Every year, the NAAR process is expected to be completed before 1 July, with any variations to the ICPSA from NAAR to be agreed by Voluntary Variation between ICPSA providers and HNZ. In 2024 and 2025 the NAAR process was not completed before October.
This has meant the annual Voluntary Variation cannot take effect before 1 December. This results in delayed payment of the funding uplifts to community pharmacy service fees, which is far from ideal, with pharmacy owners being forced to absorb increased cost pressures in the interim. It also leads to backdating fee uplifts and complicated funding washup arrangements for pharmacies. This is problematic from an administrative perspective, given the complexity of the current community pharmacy funding model and payment arrangements.
In the past two years, timing delays can be fully attributed to delayed HNZ engagement with provider representatives on the substantive matter of each NAAR – i.e. annual consideration of reasonable cost pressure adjustments (uplift offer).
HNZ has presented its uplift offer in June each year, which does not leave enough time for a national review and agreement to be completed before 1 July. This is despite repeated requests from the Guild to start the NAAR process much earlier. Compounding these delayed NAAR start dates are frustrations arising from the way HNZ has engaged with provider representatives during NAAR.
HNZ has not adhered to the ICPSA principles for how they work together with provider representatives to resolve any issues in a cooperative and collaborative manner. This has been largely due to the lack of transparency from HNZ around reasonable cost pressure adjustments in both years.
These issues were amplified in 2025 due to a lack of transparency around the intended adverse fee impacts from 12-month prescriptions for community pharmacy. As a result, we have had to resort to Official Information Act requests, followed by escalation to the Ombudsman to resolve the non-responses. This requires significant improvement.
We look forward to HNZ working with us in a much-improved way to develop and implement a simplified and sustainable community pharmacy funding model in 2026.