In 2008 New Zealand's pharmaceutical management agency, PHARMAC, made its final decision on the funding of trastuzumab (Herceptin) for HER2-positive early stage breast cancer. PHARMAC declined to fund the 12-month Herceptin regimen requested by the drug's manufacturer, funding instead a 9-week treatment regimen. The decision was justified on the grounds that there was insufficient evidence of additional long-term health benefits from the longer treatment course, which, coupled with the high cost of the drug, did not make the 12-month regimen sufficiently cost-effective. This paper examines the criticism of PHARMAC's decision that ultimately led to the government's decision to expand the health budget in order to fund the 12-month regimen. It defends PHARMAC's decision against the charge of unfairness, arguing that for high-cost drugs with limited proven effectiveness it is not unfair to deny funding on grounds of cost-effectiveness, since although some moral priority must be given to helping those with serious diseases like breast cancer, the capacity of such drugs to swamp health care budgets is itself a significant moral issue. It concludes that the decision to expand the health budget to pay for Herceptin exacerbates rather than solves the political and moral problems involved in prioritizing health care resources.

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