This is an area of health care often mis-understood until you are in the thick of your treatment and you find out things may not be as you expected.
Pharmac is the governments answer to managing health care costs and getting the best deal for New Zealanders health care dollar. The challenge is that health care dollar, which is funded from your taxes, only goes so far.
To keep it simple there are 5 keys factors in you getting the treatment you need.
- Your doctor or specifically your GP
- Your specialist your doctor refers you to
- The hospital who performs your treatment, including surgeons, nurses and probably your specialist as they often do the surgery too.
- Medsafe New Zealand, the drug safety approval board who approves medicines and treatments for use in New Zealand.
- Pharmac, the drug funding organisation the New Zealand Government uses to pay for the drugs and medicines your GP, specialist and hospital uses.
I'm going to focus on the medicine side for the moment....
Did you know that there are medicines which are discovered and manufactured by a drug company for a specific treatment and they have the right to be exclusive in the market for a period of time to recover their development costs?
This is called the branded medicine and tends to be where the most expense in your treatment is incurred as this is usually the new treatment your specialist talks to you about.
Once this initial cost recovery period is up, the other drug companies in the market can manufacture a generic version of the medicine, it will probably have a few minor differences to the branded original but works pretty much in the same way.
Why do you need to know this?
Medsafe New Zealand will usually approve the branded drug/medicine for use in New Zealand if its deemed safe to use but Pharmac may not approve it for funding until it has reached the generic stage of the drug life cycle, due to the very high costs of accessing new medicines when first released.
So why do you care?
This is where the gap in your treatment starts, if your doctor only presents to you the Pharmac funded options then you may be missing out on potentially life saving treatment, if there is a new medicine which is approved for use in New Zealand but it's not yet funded.
Even if you are told about the 'new' medicine it may not be accessible due to the very high cost you will have to pay for it.
If you find yourself in this latter situation you will feel like you have been kicked when you are down, as you have already had the news you have a serious illness. This is followed by anger, anger at whoever you can direct it at, usually the public health system, and expressed to your friends and family.
As a financial adviser I hear this often, very often in fact, and by clients who also think the insurance companies take to hard a line, as this is usually a discussion when taking out insurance cover when there are pre-existing conditions prior to application.
Ok so what does this mean for me?
This could mean you have to find 10's if not 100's of $000's to pay for the treatment yourself or do with the lesser option a hope it all works out fine.
Since since my original post there have been a number of articles in the wider media about Pharmac and how it's working.
This article, from March 2015, demonstrates how bad this situation really is. With only 13% of new medicines that have been approved for use funded by Pharmac.
Add to this the government budget for this isn't getting any better, as this article also in March 2015, demonstrates.
What has become quite a media debate is the new melanoma drug treatment, this article from June 2015 highlighting this promising new drug and funding for this is likely to be some time away.
Further to this in November 2015 this article outlining the financial balancing act Pharmac has to operate with, effectively treating your health care with similar ROI you would use in business.
in December 2015, steps up the commentary
- This article discusses Parmac giving the Melanoma drug a low priority
- This article highlights the struggle for one woman and the costs associated with accessing the new Melanoma drug.
- This article speculates that the new Melanoma drug will be funded.
- And this article, a few days later, pours cold water on it happening.
- And this article highlights another use for the Melanoma drug in fighting blood cancers, like leukemia which will also struggle to be funded for this use
How do I fix this and avoid the costs?
If you are in the situation of requiring treatment which is approved for use but is not funded or the generic is not suitable and you need the unfunded branded option you're going to have to find the money to pay for this yourself. This is where I come in as your insurance adviser.
To solve this potential shortfall in treatment you can do 1 of 2 things;
- Use the assets you have to pay for it, sell up your home and other things of value
- Insure it before you get sick or develop a condition.
I don't like option 1, I've worked hard for what I have! How does option 2 work?
This situation can be tackled in two ways. Accessing a good medical insurance policy which covers unfunded drugs and medicines or take out a trauma policy for enough money to cover this off for you, or both.
The downside to the medical insurance policy which covers everything, is future expenses incurred by the insurer for unfunded medicines could make the policy very expensive for you to maintain. The upside is, if you have a requirement for an expensive ongoing treatment, you need it ongoing every year, the medical insurance policy is probably the best approach.
If you expect your risks are lower or you want more certainty with your future medical insurance premiums, then a traditional Pharmac only medicines policy in combination with trauma cover may be the option for you. The downside risk is the trauma cover may not be enough for your treatment costs, or if you need medicine ongoing then the funding from the trauma cover may not be enough.
What I'm talking about is the recent coverage of PNH sufferers, there are 8 currently in New Zealand and they require medicine which is $500,000 per year every year to maintain their health. The first insurance option of having the medicines paid for by your medical insurance is the best option for them, but at this level of claim it will impact premiums for everyone in the future, if the insurer is paying for this treatment. Yes this treatment will come down in price in time, but right now $500,000 per year to stay healthy, is an extreme cost.
The combination option, of taking a fully funded medical insurance policy and trauma insurance, covers both bases, if later in life the fully funded medical insurance policy becomes unaffordable, or the trauma depending on your perspective, then your fall back is to drop one or the other. Possibly drop the Trauma and keep the medical insurance as a preference as the older you get the more reliant on medical treatment you get. Another option, with one insurer, is to drop back to their Pharmac only medicines funded policy, which is a cheaper option and maybe suitable if you’re heading to or past retirement age.
What to discuss your options more specifically to your situation, get in touch
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