Pharmac’s board chairwoman and its minister are defending an early $350,000 exit payment to one employee in the same year its former chief executive resigned.

Pharmac Minister David Seymour said he was comfortable with the payment, despite not being aware of the total amount.

However, he said he expects Pharmac will change how it draws up its contracts following the payout.

During the drug-buying agency’s select committee appearance today, Labour’s health spokeswoman Dr Ayesha Verrall pushed Pharmac’s representatives on how one employee received “cessation benefits”totalling$347,058, a portion of which was a redundancy payment, in the 2024/25financial year.

In March this year, Sarah Fitt resigned as chief executive. She faced sustained criticism during her time in the role, with many patients and advocates claiming the agency had little empathy and acted defensively when confronted under her leadership.

Asked by Verrall if Fitt was the employee who received the payment, Pharmac board chairwoman Paula Bennett wouldn’t say, claiming it was an employment matter.

Sarah Fitt resigned as Pharmac CEO late last year. Photo / Mark Mitchell

Verrall said the payout was equal to eight months of the highest-paid employee’s salary at Pharmac.

The payout was roughly inline with eight months’ worth of Fitt’s$493,000 salary in 2023/24.

Questioned whether Pharmac mishandled its exit agreement with Fitt, Bennett said the agency was bound to the contract’s terms.

“We negotiated that, we did everything within our powers to actually do the best for New Zealanders and New Zealand taxpayers, but that was the terms of the agreement that I inherited, and that’s what it is.”

Seymour, speaking to the Herald after his select committee session, said he was aware of the payment but not its size.

“If I did know, the last thing you would want would be a minister trying to insert themselves in an employment dispute and negotiate it.

“I think that would be a big mistake, so I think they’ve actually handled it really well.”

He wouldn’t be drawn on the size of the payment nor say who received it.

“There [are] circumstances around it that, because of employment law, we’re not going to tell the world about.

“Nonetheless, I think what’s really important is we’ve got a great chief executive who’s making really good work, leading a great team of people and that’s what really matters here.”

Labour health spokeswoman Dr Ayesha Verrall asked questions of Pharmac's representatives today. Photo / Mark Mitchell

Responding to Verrall’s questions, Seymour noted the contract was signed under the Labour-led Government in 2017.

“We dealt with the situation as we found it and I think if you knew all the facts, you’d say [we] dealt with it pretty well.

“If [Labour] don’t like the way it turned out, they were the ones that planted this particular seed, we just have to deal with the outcomes or the consequences of it.”

The Herald has sought a response from Verrall.

Asked if he expected changes to Pharmac’s employment contracts, Seymour said: “You’d be better to talk to Paula about that, but I would certainly expect so, just bear in mind I don’t run them, I just set expectations.”

Adam Pearse is the Deputy Political Editor and part of the NZ Herald’s Press Gallery team based at Parliament in Wellington. He has worked for NZME since 2018, reporting for the Northern Advocate in Whangārei and the Herald in Auckland.