Office of Hon Dr David Clark for Dunedin Norm Associate Minister at Finance Minister at Health 29 AUG Rel: DCOIA 210 Response to your request for official information Thank you for your request of 1 August 2018 under the Official Information Act 1982 (the Act) for: On 1 August 2019, it was reported that you had appointed Steve Maharey as chair of Pharmac. I would like to request the following information under the Official information Act 1982: all advice relating to the appointment. In particular, i am interested in the person specification lor the role {if any), whether the position was advertised, how possible candidates were identified, how the successful candidate entered the process g. response to advertisement, selection from database, advice from Minister), how many candidates were considered, and how many were shortlisted, how many were interviewed, whether any conflicts of interest were identified, and how much they will be paid. I can advise that Board appointments are made in line with the Board Appointment and Induction Guidelines from the State Services Commission. There are no specific person specifications for the role of Pharmaceutical Management Agency (PHARMAC) Board Chair, Generally the Ministry of Health (the Ministry) uses a skill matrix to inform candidate selection and ensure the Board is balanced, representative of the community, is diverse and has the necessary skills. The position of PHARMAC Board Chair was not publicly adverlised, which is the Board Appointments and Induction Guidelines from the State Services Commission. Hon Maharey was nominated by this office on the basis of his skills and experience which are well known to the Minister of Health. Hon Maharey completed a declaration of conflicts of interest prior to his appointment being noted by the Appointments and Honours Committee and confirmed by Cabinet, can confirm no conflicts of interests were identitied or declared. The Chair of the PHARMAC Board is paid an annual fee of $48,000, This is calculated on the average requirement of Board Chairs having to spend 50 days per annum on Board vaAAEnemg Mitigate-en \lewZeaai'd aamlayicwiamigm related business, and is in accordance with Cabinet Office Circular (12)6 Fees framework for members appointed to bodies in which the Crown has an interest. The advice provided to the Minister of Health relating to this appointment is itemised in the table below and attached in Appendix One. Some information is withheld under section of the Act, to protect the privacy of natural persons. Appointment of Board Char, Ref: 20181163, 12 June 2018 Document Explanation 1. Pharmaceutical Management Agency: Some information withheld under (Re)appointment of Chair, Deputy Chair section of the Act, to protect and Board members, Ref: 20180542, 3 the privacy of natural persons. May 2018 Information out of scope is redacted. 2. Pharmaceutical Management Agency: Some information withheld under section of the Act, to protect the privacy of natural persons. The Board Appointment and Induction Guidelines from the State Services Commission are publicly available and can be found at: uidelines-oct15.pdf You have the right under section 28 of the Act to ask the Ombudsman to review my decision to withhold information under this request. Yours sincerely f8 (7 Bill Frewen Ministerial Advisor Appendix One +64 4 817 8709 Private Bag 18041. Parliament Buildings, Wellington 6160. New Zealand a davidclark dparliamentgovtnz beehivegovtnz or ?mammal.? r. ?7 :Pr: '3 Security classification: ln-Con?dence File number: ADS2-14-2018 -ction required by: 15 May 2018 Pharmaceutical Management Agency. (Re)appo_intment of Chair'- Deputy Chair and Board members . t- .. . gar 2912 To: Hon David Clark. Minister of Health Purpose This report provides advice on Pharmaceutical Management Agency (PHARMAC) Chair, Deputy Chair and Board member (re)appointments. Key points . The third term of the Chair, Mr Stuart McLauchlan, and the second term of Board member, - In addition, since June 2013 the Board has held a vacancy and operated with ?ve members. The Board does not currently have a Deputy Chair. . The State Services Commission's Board Appointment and induction Guidelines (2015) indicate that, as a general guide, a second term can be considered appropriate, and a member can be reappointed for further terms if the Minister agrees there are sound reasons for doing so. . PHARMAC is taking on new roles that will have a significant impact on the health sector. The need to provide continuity during a period of a . - . be considered a sound reason for reappointing either or both of Mr McLauchlan art-OUt 0? 50?59 . Should both be reappointed, it would be advisable to appoint them for differing terms, to stagger the exiting of experienced Board members. . It is advisable to ?ll the member vacancy, as a small Board carries risk. The Ministry and the Chair recommend appointing a member with ?nancial expertise. Out of scope Contacts: i Jenny Bauckham, Manager, Government and Executive Advisery Karen Belt, Senior Advisor, Government and Executive Advisory m?J Page 1 of 5 umur? muou Health Report number: 20180542 Pharmaceutical Management Agency: (Re)appointment of Chair, Deputy Chair and Board members Recommendations The Ministry recommends that you: a) note that third term of the Chair of the Pharmaceutical Mana-ement A- enc IPHARMACII Mr swan and the? Out of scope b) note that the PHARMAC Board has a member vacancy. and that the role of Deputy Chair is vacant 0) agree to reappoint Mr McLauchlan as a member and Chair for a term of three Yes/No years or agree to reappoint Mr McLauchlan as a member and Chair for a term of one year while a replacement Chair is sourced Yes/No d) Out of scope YeslNo 6) Yes/No f) Yes/No @5 - Maree Roberts Minister?s signature: Acting Executive Director Office of the Director-Genera! Date: Page 2 of 5 MlNli? RY 01? HEALTH mama muau Health Report number: 20180542 Pharmaceutical Management Agency: (Re)appointment of Chair, Deputy Chair and Board members 1. The Pharmaceuticat Management Agency (PHARMAC) Board consists of up to six members. Members are appointed by the Minister of Health. who is required to make appointments in accordance with criteria in the Crown Entities Act 2004. Terms are for three years or any lesser period the Minister may determine. Members of the Board remain in of?ce, despite the expir their term. until they are reappointed, replaced or informed that they will not be reappoin? a. 1) replaced at that time. The Chair and the Deputy Chair are appointed from among Boa 6 members. 2. A skills metric for the current Board is attached as Appendix A. Term expiries . . Out oi scope 3. The third term of the Chair Mr Stuart McLauchlan, and the second of hoard member.- in addition. since June 2013 the Spam has neld a vacancy and operated with five members. The Board does not currently have a ?i ,?Lty Chair. 4. The State Services Commission?s Board Appointment and In 'o 3 Guidelines (2015) indicate that, as a general guide, a second term can be considered app ?priate, and a member can be reappointed for further terms if the Minister agrees there an;- ound reasons for doing so. The Guidelines note that there is a balance between the bene?ts derived from continuity of service on a board, the value of the board gaining new ideas and .. ?spectives, and the need to avoid the board losing a number of experienced members over a the. space of time. 5. No work was undertaken on finding replacerre tor Mr McLauchlan or-rior to the election. due to the period of restraint. and . 'iL?sequently, it was determined that no action should be taken until your view on reappointmer c. .epiacement was sought. Stuart McLauchlan - Chair 6. Mr McLauchlan was appointed ?1 PHARMAC Board in 2009 and was appointed Chair in 2010. As he is completing his third *er it would be timely to replace him. unless there are sound reasons for his reappointm 7. The Ministry consider.? me: sound reasons exist that support the reappointment of Mr McLauchlan. PHARMAC is takin'i new roies that will have a signi?cant impact on the health sector. in particuiar. it is me ?13, towards the full management of hospital medical devices, including a capped budget. a. "d it will be taking over the budget management of hospital medicines. These changes ar expected to result in considerable savings to the health sector. They will require PHARMAC to develop new capabilities to carry out these new roles. Mr McLauchlan has perforzm .vell as the Chair and it is advisable to provide for continuity during this period of exraa 1" of role. This is particularly so, given that a new chief executive has ecenfly been appointed. 8. Ministry recommends that Mr McLauchlan be reappointed as a member and as Chair for a term of three years. Should you not wish to reappoint Mr McLauchan for a three year term, the Ministry recommends that he be reappointed for a year while a replacement Chair is sourced. While Mr McLauchlan will remain in office after his term expires, reappointment for a year will provide certainty for both PHARMAC and Mr McLauchlan. Out of scope Page 3 of 5 Minute menu Health Report number: 20180542 Out of scepe Next steps 16. Once you have indicated your wishes for (re)appointments to these roies by circling the appropriate recommendations. the Ministry source candidates and/or prepare Cabinet documentation for reappointments, as appropriate. END. Page 4 of 5 MINISTRY OF EALT IMUUM Appendix A: Skills matrix of current PHARMAC board members Health Report number: 20180542 Name (Of?ce) First appointed Current term expires 'toeJd uueeH [2691 ssaugsna nuawa?euew 1mm owned USLUOM Stuart McLauchlan (Chair) Dunedin 1 August 2009 31 July 2018 Jan White Wellington 25 October 2012 31 July 2018 tepueugzj PUEISI H1003 Ross Lawrenson Hamilton 21 September 2016 20 September 2019 Jens Mueller Tauranga 1 July 2010 30 September 2019 Nicole Anderson Hamilton 13 June 2014 12 June 2020 [Vacancy member and of?ce of Deputy Chair] a3 Page 5 of 5 v. A x. 73. J-x' I - m-Eu? - TIMELINE for APPOINTM ENTS 0 P20 June 2018 21 June 2018 2? June 2018 2 Juky 2018 3 Ju?y 2018 4 July 2018 6 July 2018 URGENT ITEM Signed papers to to lodge mto CabNel MOH complete appointment papers and send to Mimster?s Office for sugnmg APH meeting noimg appomtmem Cabinet Con?rms appomimem Letters of Appointment Signed Signed Letters of Appointment reiumed to MQH Appomtmeni G?zetled mm nu - 5.: Security classi?cation: ln-Con?dence Health Report: Pharmaceutical Management Agency: Appointment of Board Chair 'T12June201a ReportNO'? 20181163 F:te Number ADB2-14-2018 Action Sought Action Sought Deadtine . _u Minister Ciark Sign__ i 10 00 am on 21 June_2018 Minister G_enter - Minister Safesa Contact for Telephone Discussion (if required) Name Position *Telephone . Contact Order Jenny Bauckham Manager i Contact 5 Government and Kevin Forward i Executive Adwsor I [2nd Contact Government and Executive i Actions for the Minister?s Office Staff Return the Signed report to Minis'ry of Health Note any feedback on the quality of it report Page 1 of 6 u'x Ml l'l EAL I'll anti-mural: Health Report number: 20181163 Security classification: tn-Con?dence File number: A062-14-2018 Action required by: 10 00 am on 21 June 2018 Pharmaceutical Management Agency: Appointment of Board Chair To: Hon Dr Dawd Clark Minister of Health Purpose This paper provides the Cabinet Committee Papers required for the Cabinet Appointments and Honours Committee (APH) to note your intention to appomt Hon Steve Maharey, CNZM as Chair of the Pharmaceutical Management Agency (PHARMAC) Board Recommendations The Ministry recommends that you: a) sign the attached draft memorandum for lodgement With the Gha of the Cabinet Yes/No Appointments and Honours Committee (APH) for the 27 June 2018 meeting (Appendix 23) note that the draft memorandum to APH (and assoeaated documents) should be Yes/No fled With the Cabinet Office no later than 108m on Thursday 21 June 2018 or fled as a late Submission, for conSideration at'APH's 27 June 2018 meetng On noting of your intent by the Appointments and Honours Committee, and following confirmation by Cabinet 0) sign the appomtment letter. Gazette not 09 and tetter of thanks (Appendix B) and Yes/No return them to the Ministry for action Key points . The third term of the Chair, Mr Stuart McLauchtan July 2018 . HR20180542 provided you With adwce on the (re)appointment of members to the Board noting options to either reappornt or seek replacement 0 it should be noted that follow.ng this appointment. there Wilt be two remaining vacancres on the Board . You have indicated that you to appomt Hon Steve Maharey as a member and the Cha of PHARMAC for a term of three years commenc mg on 1 August 2018 and ending on 31 July 2021 . The candidate has prowded a dectaration of conflicts of interest and Curriculum Vttae (CV) i There are no known or Identified conflicts of interest - Ho barriers to apporntment have been identified - A draft memorandum to the APH and the assomated documents {Organisat on and Candidate Forms) for this appomtment are attached as Appendix A for your approval and gnature - Draft appomtment 'etters, Gazette notice and letter of thanks are attached as Appendix for your apprmal and signature Contacts Jenny Baud-(ham Manager, Government and Executive AdVisory Kevn Forward, Senior Adwsor (Severnment and Executive Ac'vwsory Page 2 of 6 ammo mum; Health Report number: 20181163 . Taiking Points are attached as Appendix Maree Roberts Minister?s signature: Acting Executive Director Office of the Director?General Date: End Page 3 of 6 MINHIRY OIL HEALTH Mum: mum: Health Report number: 20181163 Appendix A: Draft Memorandum for Appointments and Honours Commihee (a?ached - for your signature) Page 4 of 6 Security classi?cation ln Con?dence Office of the Minister of Health Chair, Cabinet Appointments and Honours Committee PHARMACEUTICAL MANAGEMENT AGENCY: APPOINTMENT OF BOARD CHAIR Proposal 1 This paper outlines my intention to appoint Hon Steve Maharey, CNZM as a member and Chair of the Pharmaceutical Management Agency (PHARMAC) Board for a three year term commencing on 1 August 2018 and expiring on 31 July 2021. Background 2 PHARMAC is established under the New Zealand Public Health and Disability Act 2000 (the Act) and is a Crown entity for the purposes of section 7 of the Crown Entities Act 2004 (the CE Act). it is classi?ed as a Crown agent in Part 1 of Schedule 1 to the CE Act. As such, PHARMAC must give effect to Government policy when directed by the Minister of Health. 3 objectives. as outlined in the Act, are to ensure for eligible people in need of pharmaceuticals, the best health outcomes that are reasonably achievable from pharmaceutical treatment and within the amount of funding provided. To achieve this, PHARMAC manages a list of subsidised pharmaceuticals, known as the Pharmaceutical Schedule, on behalf of District Health Boards (DHBs). PHARMAC works with DHBs to develop a proposed combined pharmaceutical budget for pharmaceutical cancer treatments, vaccines administered in primary care and community pharmaceuticals. which is then approved by the Minister of Health. PHARMAC is also developing a medical devices procurement capability. 4 Members of the PHARMAC Board are appointed by the Minister of Health (section CE Act) for terms of office of three years (in general), and may be reappointed. Appointments are made by written notice to the member. With a copy sent to the entity, and notice of the appointment published in the Gazette as soon as practicable after appomtment. 5 A list of the current Board membership is attached. Comment 6 I intend to appoint Hon Maharey as Chair of the PHARMAC Board, for a three-year term of office commencing on 1 August 2018 and expiring on 31 July 2021. 7 Hon Maharey is currently an independent director, commentator, and consuitant on a wide range of social and political issues. He has a unique mix of skiils as a former academic sociologist. City Councillor, Member of Parliament. Senior Cabinet Minister, Director, and Vice-Chancellor of Massey University. 8 Hon Maharey is a strategic thinker with a proven track record of leadership and management. 9 Hon Maharey's current roles include: 9.1 Deputy Chair of the Asia New Zealand Foundation 9.2 Board member of the Venture Taranaki Trust 9 3 Member of the University of South Pac tic Council 9.4 Member of the NZ Police Audit and Risk Committee. 10 A curriculum vitae form containing further details on the appointee is attached. Representativeness of reappointment 11 i am satis?ed that the appointment of Hon Maharey as Chair of the Board writ provide for a well-balanced Board in terms of gender, age, ethnicity and geographic representation. and an appropriate mix of skills and experience Remuneration 12 Fees consistent with the Cabinet?approved Fees Framework (Cabinet Office Circular CO (12) 6, Fees framework for members appointed to bodies in which the Crown has an interest) are payabte to PHARMAC members and office holders. Fees are met from the existing PHARMAC budget. 13 PHARMAC is classified as a Group 3a, Level 3 Governance Board under the Cabinet Fees Framework. The fee for the Chair is $48000 per annum. Appointment process and consultation 14 i can confirm that a suitable process has been followed in selecting the proposed appointee in terms of the State Services Commission Board Appointment and induction Guidelines, including the candidate providing a declaration as to potential conflicts of interest. Conflicts of interest 15 I can confirm that appropriate enquiries concerning con?icts of interest have been carried out, in accordance with the State Services Commission appointment guidelines, to identify any conflict of interest that could reasonably be identified and no conflicts of interest have been identified. Timing and Publicity 16 A press statement will be issued once the appointment has been approved and Hon Maharey has been notified. 17 Additionally, a notice of the appointment will be published in the Gazette. Recommendation 18 It is recommended that the Committee note my intention to appomt Hon Steve Maharey as Chair of the PHARMAC Board for a three-year term of office commencing on 1 August 2018 and expiring on 31 July 2021. Authorised for lodgement Hon Dr David Clark Minister of Health Organisation Form Cabinet Appointments and Honours Committee All sections must be completed. This form 5 in Word format at lttp?flcabxuizlc cabinctullitc qm': rm Organisation PHARMACEUHCALMANAGEMENTAGENCY Current Membership Age Cityl?i? own Name MCLAUCHLAN. Stuart (Chair) WHITE Jaii LAWRENSON, Ross MUELLER. Jens I Date of original appointment 13 June 2014 1 August 2009 25 October 2012 21 September 2016 1 July 2010 I Expiry date of present I term I 12 June 2020 31 July 2018 31 July 2018 20 September 2019 20 September 2019 Brief Outline of the Functions and Responsibilities of the Organisation The Pharmaceutical Management Agency (PHARMAC) was estab ished by the New Zealand Public Health and within the amount of funding prowded purchasmg hospital pharmaceuticats patients and running patient information campaigns. and Disability Act 2000 (the A011 and is a Crown entity for the purposes of section 7 of the Crown Entities Act {the CE Act) it is clasm?ed as a Crown agent in Part One of Schedule One to the CE Act objectzves. as outlined in the Act, are to ensure ?or elig ble people in need of pharmaceut cats the best health outcomes that are reasonably achievab from pharmaceuticai treatment PHARMAC managesa list of subsidised pharmaceuticals. the Pharmaceutical Schedu e. on behalf of District Health Boards (DHBs) PHARMAC engages with DHBs to develop a proposed community pharmaceuticals budget which is then approved by the Minister of Health PHARMAC also assists DHBs in PHARMAG also has a function to promote the responSibte use of pharmaceuticals This includes commute-eating health professionals to encourage optimal prescribing and health outcomes for Usc Further page: it'rcq. Date: 08/06/2018 tlic Page I it] Candidate CV Form All sections must be completed. This form should be completed in consultation with [ht candidate possible. This form is ax in Word format at Name [family name in upper case; include till: if appropriate) MA HAREY, Steve, Hon, CNZM The Position Organisation Phannaceutical Management Agency Board Position Chair (chair'mcmber Term - rPayment I 0 {la} and or per year) Skills and attributes the candidate will bring to the posrtion (0 g. busincss skills. community tm cullu: nl awareness, regional pauper-mo - as rclmanl to the needs Ofth' posmonl .l - How the Candidate Meets the Needs of the Position Hon Maharey 15 currently an independent director. consultant and He has a unique mix of shit: as or academic Sooiologrst. a City Councillor, a Member at Parliament. 5?Scmor Cabinet Minister. :1 Director and ru- Chancellor I Possible conflicts of interest Proposals for conflict management [it applicable] Nil (?nnr'rmc on nut page if required The Candidate Name (family. name in upper case; include title if appropriate) MAHAREY. Steve. Hon. CNZM Address 5 9(2lla) Citizenship (line! he? fealand) Page I of]! Age Current or most recent Employment (specify position and ample} or, indudegear? . . Government board I . apporntments held (current and previous. inc1ude years) Private andlor voluntary sector board appointments held (current and preu?ous. include )cars 65 January 2017 Present January 2017 - Present October 2008 2016 August 1990 October 2008 Nox ember 1999 February 2008 January 1975 1990 August 2017-present 2017-piesent 201 ?-present 2016-present 2014-2016 2014-2016 2024?2016 2013?201 5 Independent Director Steve Maharey Commentator and Consultant Steve Maharey Vice Chancellor Massey University Member of Parliament New Zealand Parliament Cabinet Minister New Zealand Parliament Sociology Massey University mmittee Member 1 Audit and Risk Committee NZ Police Council Member 1 University of South Paci?c mm Venture Taranaki Trust mg Varkey Foundation (Atlantis Group) Deputy Chair Asia New Zealand Foundation Chair Committee for Universuy Academic Programmes Deputy Chair Unitersities Next Zealand was: Agri One Chair FoodHQ 2014?2016 Member Riddet lnistitue 2013-2016 Member Teacher?s C?ounc;l l'ransjnon Board Darector 352016 Massey Global 2013-2024 Member Employers Territorial Slippon Board 20112016 Chair Massey Um'x crsity Foundation 2010-2016 gfhair Manzmalu Cancer Society 2008-20l6 Member Massey Umx ersm Councal Patrol) Manau am Squash Assouation and Central Football Qualifications and 1972 - .3 Bachelor ul Arts (Hons) ?Zpref'eVCE Masscv meersity (:nclude Slgni?fallf \xmk luslon) 11ml communil) lmolwnunll NJ 1076 Master ofAns. Smlolom; i Massey [?nhelsil} ?min-r aruqu u-d. In Ede Ihc in?ll?maxi. requwu?d Date: 7/6/18 Pugs: 3013 Mlh?ld??'l?l EAITH Health Report number: 20181163 Appendix 8: Appointment Letters. Gazette Notice and Letter of Thanks (attached for your signature follow'ng noting of your intent by Appointments and Honours Committee, and confirmation by Cabinet) Page 5 of 6 Hon Dr David Clark M13 for Dunr-dlr? North Hon Steve Mahare . CNZM steve@maharey co n2 Dear Hon Maharey Appointment as a member and Chairperson of the Pharmaceutical Management Agency (PHARMAC) Board. Thank you for agreeing to be appornted as a member and Chairperson of the PHARMAC Board hereby appornt you as a member and Chairperson of the Board of PHARMAC under sectron 52{ 1) of the New Zealand Publrc Health and D-sabrtity Act 2000 and sectron 28(1) and clause 1(1) oi Schedule 5 of the Crown Entrties Act 2004 Your apporntment Writ take effect on 1 August 2018 and writ end on 31 July 2021. The Coalrtion Government was elected with a pian to better fund our health system and delrver the strong publrc health system all New Zealanders expect and deserve Whrle we be unable to achreve everytl?rng we would like to immediately, we are and absolJtery committed to improvrng our public health system and the servrces New Zealanders are able to access. I expect you to conduct your affairs rn an open and transparent manner, and to be beyond reproach in all your Finatty, I expect you to be candid and to adhere to the long standing 'no surpnses? policy. To tins and assure you that as my door rs always open Further and oi apporntment (and addrt cost information retevant to your role and duties) are attached Any necessary further rnformatron writ be provided by the Chief Execurrve. Please ?ormarly acknowledge your apporntment by the attached form and erther and emailing to Jenny Bauckham (Jenny_bauckham@meh govt n2) or posting rt to Jenny Bauckham. Manager, Government and Execut ve Adwsory Ministry of Health. PO Box 5013 Well ngtor 6145 Thank you again, and let me be the first to congratulate you on your appontment Yours srncerely Hon Dr David Clark Minister of Health Cc Ms Sarah - Chret Executrve. PHARMAC govt n2 ATTACHMENT: TERMS AND CONDITIONS OF APPOINTMENT I am pleased to appoint you as a member and Chairperson of the Board of PHARMAC. and look forward to working with you to improve the heaith and wellbeing of New Zealanders. i have received your consent to being a member and Chairperson of the Board. your declaration that you are not disqualified from these positions and your declaration as to your interests. These terms and conditions may be varied by me at any time during the period of your appomtment. lt is important that you read this attachment carefully and in its entirety, and retain it for future reference Performance expectations As the Chairperson of PHARMAC. you are directly accountable to me for your performance. I except you to deliver on the Government's expectations set out above. and on any speCific expectations that I may adVise you of in relation to y0ur particular entity. ?No surprises? The ?no surprises? policy IS a critical component of maintaining ministerial trust and confidence in your organisation To this end. I require early warning of any issues before they arise. both to the Ministry of Health and, when appropriate. to my office A ?no surprises? way of working is not intended to interfere your independent functions. nor with Boards? operational responsibilities. Rather it covers Circumstances where it is prudent for PHARMAC to disclose to me issues that may require a ministerial response. are possibly considered contentious. or which attract wide public interest (be it positive or negative). Open and effective communication between the Board. the Ministry and the Minister is vital to building strong relationships, while maintaining clear lines of accountability. Statutory basis for appointment Your appomtment as a member is made pursuant to section 52(1) of the New Zealand Public Health and Disability Act 2000 (the Act) and section 28(1)(a) of the Crown Entities Act 2004 (the CE Act). Your appomtment as Chairperson is made pursuant to clause 1(1) of Schedule 5 to the CE Act This appointment does not create any contract of service or contract for services between you and me as Minister, or between you and PHARMAC Reappomtment at the completion of your current term is not automatic. nor should it be expected Reappomtments are only made after a careful consideration of the performance of PHARMAC and the particutar skilis and experience needed by the Board geing fomrard You may resign as Chairperson. Without resigning as a member, at anytime by written notice to me as Minister Your re5ignation letter must state the date on which the resignation takes effect and be copied to the Board (clause 3. Schedule 5. CE Act) You may resign as a member at any time by written notice to me as Minister. signed by you. with a copy to PHARMAC Your resignation Will be effective on receipt of the notice by me. or at any later speCified time (section 44. CE Act) Your services as a member or as Chairperson may be terminated by me at any time during the period of your appointment In the case of your membership. this may be done at any time during the period of your appointment (section 36. CE Act). and with as formality and technicality. and as much expedition. as is permitted by the principles of natural Justice and a proper consrderation of the matter (section 41. CE Act) In the case of your role as Chairperson such removal may be done after consultation with you. and afterwards by written notice to you and PHARMAC (clause Scheduie 5, CE Act). You are not entitled to any compensation or other payment or benefit relating to your ceasing. for any reason. to hold office (section 43. CE Act). Expectations of the Board New Zealanders have high expectations in reiation to the healthcare they receive. They want hospital services they can rely on. They want a smarter public health system that provides maximum value for each tax dollar. These expectations, and the challenging fiscal environment New Zealand continues to face, reinforce the need to ensure the different parts of the health system are working in unison. I expect PHARMAC to think as part of the system and work in co-operation and co-ordination with the Ministry of Health, District Health Boards and other Crown entities and agencies i expect the Board to maintain a high level of pub'ic confidence in the services it detlvers. The Board is expected to find an appropriate balance in the provision and purchase of services at all necessary levels. Services also need to represent good value-for-money and be delivered in a timety manner. It is my strong expectation that the Board operates within its allocated funding. This is particularly important given that we operate in a resource-constrained emiironment. You continue to have operational flexibility to re-prioritise efforts and costs internally to achieve objectives Role of the Chairperson The PHARMAC Chairperson 5 directly accountable to me for the performance of PHARMAC reqUire the PHARMAC Chairperson to: . provide effective leadership and direction to the Board, consistent with my expectations ensure the effective accountability and governance of PHARMAC, consistent with reqwrements ll' the Act, the CE Act and other retevant legislation . ensure that the PHARMAC Board's governance practices and risk management policies are continuatly reviewed and updated to reflect current best practice . prowde the necessary gurdance and support to Board members to ensure that they contribute effectively to the governance of PHARMAC (with particular regard to the induction and mentoring of new members), and to Chief Executive and their senior management team as appropriate (to ensure PHARMAC is managed effectively) . ensure a process is in place to undertake a regular (preferably annual) performance revrew of the Board as a whole, as welt as of the Chairperson and members indivrdually maintain an ongoing review of the Board?s membership profile and that of it?s committees, regard to the skills needed for PHARMAC's successful governance and successor to Chairperson. Deputy Chairperson and member roles develop and maintain sound relationships with the Minister and Associate Ministers of Health (as required), Minister?s Offices. the Ministry of Health. fellow health Crown entity Chairpersons and other stakeholders, and actively observe the ?no surprises' policy described above Relevant legislation and duties You must ensure that you are familiar With both the CE Act and Act. In particular, i draw your attention to sections 25-26 and 49-61 of the CE Act These provisions describe the Board's role, members' accountability to myself and the collective and indivrdual duties of Board members You must keep y0urself fuity familiar with the duties and ob'igations of your position at all times At present, these duties reqUire members to . comply with the Act and the CE Act 0 act with honesty and integrity 0 act in good faith and not at the expense of PHARMAC's interests . act with reasonabie skilt, diligence and care - not disclose information gained in their capacity as a member (see atso the ?Conflicts of interest? section below). (sections 53?57. CE Act) in addition, the Board is also subject to several collective duties. Under these. the Board must ensure that PHARMAC: . acts consistently with its objectives. functions, current Statement of intent and Output Agreement . performs its functions ef?ciently and effectively and in a manner consistent with the spirit of service to the public - operates in a financially sustainable manner (is. that it prudently manages its assets and liabilities, and endeavours to ensure its tong-term financial viability and that it acts as a successful gomg concern). (sections 49-51. CE Act) Conflicts of interest and the duty not to disclose information i draw your attention to the disclosure of interest provisions in section 62 of the CE Act. it is important for all members and particularly the Chairperson, to have a thorough working knowledge of these provisions. You must ensure that any reievant change in your Circumstances is entered into the Board's interest register as soon as practicable after the change occurs. Should you become interested in any transaction of PHARMAC in the future. expect you to disclose to the Board the nature of that interest as soon as is practicable (section 64. CE Act) in undertaking the appointment process for this rote. i also expect you to have fully evaluated the extent of your conflicts of interest (if any) and considered how you intend to manage them in a tegal. ethical and good practice sense It is important that any conflicts of interest you may have are not so great that they compromise the confidence placed in you. or prevent you from making an effective contribution to the Board It is absolutely essential that con?icts of interest are appropriately dectared and managed Simply deciaring a conflict of interest in itself does not amount to the effective and appropriate management of that conflict I expect you to ensure an exists around the Board table where conflicts of interest can be discussed and managed both transparently and effectively Failing to manage conflicts of interest tn this way reduces New Zealanders' trust and confidence in the health system This IS unacceptable to me as Minister of Health. Conflicts of interest (either real or perceived) can be exacerbated by the inappropriate use of information A member who wrongly uses or discloses information, that they have access to through their posmon on the Board. jeopardises my confidence in the Board and uttimatety the confdence of the public. As outlined earlier, the duty not to disclose information is one of the individual duties owed by members {section 57 CE Act) Members who fail to comply With their duties may be removed from office. Indemnity There is an exclusion of prowsmn in section 90 of the Act that applies to you where you have acted in good faith and with reasonable care in pursuance of your dUttBS as a Board member and Chairperson. To the extent that you consider it necessary in tight of section 90. you should make your own arrangements for professional indemnity insurance to cover your work as a member and Chairperson of the PHARMAC Board Remuneration and time commitment The fee payable to you as Chairperson is $48,000 per annum. payment of which will be arranged through the office of PHARMAC's Chief Executive Taxation matters depend on your personal circumstances. in general, fees are classed as ?honoraria' for the purposes of income tax regulations and are not subject to GST. You are also enhtied to be reimbursed by PHARMAC for actual and reasonable travelling and other expenses incurred while carrying out your duties (section 48, CE Act). Such reimbursement is to be in accordance with the Cabinet-approved Fees Framework (Cabinet Office Circular CO (12) 6, Fees Framework for Members Appointed to Bodies in which the Crown has an Interest) Thank you for your commitment to improvrng the health and wellbeing of New Zealanders. i would be grateful if you w0uld confirm receipt of this letter by contacting Jenny Bauckhaml Manager, Government and Executive Advisory at the Ministry of Health on either 021 810 114 or Hon Dr Davrd Clark MINISTER OF HEALTH June 2018 MEMORANDUM To: Jenny Bauckham Manager. Government and Executive Advisory Ministry of Health PO Box 5013 WELLINGTON 6145 Far (04) 496 2191 Emall Jenny_bauckham@moh govt nz Subject Appointment to the Pharmaceutical Management Agency (PHARMAC) Board From: Hon Steve Maharey 1 I acknowledge my appomtment as a member and Chairperson of the Pharmaceutical Management Agency (PHARMAC) Board under section 28(1)(a) ot the Crown Entities Act 2004 This appointment wull commence on on 1 August 2018 and Will end on 31 July 2021 2 have read and understand the terms and of my appomtment. Signed Date ?3 NEW ZEALAND GAZETTE NEW ZEALAND PUBLIC HEALTH AND DISABILITY ACT 2000 AND CROWN ENTITIES ACT 2004 Appointment to the Pharmaceutical Management Agency Pursuant to section 52(1) of the New Zealand Public Health and Disability Act 2000 and section 28(1)(a) and clause 1(1)of Schedule 5 to. the Crown Entities Act 2004 (the CE Act), and notice given under section 28(2) of the CE Act, have appointed Steve Maharey, CNZM as a member and Chair of the Board of the Pharmaceutical Management Agency. for a term of office commencing on 1 August 2018 and ending on 31 July 2021 Dated at this day of 2018 Hon Dr David Clark MINISTER OF HEALTH Hon Dr David Clark MP for Dunedin North Mr Stu rt McLauchlan Dear Mr McLauchlan I write to you in regards to your term of office as a member and Chair of the Pharmaceutical Management Agency (PHARMAC) Board. i am informed that your third tern; in of?ce expires on 31 July 2018. i wish to advise you that i do not intend to reappointyou and that your term on the Board Will end on 31 July 2018 i would like to take this opportunity to acknowledge and personally thank you for, y0ur commitment as a member. and for your leadership as the Chair. of the PHARMAC Board since 2009. Under your stewardship, PHARMAC has increased the number of medicines being funded. increased the number of patients being treated funded medicines. and contained spending Within the Combined Pharmaceutical Budget While the budget grew at an affordable rate. i would also like to congratulate you on your leadership of PHARMAC as it expanded ts rote to include the management of hosptlal medical dev-ces The savings seen to date are high'y encouraging After careful consrderatlon. l~have appointed Hon Steve Maharey to the Board and as Chairperson. effective 1 August 20t8 Please accept my best Wishes for your future endeavours Yours sincerely Hon Dr Davad Clark Minister of Health cc Hon Steve Maharey Incoming Chairperson. PHARMAC steve@maharey co n2 Ms Sarah Fitt Chief Executive PHARMAC sarah.frtt@pharmac govt nz mum: mmru Health Report number: 20181163 Appendix C: Taiking Points PHARMACEUTICAL MANAGEMENT AGENCY: APPOINTMENT OF BOARD Summary intend to appoint Hon Steve Maharey, CNZM as Chair of the Pharmaceutical Management Agency (PHARMAC) Board for a three-year term of otf?ce. commencing on 1 August 2018 and ending on 31 July 2021. Key Points 0 The third term of the current Chair, Mr Stuart McLauchlan, is due to expire on 31 July 2018 . I intend to appoint Hon Steve Maharey, CNZM as Chair of the PHARMAC Board for a three-year term of office commencing on 1 August 2018 . Hon Maharey is a currently an independent director, commentator and consultant . He has proven track record of leadership and management, having served as a 89030! Cabinet Minister, Vice Chancellor of Massey University. City and Director . Hon Maharey IS currently the 0 Deputy Chair of the Asia New Zealand Foundation 0 Board member of Venture Taranaki Trust 0 Councri Member of the of South Pacific 0 Member of the NZ Police. Audit and Risk Committee - expect the apporntment of Hon Maharey writ support the Coalition Government?s Plan to deliver the strong public heaith system. that all New Zealanders expect and deserve. through greater levels of access to essential pharmaceuticals, in a fiscally responsible manner . An appropriate process has been followed in selecting the proposed appomtee. in terms of State Services Commission Board Appornlment and Induction Gurdelines . Hon Maharey has provrded a declaration regarding of interests . Hon Maharey has no known or declared conflicts of interest a No barriers to his appointment have been identified End Page 6 of6