Approval for Merck's Keytruda a political football in New Zealand

In New Zealand, where government coverage of a single melanoma drug is a national political issue, drugmakers of all stripes complain about the slow work of the national health agency responsible.

At the core of the dispute is the relatively new type of drug, biologics, which requires a closer look at data than chemical-based drugs Pharmac is used to facing in deciding a drug's cost-effectiveness. One biologic was Keytruda (pembrolizumab) developed by Merck, Sharp and Dohme (MSD), or Merck ($MRK) outside the U.S. and Canada.

Pharmac decided not to fund the drug for treating terminal patients with melanoma despite its showing promising results in clinical trials, The New Zealand Herald reported.

The agency cited the per-patient cost of $42,470 to $132,710 and a refusal by MSD to lower the price to what Pharmac considered more reasonable. Pharmac experts also said data showed most patients would not see a change in their tumors or a longer period of survival.

Politicians are using the denial as a political football, according to

The industry, represented by Medicines New Zealand, used the dispute to lambast Pharmac's funding-approval process, noting it has a backlog of 35 drugs that its advisory committee has decided are cost-effective, reported.

The group's general manager, Graeme Jarvis, suggested Pharmac does not take into account the entire picture of funding medicines, saying investments in new medicines have saved neighboring Australia nearly $4.56 billion in hospital costs.

Pharmac critics also said New Zealand's drug-spending ranks last among 20 developed countries. Australia, with a similar system and similar needs, is ranked 18th.

Health Minister Jonathan Coleman lashed back at the criticism, saying that at any one time, Pharmac has a range of drugs waiting to be funded after being assessed.

But, he said, the procedure is to reassess them at the agency level following a complex process that includes its own funding budget and what it can negotiate with drugmakers.

Pharmac's budget is set to be increased by $3.3 million to a high of $531 million, but the increase was $4 million less than the agency requested, according to the reports. Coleman said $26.5 million to nearly $40 million is spent annually to cover new drugs, using new funds made available through price concessions from drugmakers.

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