, particularly the non-Pharmac chemotherapy component. However this isn’t the case and in fact reinforces the value of having a specific Cancer Care benefit.

When a drug is Pharmac subsidised this funding only applies if the treatment is delivered in the public system. If a patient chooses to have their treatment in the private system the price that patient is charged for the drug is based on the rate that Pharmac has negotiated with the drug company, despite the drug not being paid for by Pharmac. This means the patient needs to pay for it themselves, or through their health insurance.

Why would people choose to go private?

Because of this you might assume it would make more sense for people to just go public if the drug they have been recommended is Pharmac subsidised. However people often prefer to have their treatment performed privately as it gives them more options on where and when they will be treated. Additionally many Pharmac subsidised drugs are used in conjunction with other drugs that are not subsidised by Pharmac to improve treatment outcomes, for instance Opdivo is used in conjunction with Yervoy¹, a non-Pharmac subsidised immunotherapy drug, for the treatment of advanced melanoma.

What about other types of cancer?

While Opdivo is Pharmac subsidised for advanced melanoma, it is not currently funded for treating lung cancer despite being MedSafe indicated for this condition. This means lung cancer patients who are prescribed this drug will still need to pay for it themselves or by using their health insurance.

We are also seeing claims for new non-Pharmac subsidised drugs that are MedSafe indicated. In the case of breast cancer we have received claims for a number of non-Pharmac subsidised drugs such as Kadcyla (Trastuzumab emtansine)²  and Perjeta (Pertuzumab)³ that are being used to treat HER2 positive breast cancers⁴.

Private Health Insurance Cancer Cover benefit continues to provide value

While Pharmac’s funding decision is fantastic news for New Zealanders facing a diagnosis of advanced melanoma, it in no way negates the value customers get from the Cancer Care benefit available under Private Health. We know there are a number of new drugs under development⁵ and that they aren’t always funded for every cancer type they are used to treat. For instance, there are over 700 new cancer drugs and vaccines in active clinical trials or with the Food and Drug Administration (FDA) for approval⁶. The reality is Pharmac will not be able to fund all of these drugs, so the value of non-Pharmac chemotherapy cover is likely to only increase over time as more advancements are made.

If you have any further questions please contact your BDM.

^[1] Larkin, J. et. al. (2015) Combined Nivolumab and Ipilimumab or Monotherapy in Untreated Melanoma.

^[2]Peddi, P. F., and Hurvitz, S. A. (2013). Trastuzumab emtansine: the first targeted chemotherapy for treatment of breast cancer

^[3]Fabi,A., Malaguti, P., Vari, S. and Cognetti, F. (2016). First-line therapy in HER2 positive metastatic breast cancer: is the mosaic fully completed or are we missing additional pieces?

^[4]Breast Cancer Aotearoa Coalition. (2016) Exciting new breast cancer medicines now available to be used in NZ.

^[5]Farkona, S., Diamandis, E. P. and Blasutig, I. M. (2016). Cancer immunotherapy: the beginning of the end of cancer?

^[6]Buffery, D. (2015). The 2015 Oncology Drug Pipeline: Innovation Drives the Race to Cure Cancer

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