diff --git a/x-pack/plugins/fleet/common/services/package_to_package_policy.test.ts b/x-pack/plugins/fleet/common/services/package_to_package_policy.test.ts
index 59768e6ac8c85..549192413527b 100644
--- a/x-pack/plugins/fleet/common/services/package_to_package_policy.test.ts
+++ b/x-pack/plugins/fleet/common/services/package_to_package_policy.test.ts
@@ -325,9 +325,11 @@ describe('Fleet - packageToPackagePolicy', () => {
 
   describe('packageToPackagePolicy', () => {
     it('returns package policy with default name', () => {
-      expect(packageToPackagePolicy(mockPackage, '1', '2')).toEqual({
+      expect(
+        packageToPackagePolicy({ packageInfo: mockPackage, agentPolicyId: '1', outputId: '2' })
+      ).toEqual({
         policy_id: '1',
-        namespace: '',
+        namespace: 'default',
         enabled: true,
         inputs: [],
         name: 'mock-package-1',
@@ -341,7 +343,14 @@ describe('Fleet - packageToPackagePolicy', () => {
     });
 
     it('returns package policy with custom name', () => {
-      expect(packageToPackagePolicy(mockPackage, '1', '2', 'default', 'pkgPolicy-1')).toEqual({
+      expect(
+        packageToPackagePolicy({
+          name: 'pkgPolicy-1',
+          packageInfo: mockPackage,
+          agentPolicyId: '1',
+          outputId: '2',
+        })
+      ).toEqual({
         policy_id: '1',
         namespace: 'default',
         enabled: true,
@@ -358,14 +367,14 @@ describe('Fleet - packageToPackagePolicy', () => {
 
     it('returns package policy with namespace and description', () => {
       expect(
-        packageToPackagePolicy(
-          mockPackage,
-          '1',
-          '2',
-          'mock-namespace',
-          'pkgPolicy-1',
-          'Test description'
-        )
+        packageToPackagePolicy({
+          name: 'pkgPolicy-1',
+          namespace: 'mock-namespace',
+          description: 'Test description',
+          packageInfo: mockPackage,
+          agentPolicyId: '1',
+          outputId: '2',
+        })
       ).toEqual({
         policy_id: '1',
         enabled: true,
@@ -383,14 +392,19 @@ describe('Fleet - packageToPackagePolicy', () => {
     });
 
     it('returns package policy with inputs and package-level vars', () => {
-      const mockPackageWithPolicyTemplates = ({
+      const mockPackageWithPackageVars = ({
         ...mockPackage,
         policy_templates: [{ inputs: [{ type: 'foo' }] }],
         vars: [{ default: 'foo-var-value', name: 'var-name', type: 'text' }],
       } as unknown) as PackageInfo;
 
       expect(
-        packageToPackagePolicy(mockPackageWithPolicyTemplates, '1', '2', 'default', 'pkgPolicy-1')
+        packageToPackagePolicy({
+          name: 'pkgPolicy-1',
+          packageInfo: mockPackageWithPackageVars,
+          agentPolicyId: '1',
+          outputId: '2',
+        })
       ).toEqual({
         policy_id: '1',
         namespace: 'default',
@@ -409,12 +423,12 @@ describe('Fleet - packageToPackagePolicy', () => {
 
     it('returns package policy with multiple policy templates correctly', () => {
       expect(
-        packageToPackagePolicy(
-          packageWithPolicyTemplates,
-          'some-policy-id',
-          'some-output-id',
-          'default'
-        )
+        packageToPackagePolicy({
+          name: 'aws-1',
+          packageInfo: packageWithPolicyTemplates,
+          agentPolicyId: 'some-policy-id',
+          outputId: 'some-output-id',
+        })
       ).toMatchSnapshot();
     });
   });
diff --git a/x-pack/plugins/fleet/common/services/package_to_package_policy.ts b/x-pack/plugins/fleet/common/services/package_to_package_policy.ts
index 88bfb77238133..386c4a61e7de1 100644
--- a/x-pack/plugins/fleet/common/services/package_to_package_policy.ts
+++ b/x-pack/plugins/fleet/common/services/package_to_package_policy.ts
@@ -16,7 +16,7 @@ import type {
   PackagePolicyConfigRecordEntry,
 } from '../types';
 
-import { doesPackageHaveIntegrations, groupInputs } from './';
+import { groupInputs } from './';
 
 export const findDataStreamsByNames = (
   names: string[] = [],
@@ -112,16 +112,25 @@ export const packageToPackagePolicyInputs = (
  * @param outputId
  * @param packagePolicyName
  */
-export const packageToPackagePolicy = (
-  packageInfo: PackageInfo,
-  agentPolicyId: string,
-  outputId: string,
-  namespace: string = '',
-  packagePolicyName?: string,
-  description?: string
-): NewPackagePolicy => {
+export const packageToPackagePolicy = (options: {
+  name?: string;
+  description?: string;
+  namespace?: string;
+  packageInfo: PackageInfo;
+  agentPolicyId: string;
+  outputId: string;
+}): NewPackagePolicy => {
+  const {
+    name,
+    packageInfo,
+    agentPolicyId,
+    outputId,
+    namespace = 'default',
+    description,
+  } = options;
+
   const packagePolicy: NewPackagePolicy = {
-    name: packagePolicyName || `${packageInfo.name}-1`,
+    name: name || `${packageInfo.name}-1`,
     namespace,
     description,
     package: {
diff --git a/x-pack/plugins/fleet/public/applications/fleet/sections/agent_policy/create_package_policy_page/step_define_package_policy.tsx b/x-pack/plugins/fleet/public/applications/fleet/sections/agent_policy/create_package_policy_page/step_define_package_policy.tsx
index 4e18950fc55de..090f4a86dcfc2 100644
--- a/x-pack/plugins/fleet/public/applications/fleet/sections/agent_policy/create_package_policy_page/step_define_package_policy.tsx
+++ b/x-pack/plugins/fleet/public/applications/fleet/sections/agent_policy/create_package_policy_page/step_define_package_policy.tsx
@@ -5,13 +5,12 @@
  * 2.0.
  */
 
-import React, { memo, useEffect, useState, useMemo } from 'react';
+import React, { memo, useEffect, useState } from 'react';
 import { FormattedMessage } from '@kbn/i18n/react';
 import {
   EuiFormRow,
   EuiFieldText,
   EuiButtonEmpty,
-  EuiSpacer,
   EuiText,
   EuiComboBox,
   EuiDescribedFormGroup,
@@ -74,19 +73,18 @@ export const StepDefinePackagePolicy: React.FunctionComponent<{
         .sort((a, b) => a - b);
 
       updatePackagePolicy(
-        packageToPackagePolicy(
-          packageInfo,
-          agentPolicy.id,
-          packagePolicy.output_id,
-          packagePolicy.namespace,
-          // FIXME: Improve package policies name uniqueness - https://github.com/elastic/kibana/issues/72948
-          `${packageInfo.name}-${
+        packageToPackagePolicy({
+          name: `${packageInfo.name}-${
             pkgPoliciesWithMatchingNames.length
               ? pkgPoliciesWithMatchingNames[pkgPoliciesWithMatchingNames.length - 1] + 1
               : 1
           }`,
-          packagePolicy.description
-        )
+          description: packagePolicy.description,
+          namespace: packagePolicy.namespace,
+          packageInfo,
+          agentPolicyId: agentPolicy.id,
+          outputId: packagePolicy.output_id,
+        })
       );
     }
 
diff --git a/x-pack/plugins/fleet/server/routes/package_policy/handlers.test.ts b/x-pack/plugins/fleet/server/routes/package_policy/handlers.test.ts
index 7f2b9d93e2df7..5aa400d6443e6 100644
--- a/x-pack/plugins/fleet/server/routes/package_policy/handlers.test.ts
+++ b/x-pack/plugins/fleet/server/routes/package_policy/handlers.test.ts
@@ -24,7 +24,9 @@ jest.mock('../../services/package_policy', (): {
 } => {
   return {
     packagePolicyService: {
-      compilePackagePolicyInputs: jest.fn((packageInfo, dataInputs) => Promise.resolve(dataInputs)),
+      compilePackagePolicyInputs: jest.fn((packageInfo, vars, dataInputs) =>
+        Promise.resolve(dataInputs)
+      ),
       buildPackagePolicyFromPackage: jest.fn(),
       bulkCreate: jest.fn(),
       create: jest.fn((soClient, esClient, newData) =>
diff --git a/x-pack/plugins/fleet/server/services/agent_policy.ts b/x-pack/plugins/fleet/server/services/agent_policy.ts
index be61a70154b11..a197eeeec37f3 100644
--- a/x-pack/plugins/fleet/server/services/agent_policy.ts
+++ b/x-pack/plugins/fleet/server/services/agent_policy.ts
@@ -802,14 +802,14 @@ export async function addPackageToAgentPolicy(
     pkgVersion: packageToInstall.version,
   });
 
-  const basePackagePolicy = packageToPackagePolicy(
+  const basePackagePolicy = packageToPackagePolicy({
+    name: packagePolicyName,
+    description: packagePolicyDescription,
+    namespace: agentPolicy.namespace ?? 'default',
     packageInfo,
-    agentPolicy.id,
-    defaultOutput.id,
-    agentPolicy.namespace ?? 'default',
-    packagePolicyName,
-    packagePolicyDescription
-  );
+    agentPolicyId: agentPolicy.id,
+    outputId: defaultOutput.id,
+  });
 
   const newPackagePolicy = transformPackagePolicy
     ? transformPackagePolicy(basePackagePolicy)
diff --git a/x-pack/plugins/fleet/server/services/epm/elasticsearch/ingest_pipeline/ingest_pipelines.test.ts b/x-pack/plugins/fleet/server/services/epm/elasticsearch/ingest_pipeline/ingest_pipelines.test.ts
index 097f9ce28c7d1..f915e871b98f7 100644
--- a/x-pack/plugins/fleet/server/services/epm/elasticsearch/ingest_pipeline/ingest_pipelines.test.ts
+++ b/x-pack/plugins/fleet/server/services/epm/elasticsearch/ingest_pipeline/ingest_pipelines.test.ts
@@ -121,7 +121,7 @@ test('getPipelineNameForInstallation gets correct name', () => {
   const packageVersion = '1.0.1';
   const pipelineRefName = 'pipeline-json';
   const pipelineEntryNameForInstallation = getPipelineNameForInstallation({
-    pipelineName: dataStream.ingest_pipeline,
+    pipelineName: dataStream.ingest_pipeline!,
     dataStream,
     packageVersion,
   });
diff --git a/x-pack/plugins/fleet/server/services/package_policy.ts b/x-pack/plugins/fleet/server/services/package_policy.ts
index 92b3ec68dcae0..de21452a7fd59 100644
--- a/x-pack/plugins/fleet/server/services/package_policy.ts
+++ b/x-pack/plugins/fleet/server/services/package_policy.ts
@@ -416,7 +416,7 @@ class PackagePolicyService {
   ): Promise<NewPackagePolicy | undefined> {
     const pkgInstall = await getInstallation({ savedObjectsClient: soClient, pkgName });
     if (pkgInstall) {
-      const [pkgInfo, defaultOutputId] = await Promise.all([
+      const [packageInfo, defaultOutputId] = await Promise.all([
         getPackageInfo({
           savedObjectsClient: soClient,
           pkgName: pkgInstall.name,
@@ -424,11 +424,15 @@ class PackagePolicyService {
         }),
         outputService.getDefaultOutputId(soClient),
       ]);
-      if (pkgInfo) {
+      if (packageInfo) {
         if (!defaultOutputId) {
           throw new Error('Default output is not set');
         }
-        return packageToPackagePolicy(pkgInfo, '', defaultOutputId);
+        return packageToPackagePolicy({
+          packageInfo,
+          agentPolicyId: '',
+          outputId: defaultOutputId,
+        });
       }
     }
   }