Former National Party minister will chair the board of Pharmac which has been burnished with a $1.7 billion budget boost

Associate Health Minister David Seymour has announced the Government will continue to provide Pharmac with enough funding to maintain current medicines in Budget 2024.

The Act Party leader has also appointed former National Party minister, Paula Bennett, to chair the board of directors and oversee the independent organisation. 

Bennett raised almost $2 million for the National Party ahead of the 2023 election and appeared to endorse Act candidate Brooke Van Velden in the Tamaki electorate. Van Velden shared an image of her drinking a cup of tea with Bennett in the electorate, each wearing a suit in the colors of their respective parties. 

While the social media post didn’t include any explicit endorsement, some interpreted it as a suggestion that voters should support Van Velden over National’s Simon O’Connor. Van Velden won the seat.

Seymour ultimately ended up with an Associate Health portfolio and was made responsible for Pharmac.

His decision to appoint such an openly political figure to run the independent agency was heartily criticized by economist and self-styled government watchdog, Michael Reddell. 

Pharmac was supposed to be a highly independent operation that delegated real power to technocratic experts to make tough decisions within a strict mandate, he said on Twitter. 

“How then is it appropriate to appoint a highly political, partisan, person with no domain experience as chair,” he asked. 

The previous chair, Steve Maharey, was a former Labour Party minister who was found to have breached impartiality rules in two opinion columns he wrote for the Sunday Star Times. 

He resigned after the election and a highly-experienced health profession, Peter Bramley, had been serving as interim board chair. 

Bennett held several ministerial portfolios and after politics took a job as one of eight senior leaders at real estate agency Bayleys Realty Group. 

She has never served as board chair or worked in the pharmaceutical industry previously. 

'A world-leading medicine procurement agency'

Seymour said he thought Bennett was the best person to help transform Pharmac into a world-leading medicine procurement agency.

“Paula brings a wealth of experience to this role, with extensive experience in governance and organisational change,” he said. 

The upcoming May budget will give the medicine buying agency a four-year budget of $6.3 billion—its largest ever—fulfilling campaign promises made by most political parties.

While Labour increased Pharmac’s budget while in office, it didn’t guarantee that funding would continue across the forecast period in Budget 2023. 

Instead, maintaining that level of funding was made as a campaign promise and baked into the parties’ election fiscal plan. This created a ‘fiscal cliff’ in the official budget numbers. 

National and Labour both included $180 million for Pharmac in their election campaign fiscal plans but the number announced today was significantly higher. 

Seymour said he had been informed that more than $400 million per year was needed, just to maintain access to existing medicines. He blamed Labour for creating a “fiscal challenge”. 

Labour’s health spokesperson, Ayesha Verrall said the agency’s budget had been increased by 51% across the six years Labour was in government. 

“Labour did more to increase access to medicine than any government before it, and will continue to fight to see the investment in the health of Kiwis continue,” she said. 

Seymour needed to explain why the budget increase was $1 billion bigger than has been forecast prior to the election, Verrall added.

“Hopeful patients and advocates will welcome this funding — but David Seymour needs to be up front with them about how far it will go”.