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

ecause the costs of treating orphan diseases are extremely high and these
diseases fail the ‘value for money’ test. This is a moral dilemma not solved by
the utilitarian approach and some people are denied treatment for their medical
conditions simply because the disease they endure is suffered by few rather
than many people.
George Laking (2006), a medical economics researcher in the area of health
technology assessment, also took part in PHARMAC’s Review of High Cost
Medicines. He proposed that the challenge for decision makers who are
presented with cost-benefit analysis is to identify trade-offs that are deemed
equitable or distributionally just. He did not believe QALYs were distributionally
just because of the system’s inability to deal with the cases at the margin of the
cost-utility exercise (whatever margin PHARMAC might deem to be an
acceptable cost per QALY). These cases most matter in human terms because
there are people who lose, having almost won, and those who win, having
almost lost (Metcalfe, 2003).
However, the cost-utility analysis calculation can and does maximise the
benefits of subsidised drugs. Hadorn (2006) proposed that the utilitarian
approach taken by PHARMAC should be firm and set the maximum dollar value
it is prepared to subsidise per QALY. He submitted that PHARMAC should
stick to this upper limit. He also proposed a blending into the decision making
of the principles underlying New Zealand public health services approach:
fairness and transparency. Hadorn called this a ‘Rawlsian wrinkle’ which should
be introduced to PHARMAC’s decision making to take into account the needs of
the least well off first. PHARMAC could do this by electing not to consider the
adverse effects of co-existing conditions which are more common in older and
lower income people. These conditions reduced the net benefit of taking the
proposed drug and thus increased the QALY price.
However, Hadorn recognised that this approach would come at a price to
PHARMAC and he proposed that the government should set aside 5% of
PHARMAC’s budget for the subsidisation of drugs it does not consider cost-
effective. This would meet society’s desires for non-utilitarian preferences.
Notwithstanding the intention to strike a more fair approach to the needs of
those on the margins of the cost-utility analysis process, Hadorn did not explain
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