Health systems operate differently around the world, and published research does not identify any one right way of organising or funding them. However, New Zealand’s health system is an outlier in its very low allocation of resources to pharmaceuticals and very high allocation of resources to delivering health services. While New Zealand spends only 4.9 percent of the health and disability budget on pharmaceuticals, the average allocation for similar OECD countries is 13.3 percent.
New Zealand also stands out as having lower health-adjusted life years (the share of life spent in good health). With concerns about overall health spending and value for money, decision-makers should be asking whether we have the right input mix and whether we are fully reflecting the critical role that medicines play in the system as both a substitute for other health inputs and as a complementary input that makes other inputs more productive.
This report was commissioned by Medicines New Zealand to shed light on the allocation of health expenditure in New Zealand compared with other OECD countries, a question that lacks transparency due to New Zealand’s failure to report this data to the OECD.