Pharmac CEO Exit Payout: Ministers Defend $357k Payment Amid Scrutiny Over Public Funds in New Zealand

Pharmac's $357,000 Exit Payout Sparks Scrutiny: Ministers Defend Decision

The significant exit payment of $357,000 to Sarah Fitt, former chief executive of New Zealand's drug-buying agency Pharmac, has ignited a fierce political debate. Associate Health Minister David Seymour, who oversees Pharmac, and Pharmac board chair Paula Bennett, are staunchly defending the substantial payout, asserting it was "very well managed" by the board.

The Controversial Departure and Payout

Fitt's departure in February followed several years marked by considerable controversy, including accusations of a "culture of contempt" and a "fortress mentality" within the agency. Her tenure, which began in 2018, was also shadowed by criticism regarding her interactions with media, notably a journalist. Public scrutiny intensified in 2024 over changes to hormone replacement therapy patches, ultimately leading Bennett and Seymour to withhold confidence in Fitt's leadership.

During a recent Health select committee meeting, Labour Party health spokesperson Ayesha Verrall directly challenged Bennett regarding the $357,000 sum. Bennett confirmed the payment was made under an existing employment contract, emphasizing its confidential nature and explaining it was an expected part of "negotiations for... cessation payment for someone leaving." She clarified that she hadn't informed Seymour of the exact figure. Bennett asserted the board acted "within our powers to actually do the best for New Zealanders and New Zealand taxpayers," acknowledging the terms were part of an inherited agreement.

Ministers Defend Board's Handling

Verrall sharply retorted, calling the payout "well beyond the norm in the public sector." Seymour, seemingly confirming the payment was indeed for Fitt, justified the board's actions by highlighting Pharmac's crucial role as a "two billion dollar a year operation" essential for securing medicines for New Zealanders. "Having the right leadership at the head is absolutely critical, and I think the board's managed it very well," he stated.

Labour Questions Taxpayer Value

Labour's spokesperson further questioned the prudence of using taxpayer funds for an exit package equivalent to at least eight months of the highest-paid Pharmac individual's salary. Seymour responded by referencing his broad views on employment law but reiterated adherence to the country's laws. When asked if the situation was "bungled," Seymour distanced himself, affirming his belief that "the board has operated very effectively in challenging circumstances." He also pointed to the appointment of Malcolm Mulholland, a prominent cancer patient advocate, to chair Pharmac's advocacy committee, as a positive step following past protests against the agency.

Despite previous controversies, Seymour had publicly thanked Fitt upon her resignation in February, praising her commitment to Pharmac's core mission of expanding patient access and opportunities.

Culture Review Remains Partially Private

Another point of contention raised by Verrall was the full release of a review into Pharmac's culture. Bennett explained that the report addressed "staffing issues" and that the board was advised to release only the executive summary. She detailed efforts to conduct "face-to-face" meetings and workshops with patients, aiming to avoid "the Pharmac way" and genuinely listen to concerns, describing a significant divide that necessitated direct, honest engagement to address past hurt. Bennett positioned herself as a "buffer if needed" during these interactions.