How does the operation of PHARMAC's 'Community Exceptional ...

when there is no profound evidence that the life saving rescue will achieve a
cure or even prolong life, is often done without too much thought for the
opportunity cost of doing so (Moodie, 2008).
Several possible remedies to this moral difficulty have been suggested and are
worthy of discussion. Hadorn (2006) suggested that PHARMAC should set
aside 5% of its budget to subsidise drugs that it does not consider cost-effective
but would meet the needs of claimants whose needs cannot be met by cost-
effective medicines. In effect, this approach endorses wasting money because
there is no effectiveness or efficiency component to the spending (Caygill,
2011). Hadorn does not give a rational explanation as to why 5% should be set
aside. Caygill remarked that if PHARMAC is going to endorse non-cost
effective spending then there is no rational basis for choosing 5% as opposed
to any other percentage figure (Caygill, 2011).
The NZORD interviewee suggested that PHARMAC should significantly
increase the budget for Community Exceptional Circumstances. The example
of Australia was given previously, where the Australian Benefits Scheme
(PHARMAC’s equivalent) has put aside $40 million for rare and exceptionally
high-cost medicines for very low numbers of applicants. These
reimbursements are also applied to a life-saving drugs programme. This
approach recognises that even if the numbers of patients requiring expensive
drugs are small, there is still a responsibility on the government to provide
healthcare to these few people. This responsibility is met from this special
budget. The NZORD interviewee stated that if PHARMAC was to allocate a
similar proportion per head of population, as is provided by the Australian
Benefits Scheme, PHARMAC should set aside approximately $8 million. If this
were to occur, PHARMAC could approve more than double the number of
claims for Community Exceptional Circumstances it now approves.
Whilst there is some logic to this approach, there are two elements to approving
‘Community Exceptional Circumstances’ claims; affordability and clinical
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