Non-PHARMAC drugs - what are the costs?

In March this year, we presented non-PHARMAC 101, which gave an introduction to 'what it is all about'. It seemed to pique the interest of readers so much, we thought best to unpack it further. So, join us as we take a deeper dive into non-PHARMAC drugs, by taking a closer look at some of the costs that can come up when having to take them.

Although it is not pleasant, picture this for just a moment, you are in need of life-saving or life-extending drugs with an annual price tag that runs into the hundreds of thousands of dollars, as it is not funded by the government. What would be your choices be here? Re-mortgage the house? Seek crowd-funding or simply forgo that expensive treatment?

This is actually a reality some New Zealanders face each year, as it is not only people with rare diseases, but Kiwis with more common diseases such as lung cancer and diabetes that are missing out on effective treatment options because some drugs are not subsidised – being able to pay for them themselves is simply not an option.  



Consultation A recap: How drug funding decisions are made in New Zealand

PHARMAC, the government agency responsible for deciding which medicines are publicly subsidised after they have been approved by drugs regulator Medsafe, has an annual budget of approximately $1.1 billion and funds nearly 1,000 different medicines.

PHARMAC recently welcomed a $191 million increase to its pharmaceutical budget over the next two years. PHARMAC announced they will be funding certain drugs for early breast cancer and newly diagnosed acute myeloid leukaemia. They also announced it is working its way through the medicines options for investment (OFI) list, looking at what agreements it can now make with pharmaceutical suppliers.

The agency undertakes a difficult balancing act to ensure the drugs it funds benefit the greatest number of people for the least amount of money. But it can’t fund everything. This was highlighted in a study commissioned by Medicines New Zealand. Published in November 2021, the study found that Kiwis have the least access to publicly funded modern medicines out of 20 OECD countries.


Medical supplies Unfunded treatment options are often out of reach

A series of tragic case studies have featured in the media over recent years. A common theme is the difficulties New Zealanders face when trying to access affordable treatment for life-threatening illnesses.

Difficulties were highlighted in 2020 when PHARMAC received a petition with over 30,000 signatures that called for them to fund a drug that is used for the treatment of bowel disease. Unfortunately, the drug is not funded in New Zealand, despite being funded in more than 35 countries across the globe. 


As of August 2022, here are some examples of treatment options and their potential out-of-pocket expenses without PHARMAC funding:

Ustekinumab - Newsroom reports that it would cost patients suffering from bowel disease $35,000 a year for the first year and $27,000 a year after that.

Keytruda - currently only funded for the treatment of melanoma, but can help in the treatment of other types of cancer. Non-melanoma patients would have to fork out more than $60,000 a year, and with administration costs that could bump the total cost up to $100,000.

Tafinlar – one of the most advanced treatment options for melanoma,Tafinlar can cost up to $132,000 a year.


Different insurance policies So what are my options?

Without health insurance that covers the non-PHARMAC drugs being prescribed, these daunting amounts may force people to move overseas for treatment, seek donations or forgo the non-funded treatment all together.

To help bridge this gap, AA Health Insurance offers a non-PHARMAC Plus add-on option that provides access to many Medsafe-approved drugs not funded by PHARMAC.*


Health insurance What is AA Health Insurance's non-PHARMAC Plus?

AA Health Insurance’s non-PHARMAC Plus option can be added to Private Hospital or Private Hospital and Specialist Cover, and helps you cover the cost of some drugs that are Medsafe approved and prescribed under the Medsafe guidelines but aren’t funded by PHARMAC*.

With non-PHARMAC Plus you will have access to wider treatment options and cover for approved drugs used to treat cancer and other types of health conditions.

  • Four different annual cover levels to suit your needs: $50,000, $100,000, $200,000, or $300,000*
  • Cover for many pre-existing conditions after 3 years**
  • 5% AA Member discount available if you provide a valid AA Membership number for you or someone named on your policy^

non-PHARMAC Plus covers the cost of these drugs, as long as:

  • The drugs relate to a claim we’ve paid under your Surgical, Medical or Cancer Treatment Benefit under your Private Hospital or Private Hospital & Specialist Cover
  • Your registered specialist has recommended them.
  • The non-PHARMAC drugs are used in a private hospital, or at home up to six months after being admitted to hospital for approved and related treatment.

The option also covers any drug administration costs. 


Insurance coverage How do I add it to my current Health Insurance?

If you’re already an AA Health Insurance customer, and have one of the Private Hospital covers, it’s easy to add the non-PHARMAC Plus option to your existing policy by sending us an email at or calling us on 0800 758 758.

If you are a new customer, you can apply online, at an AA Centre or over the phone with our New Zealand based team.


'Heart-breaking': 30,000 sign petition urging Pharmac to fund inflammatory bowel disease medicine | 


#Cover limits are paid per person per policy year. Policy terms and conditions, exclusions, and benefit limits apply. For more information on non-PHARMAC Plus, see the non-PHARMAC Plus Policy Wording.
**After three years of continuous cover under this option, you will be eligible to claim for non-PHARMAC funded drugs to treat a pre-existing condition that is covered by your policy. Some conditions are never covered. Please refer to the Policy Wording.
*If provided after your policy has commenced, the discount will apply from your next billing date after you provide us with a valid AA Membership number and is applicable while you (or someone named on your policy) remain an AA Member.


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