non-PHARMAC – what’s the deal?

Deciding between possible financial hardship and potentially life-saving medical treatment is a choice that no one should have to make. However, it's a decision currently facing thousands of Kiwis who need access to medications that are currently not funded by PHARMAC.

You may be familiar with the term non-PHARMAC drugs or be curious as to what it actually means. So, we thought we would pull together a bit of a ‘non-PHARMAC 101’ for you in a nice easy-to-follow Q&A format.

Let’s start at the start…


Question iconWhat does non-PHARMAC funded drugs mean?

non-PHARMAC funded drugs can be lifesaving, but could possibly cost up to hundreds of thousands of dollars. These drugs are Medsafe approved and prescribed under the Medsafe guidelines, but aren’t funded by PHARMAC.


Doctor consultationHow does PHARMAC determine what’s funded and what’s not?

It is up to PHARMAC to decide on what new medicines they will fund. This decision will come after they have consulted with experts and understand the costs and benefits, before finally considering if there are any alternatives to fund. 

To give you an idea of the size and scale, PHARMAC currently funds nearly 1,000 different medicines in New Zealand, which range from your everyday medicines like paracetamol through to the likes of vaccinations and hospital treatments.

PHARMAC are responsible for maintaining a fixed budget and therefore cannot fund everything. An example of this is in late 2020, PHARMAC had to announce a freeze on funding Keytruda – which is a treatment used for melanoma, lung, head and stomach cancers – stating that they could not continue as they did not have the budget to cover the investment. This potentially left patients in financial (alongside emotional) limbo. It was estimated that Keytruda could have been able to assist at least 1,400 patients each year.


Question iconWho is Medsafe?

Medsafe is the organisation that provides “quality control” for new treatments and medications – deciding whether they’re safe and approved for use in New Zealand. Usually, PHARMAC considers funding treatments and medications only after they’ve been Medsafe-approved.


Insurance coverageWhat is AA Health Insurance's non-PHARMAC Plus?

non-PHARMAC Plus is an optional add-on to both of the AA Health Insurance Private Hospital covers. It can help cover the cost of some drugs that are Medsafe approved, and prescribed under the Medsafe guidelines, but aren’t funded by PHARMAC.

Benefit limits range from $50,000 to $300,000 per customer, per year, allowing customers to choose the level of cover that best suits their health needs and budget.


Prescribed medicinesWhy could I need it?

AA Health Insurance’s non-PHARMAC Plus option is being offered to fulfil the increasing need for cover that provides customers with wider choice, affordability and flexibility when it comes to modern medicines.

Without funding, these medicines can often cost hundreds of thousands of dollars, placing Kiwis who are already under significant stress with the added financial burden of paying for treatments out-of-pocket.


Duration of policyWhen would I need it?

A typical treatment journey would usually involve you feeling unwell and going to see your doctor. If your GP thinks you need further assessment or treatment, they may refer you to a specialist or hospital. As part of your treatment, you may be prescribed drugs by your specialist. These drugs may or may not be covered by PHARMAC and sometimes, non-PHARMAC funded drugs are the best available, or the only option for your treatment.

Having non-PHARMAC Plus means you are covered for the cost of medicines where AA Health Insurance has accepted a claim for treatment and where the non-PHARMAC drugs are used in a private hospital or at home for up to six months after being admitted to hospital for treatment^. The option also covers any drug administration costs.

There is a 3 year waiting period for pre-existing conditions, which applies from the start date of your non-PHARMAC Plus option.  Some pre-existing conditions will never be covered.

non-PHARMAC Plus also enables customers to ‘future-proof’ their cover so that when new unfunded, but Medsafe approved medicines become available to treat illnesses, they’ll be covered for it^.


Insurance contract 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.

^The drugs must be prescribed by a registered specialist under the Medsafe guidelines, used in a recognised NZ based private hospital, day stay unit or a private wing of a public hospital or used at home for up to six months after you are admitted for treatment for an approved related treatment. Policy terms and conditions (including exclusions) apply.




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