The ACT Party wants to grow the share of the health budget that goes to Pharmac by one percentage point each year, reaching 12% of total health spending by 2033.

Pharmac is the government agency that decides which medicines are publicly funded in Aotearoa New Zealand. Think of it as the country's bulk buyer for prescription drugs — it uses its purchasing power to negotiate lower prices, but its budget sets the limit on which treatments patients can get for free or at low cost.

ACT leader David Seymour, who currently holds ministerial responsibility for Pharmac, outlined the policy in a press release on 26 July 2026 titled "ACT sets achievable path to close medicines gap with Australia."

New Zealand currently spends 4.9% of its health budget on medicines. The OECD average — a benchmark of comparable developed countries — is 13.3% (RNZ).

Under ACT's proposed plan, in the 2027/28 year overall health spending would be between $33.4 billion and $36.6 billion, with medicine spending between $2 billion and $2.2 billion — about 6%. By 2033/34, health spending would reach $44.9 billion to $51 billion, with medicine spending between $5.4 billion and $6.1 billion, or 12%.

The lower-end costings come from the Treasury's 2025 Long-term Fiscal Model, while the upper end uses the Treasury's 2025 Overlapping Generations model. Both are Treasury tools for forecasting government spending, but they make different assumptions about how the economy and health costs will change over time.

Seymour had not pitched the policy to his coalition partners before announcing it, according to RNZ. That means it is an ACT Party position, not an agreed government plan.

The announcement comes against a backdrop of tension between broader health funding and Pharmac's share. In the 2026 Budget, the health system received a $1.5 billion funding boost, of which Pharmac received $13.5 million. At the time of the announcement, 139 applications sat on Pharmac's Options for Investment list — treatments Pharmac has assessed as worth funding but has not yet been able to pay for.

Pharmac has previously stated it needs more than $400 million in extra funding to cover all the medicines it wants to fund, a figure ACT cited in a 2021 press release (ACT Party). ACT's Brooke van Velden, then the party's Health spokesperson, argued at that time that the shortfall showed the funding model needed reviewing. Van Velden is now ACT's Deputy Leader, the MP for Tāmaki, and Minister of Internal Affairs. She had also previously welcomed a $191 million boost to Pharmac funding while continuing to call for a proper funding review, and pressed for greater transparency from Pharmac on its decision-making, asking the agency to disclose when each medicine was first added to its priority list.

ACT has previously argued that spending more on medicines could reduce pressure on hospitals — treating conditions with drugs before they get bad enough to need a hospital bed.

The broader context here is that Pharmac's budget decisions effectively ration which funded medicines are available to patients. The gap between New Zealand's 4.9% medicines spend and the OECD's 13.3% average has been a recurring point of pressure for successive governments, and the 139 applications on the Options for Investment list represent treatments that Pharmac has assessed as having some level of priority but has not yet funded.

The coalition dynamic matters. Seymour holds the Pharmac portfolio but is one of three party leaders in the coalition government. A policy that has not been through the coalition process carries no automatic weight across the wider government. Whether National and NZ First would agree to the fiscal implications of lifting Pharmac's share to 12% of health spending by 2033 is a separate question from ACT's proposal.

The costings tell their own story. Using two Treasury models to bracket the fiscal impact gives the policy some analytical rigour, but the spread between the lower and upper bounds is large: by 2033/34, the difference between the two projections is roughly $6 billion in total health spend and $700 million in medicine expenditure. That range reflects different assumptions about how health costs will evolve over the next decade, and it means the actual cost would depend heavily on which path the economy and health system follow.

For political watchers, releasing this without coalition sign-off fits ACT's pattern of using its ministerial portfolios to push public discussion on issues where the wider government may not be ready to act. Whether the proposal translates into Budget bids, coalition agreements, or actual spending will depend on negotiations that have not yet begun.