The Associate Health Minister says Pharmac must modernise, "or it will fall behind."

David Seymour has told the agency to "innovate and optimise" to increase access to medicines and continue the "positive culture shift" that's been underway, such as exploring ways to "utilise AI".

Seymour released his latest letter of expectations today, with the hope of building on his letter from last year where he told the agency it was inappropriate to keep considering the Treaty of Waitangi's place in the health sector.

Since that letter of expectation, Seymour said the drug-buying agency has improved overall consultation and changed funding criteria based on public feedback.

The agency had also appointed a new chief executive to "cement positive change, and continue to move towards a more transparent, inclusive, and people-focused organisation."

"This is a good start. My letter of expectations for this year makes it very clear that there is still more work to be done. I expect this positive culture shift to continue," Seymour said.

Now, Seymour wanted Pharmac to modernise and "adopt faster, smarter processes and explore the use of AI to lift performance."

His expectations included:

• Explore how it can optimise medicines assessment and procurement processes to make them more efficient.
• Explore ways to utilise AI to make their processes more efficient.
• Consider the fiscal impacts to the government of funding medicines and medical devices, including costs of societal impacts of funding or not funding a medicine or medical device.
• Be more proactive in engaging with stakeholders.
• Look for new and additional funding opportunities for medicines and medical devices.
• Publish measurable performance metrics and timely decisions to increase transparency.
• Continue to involve patients early in the process and engage with them meaningfully.

Seymour told the agency he wanted it to report back to him by December this year on work done to consider the broader fiscal impacts to government and regarding societal and non-health outcomes of funding medicines and medical devices.

He also expected Pharmac to "renew its organisational culture and sharpen its strategic focus, ensuring it plays a more visible and constructive role across the wider health system."

As part of the "continuous improvement of organisational culture", Seymour said Pharmac needed to carry on giving effect to the Cabinet Circular specifying "Needs-based Service Provision" to meet the government's expectations for how the "targeting, commissioning and design of public services should be based on the needs of all New Zealanders."

Seymour said he's committed to ensuring the regulatory system for pharmaceuticals was not "unreasonably holding back access".