Background: In September 2001, in addition to their existing management of primary care pharmaceutical expenditure, PHARMAC, the New Zealand government�s Pharmaceutical Management Agency, was authorized to manage pharmaceutical expenditure in public hospitals.[1] In February 2002 PHARMAC launched a three-part Strategy, the National Hospital Pharmaceutical Strategy (NHPS), for this purpose.[2] The Strategy focused on Price Management (PM), the Assessment of New Medicines (ANM), and promoting Quality in the Use of Medicines (QUM). Major initiatives planned were: for PM, to negotiate new, national (as opposed to current, local) contracts for frequently used pharmaceuticals; for ANM, to provide economic assessments of new hospital medicines; and for QUM, to coordinate activities in hospitals. Aims: To assess the impact of each of the three parts of the National Hospital Pharmaceutical Strategy, and assess any impact of the Strategy�s new contracts on the availability of those medicines. Methods: Price Management was assessed in 2003, 2004 and 2005 using data from eleven selected hospitals to estimate savings for all 29 major hospitals, and by tracking hospital pharmaceutical expenditure from 2000 to 2006. For other aspects, cross-sectional surveys were administered to chief pharmacists at all hospitals employing a pharmacist; 30 hospitals in 2002, 29 in 2004. Surveys were undertaken in 2002 and 2004 to examine ANM and QUM activity in hospitals before and after the Strategy. Surveys were undertaken in 2004 and 2005 to examine any changes in the availability of medicines on new contracts, in hospitals. In 2005 a survey was undertaken of opinions on PHARMAC�s specially-developed pharmacoeconomic (PE) assessments. Results: PM results indicated that, by 2006, savings of $7.84-13.45m per annum (6-8%) had been made on hospital pharmaceutical expenditure, and growth in inpatient pharmaceutical expenditure appeared to slow for all types of hospitals in 2003/4. ANM surveys indicated that, by 2004, hospital new medicine assessment processes, predominantly formal, became more complex, more focused on cost-effectiveness, and the use of pharmacoeconomic information increased. The PE survey indicated that PHARMAC�s economic assessments of new medicines were mainly viewed favourably but were not sufficiently timely to be widely used in hospital formulary decisions. Availability surveys indicated that new contracts occasionally caused availability problems e.g. products that were "out of stock", or products considered inferior by respondents. Problems were usually resolved within weeks, but some took over a year. QUM activities showed little change between surveys, but during the period an independent organisation was formed by the District Health Boards of New Zealand, with representation from PHARMAC, to coordinate the Safe and Quality Use of Medicines in New Zealand. Conclusion: The National Hospital Pharmaceutical Strategy has been moderately successful in New Zealand. Savings of NZ$7.84-13.45m per annum were made, and growth in inpatient pharmaceutical expenditure appeared to slow in the year following the Strategy�s launch. The study has indicated some important short-term effects from the Strategy, but further research is needed to ensure that favourable effects are sustained and unfavourable effects kept to a minimum. Similar, centralized, multifaceted, approaches to managing pharmaceutical expenditure may be worth considering in other countries. 1. New Zealand Parliament. New Zealand Public Health and Disability Act. In: The Statutes of New Zealand 2000. No 91.Wellington: New Zealand Parliament; 2000 2. Pharmaceutical Management Agency. National Hospital Pharmaceutical Strategy Final Version. Wellington: PHARMAC; 2002

Background: In September 2001, in addition to their existing management of primary care pharmaceutical expenditure, PHARMAC, the New Zealand government�s Pharmaceutical Management Agency, was authorized to manage pharmaceutical expenditure in public hospitals.[1] In February 2002 PHARMAC launched a three-part Strategy, the National Hospital Pharmaceutical Strategy (NHPS), for this purpose.[2] The Strategy focused on Price Management (PM), the Assessment of New Medicines (ANM), and promoting Quality in the Use of Medicines (QUM). Major initiatives planned were: for PM, to negotiate new, national (as opposed to current, local) contracts for frequently used pharmaceuticals; for ANM, to provide economic assessments of new hospital medicines; and for QUM, to coordinate activities in hospitals. Aims: To assess the impact of each of the three parts of the National Hospital Pharmaceutical Strategy, and assess any impact of the Strategy�s new contracts on the availability of those medicines. Methods: Price Management was assessed in 2003, 2004 and 2005 using data from eleven selected hospitals to estimate savings for all 29 major hospitals, and by tracking hospital pharmaceutical expenditure from 2000 to 2006. For other aspects, cross-sectional surveys were administered to chief pharmacists at all hospitals employing a pharmacist; 30 hospitals in 2002, 29 in 2004. Surveys were undertaken in 2002 and 2004 to examine ANM and QUM activity in hospitals before and after the Strategy. Surveys were undertaken in 2004 and 2005 to examine any changes in the availability of medicines on new contracts, in hospitals. In 2005 a survey was undertaken of opinions on PHARMAC�s specially-developed pharmacoeconomic (PE) assessments. Results: PM results indicated that, by 2006, savings of $7.84-13.45m per annum (6-8%) had been made on hospital pharmaceutical expenditure, and growth in inpatient pharmaceutical expenditure appeared to slow for all types of hospitals in 2003/4. ANM surveys indicated that, by 2004, hospital new medicine assessment processes, predominantly formal, became more complex, more focused on cost-effectiveness, and the use of pharmacoeconomic information increased. The PE survey indicated that PHARMAC�s economic assessments of new medicines were mainly viewed favourably but were not sufficiently timely to be widely used in hospital formulary decisions. Availability surveys indicated that new contracts occasionally caused availability problems e.g. products that were "out of stock", or products considered inferior by respondents. Problems were usually resolved within weeks, but some took over a year. QUM activities showed little change between surveys, but during the period an independent organisation was formed by the District Health Boards of New Zealand, with representation from PHARMAC, to coordinate the Safe and Quality Use of Medicines in New Zealand. Conclusion: The National Hospital Pharmaceutical Strategy has been moderately successful in New Zealand. Savings of NZ$7.84-13.45m per annum were made, and growth in inpatient pharmaceutical expenditure appeared to slow in the year following the Strategy�s launch. The study has indicated some important short-term effects from the Strategy, but further research is needed to ensure that favourable effects are sustained and unfavourable effects kept to a minimum. Similar, centralized, multifaceted, approaches to managing pharmaceutical expenditure may be worth considering in other countries. 1. New Zealand Parliament. New Zealand Public Health and Disability Act. In: The Statutes of New Zealand 2000. No 91.Wellington: New Zealand Parliament; 2000 2. Pharmaceutical Management Agency. National Hospital Pharmaceutical Strategy Final Version. Wellington: PHARMAC; 2002