Budget 2024 was the first time the government agreed to a three-year cost pressures package. Funded cost pressure increases from this package for delivering all primary, community, public and population services are: $531m increase (6.2%) to the baseline in 2024/25, $507m baseline increase (5.5%) in the current year 2025/26, and further $507m increase (5.2%) for next year in 2026/27. This package represents the source of HNZ’s funding for community pharmacy’s ongoing price and volume pressures.
The government has indicated there will be a high threshold for reopening the cost pressures package allocated throughout the three-year settlement (i.e. limited to extraordinary and significant events). The package is based on the government’s expectations that HNZ continue to explore opportunities for further savings, and reprioritisation, and invest in approaches to ensure increasing value for money.
Ministers have also delivered expectations via the 2024-2027 Government Policy Statement on Health that HNZ needs to operate within its financial plan and budget assumptions, including appropriated funding levels.
Within this context, our strategic advocacy remains focused on seeking fair and consistent annual price uplift offers across all services, including an overdue major ‘cost pressures catchup’ for community pharmacy – noting community pharmacy cumulative service fee increases have been 20% below inflation over the last 17 years.
It also includes our need for systemic identification of lower value for money expenditure across all health service spending for investment into higher value community pharmacy services. A great illustration of this is the evaluated 230% return on investment that would follow from an investment in nationwide minor health condition services via community pharmacy, with cost savings flowing from avoidable general practice and emergency department visits.
This is why we are keeping maximum pressure on obtaining a genuine commitment from government and HNZ to develop and implement a sustainable community pharmacy funding model in 2026/27. It is also why we are pressing hard for an increased investment in extended and enduring nationwide community pharmacy services.