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25 June 2009

Dear Supplier REQUEST FOR PROPOSALS – SUPPLY OF SOMATROPIN PHARMAC invites proposals for the supply of somatropin in New Zealand. This request for proposals (RFP) letter incorporates the following schedules: • • • • Schedule 1 specifies the pharmaceutical for which PHARMAC is requesting proposals and sets out the background to the RFP and the types of proposals sought; Schedule 2 describes the process that PHARMAC expects to follow in relation to the RFP; Schedule 3 sets out information about the estimated size of the current subsidised market for the pharmaceutical; and Schedule 4 contains the RFP form in which you are to provide details of your proposal.

If you wish to submit a proposal, you must submit it to PHARMAC no later than 5.00 p.m. on 31 July 2009. If you have any questions about this RFP, please contact Greg Williams at PHARMAC by telephone (04) 916-7524 or email greg.williams@pharmac.govt.nz. We look forward to receiving your proposal. Yours sincerely

Matthew Brougham Chief Executive

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Schedule 1: Pharmaceutical, background to RFP and types of proposals sought 1. Pharmaceutical PHARMAC is interested in considering proposals from suppliers of somatropin for the treatment of patient groups who are eligible for subsidised treatment in the community. 2. Background to RFP The background to this RFP is as follows: • Somatropin, in presentations of 16 iu (5.3 mg) per vial, 36 iu (12 mg) per vial, 5 mg per cartridge, 10 mg per cartridge and 15 mg per cartridge, is currently fully subsidised in Section B of the Pharmaceutical Schedule. Somatropin is currently listed as growth hormone biosynthetic human and recombinant human growth hormone. There are currently two brands of somatropin listed in the Pharmaceutical Schedule – Genotropin (supplied by Pfizer) and Norditropin SimpleXx (supplied by Novo Nordisk). The listed prices and subsidies for Genotropin and Norditropin SimpleXx are as follows:

Genotropin (Growth Hormone Biosynthetic Human) Strength and presentation Cartridge 16 iu per vial Cartridge 36 iu per vial Price and subsidy $1,600 $3,600 Pack Size 5 5

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•

Norditropin SimpleXx (Recombinant Human Growth Hormone) Strength and presentation Injection 5mg Injection 10mg Injection 15mg Price and subsidy $300.00 $600.00 $900.00 Pack Size 1 1 1

•

The listing of somatropin in the Pharmaceutical Schedule is subject to Special Authority criteria. These criteria are available on the PHARMAC website at http://www.pharmac.govt.nz/2008/07/25/SA0755.pdf and can be made available upon request. The following patient groups are currently eligible for funding under this proposal, subject to meeting the Special Authority criteria: Growth hormone deficient children; Patients diagnosed with Turner syndrome;

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Patients of short stature without growth hormone deficiency; Patients of short stature due to chronic renal insufficiency including dialysis; Patients diagnosed with Prader-Willi syndrome • PHARMAC has received applications to extend funding to other patients. For example, PHARMAC has an application to widen access to adults with growth hormone deficiency. It is estimated that 70-100 adults with growth hormone deficiency might access funded treatment with somatropin at a dose of 0.4 - 1.0 mg daily, if access were widened as requested. Under the current access criteria, almost 80,000 mg of somatropin are dispensed per year (see Schedule Three). If access to somatropin were widened to include adults with growth hormone deficiency, an increase of 10,000 – 36,000 mg of somatropin per year might occur, depending on uptake and dosing (both of which are matters that would be determined by patients and their treating clinicians). 3. 3.1 Types of proposals sought PHARMAC is seeking proposals for Sole Subsidised Supply and Dual Subsidised Supply that include both current access levels and widened access. PHARMAC is willing to consider the following types of proposals: • Proposals for the Sole Subsidised Supply of somatropin in the community for a period of up to, but no more than, 3.5 years, provided that the Sole Subsidised Supply period does not commence before 1 July 2010 and does not extend beyond 31 December 2013. Proposals for Dual Subsidised Supply of somatropin in the community for a period of up to, but no more than, 3.5 years, provided that the Dual Subsidised Supply period does not commence before 1 July 2010 and does not extend beyond 31 December 2013. Proposals for Sole Subsidised Supply or Dual Subsidised Supply that also include widening of access to somatropin. Proposals that involve rebates. Proposals that involve the listing of a different range of presentations to those currently subsidised.

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• • •

3.2

Please note: • If Sole Subsidised Supply or Dual Subsidised Supply is awarded, there would be a transition period of up to 6 months to allow for training of any patients and clinicians in the use of an alternative brand of somatropin. The earliest that this transition period would commence is 1 January 2010.

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•

Any supplier that is awarded Sole Subsidised Supply or Dual Subsidised Supply shall be responsible for all costs incurred in transitioning patients and clinicians to its subsidised brand of somatropin. In the event that Dual Subsidised Supply is awarded, PHARMAC reserves the right to contract with one supplier from 1 January 2010 and contract with an alternative supplier at a later date. If you submit a proposal for widened access to somatropin, you must also submit a proposal for unchanged access. If you submit a proposal for Sole Subsidised Supply, you must also submit a proposal for Dual Subsidised Supply. If PHARMAC awards Sole Subsidised Supply or Dual Subsidised Supply for somatropin, this may result in one or both of the currently subsidised brands of somatropin being delisted from the Pharmaceutical Schedule. Suppliers of somatropin are currently responsible for the provision of the following to patients, including any associated costs, and any supplier awarded Sole Subsidised Supply or Dual Subsidised Supply of somatropin would also be responsible for: educational support and training to patients and clinicians; needles, sharps containers and injection devices; and courier costs, containers and any other materials required for the delivery of somatropin to eligible patients (see Schedule Three).

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•

3.3

PHARMAC is not willing to consider the following types of proposals: • two part pricing arrangements, whereby PHARMAC may make an up-front payment (in addition to any ongoing subsidy) in return for the listing of a pharmaceutical on specific terms; or proposals that involve products other than somatropin.

•

Subject to the above, PHARMAC is open to considering any other types of proposals you may wish to put forward. 3.4 Proposals must include information on the proposed educational support and training that would be provided. PHARMAC may request samples of the auto-injector device, cartridges/vials and any related consumables, and such samples must be provided within 10 working days of such a request.

3.5

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Schedule 2: RFP process PHARMAC expects to follow the process set out below in the sequence indicated. 1. Submission (a) You may submit more than one proposal. Each proposal will be considered as a separate proposal. Proposals must be submitted no later than 5.00 p.m. (New Zealand time) on 31 July 2009. Late proposals will only be considered at PHARMACs discretion. You cannot withdraw your proposal, once submitted, while the RFP process is continuing. All proposals must be submitted to PHARMAC to the attention of Greg Williams, Therapeutic Group Manager either by facsimile on 04 460 4995 or by email to greg.williams@pharmac.govt.nz (email is preferred).

(b)

(c)

(d)

2.

Evaluation (a) Following the deadline for submitting proposals, an Evaluation Committee comprising PHARMAC staff (including PHARMAC’s legal counsel) will evaluate each proposal to select its preferred proposal(s). PHARMAC may also seek external advice on proposals, including but not limited to, the New Zealand Growth Hormone Committee (NZGHC) as part of the evaluation process. It is anticipated that any such evaluation may include the assessment of devices, proposed education and support, potential dosing issues and any other issues that PHARMAC may deem appropriate. PHARMAC may approach submitters of proposals to provide further information on their products as part of this evaluation process. The basis on which the Evaluation Committee will evaluate proposals, and the weight to be given to the criteria and other matters that it considers, are to be determined by the Evaluation Committee at its sole discretion. The matters to be taken into account by the Evaluation Committee will, however, include: (i) the decision criteria set out in PHARMAC’s then current Operating Policies and Procedures (OPPs), as published on PHARMAC’s website (www.pharmac.govt.nz), to the extent applicable; any clinical advice from the NZGHC; the quality of patient and clinician support and education outlined in the proposal, including discussion on the proposed transition of patients to an alternative brand of somatropin where required; the temperature stability of the pharmaceutical (specifically during the distribution process); the registration status of the pharmaceutical with Medsafe;

(b)

(c)

(ii) (iii)

(iv)

(v)

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(vi) (vii)

continuity of supply and supply record; any other matters that the Evaluation Committee considers to be relevant (provided that PHARMAC will notify such matters and allow an opportunity for submitters of proposals to address them).

(d)

Each proposal will be evaluated on the basis that the price offered, the expenditure entailed, and any other terms included in the proposal, are the best that the supplier is able to offer. If you do not put forward your best terms you risk having your proposal excluded at the evaluation stage. PHARMAC is not bound to select the lowest priced proposal or any proposal.

(e) 3.

Negotiation (a) PHARMAC may negotiate with the submitter(s) of one or more preferred proposals, in the latter case whether or not the acceptance of either supplier’s proposal would exclude acceptance of the other proposal. Negotiations will proceed on the basis that PHARMAC’s standard terms and conditions for supply of pharmaceuticals, which are available on request from PHARMAC, will apply. Given that PHARMAC expects your proposal to be the best you can offer, PHARMAC does not intend to initiate negotiation with you on price. However, PHARMAC does not exclude the possibility that the final price agreed will be different from the price put forward in your proposal, as a result of the impact that other negotiated terms may have on price. PHARMAC may negotiate and enter into a provisional agreement with a preferred supplier(s) on whatever special terms, in addition to PHARMAC’s standard terms and conditions, PHARMAC considers appropriate. If PHARMAC and the supplier(s) are unable to reach a provisional agreement within what PHARMAC considers to be a reasonable time, PHARMAC may terminate those negotiations and negotiate with a different supplier(s).

(b)

(c)

(d)

(e)

4.

Consultation and approval (a) Any provisional agreement will be conditional on consultation with suppliers and other interested parties, to the extent PHARMAC considers consultation to be necessary or appropriate, and on Board approval (or approval by PHARMAC's Chief Executive under delegated authority). PHARMAC will not consider any counter-offers received during consultation. The provisional agreement and responses to consultation will be considered by PHARMAC's Board (or by PHARMAC’s Chief Executive under delegated authority) in accordance with the decision criteria in PHARMAC’s then current OPPs. If the Board or the Chief Executive does not approve the provisional agreement, then PHARMAC may initiate negotiations for a provisional agreement with any other supplier(s).

(b) (c)

(d)

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(e)

The RFP process will be complete once PHARMAC has notified suppliers of the termination of the RFP process, whether because the Board or the Chief Executive has approved one or more provisional agreements or otherwise.

5.

Miscellaneous (a) PHARMAC reserves the right: (i) to make such adjustments to the above RFP process as it considers appropriate, at any time during the process, provided that it notifies suppliers affected by those changes; not to accept any proposal; to seek clarification of any proposal; to meet with any supplier in relation to its proposal; to enter into an agreement or arrangement that differs in material respects from that envisaged in this RFP letter; to suspend this RFP process. For example, if during the RFP process (and before a provisional agreement is entered into) it becomes apparent to PHARMAC that further consultation is appropriate or required we may suspend the RFP process in order to consult. In this situation we may ask you to adapt and resubmit your proposal in light of consultation, or alternatively we may request that new proposals be submitted; to terminate this RFP process at any time, by notifying suppliers who submitted proposals, and, following termination, to negotiate with any supplier(s) on whatever terms PHARMAC thinks fit; and to re-advertise for proposals.

(ii) (iii) (iv) (v)

(vi)

(vii)

(viii) (b)

PHARMAC may consult or seek clinical advice from PTAC or its relevant subcommittee at any stage of the RFP process. PHARMAC will notify you if the clinical advice results in any changes to the terms of the RFP. You must not initiate or engage in any communication with other suppliers in relation to the RFP, whether before or after submitting their proposal(s), until such time as a provisional agreement is accepted by PHARMAC’s Board or Chief Executive. You must not at any time initiate any communication with PHARMAC’s directors or officers, the Ministry of Health, the Minister of Health or District Health Boards, with a view to influencing the outcome of this RFP process. You must pay your own costs for preparing and submitting your proposal. Proposals are submitted in reliance on your own knowledge, skill, and independent advice, and not in reliance on any representations made by PHARMAC.

(c)

(d)

(e) (f)

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(g)

Your submission of a proposal will be taken as acceptance of the terms contained in this RFP letter. PHARMAC may exclude your proposal if you do not comply with any of the terms contained in this RFP letter. This is an RFP and not a tender. Your proposal is not an offer capable of being converted into a contract for the supply of somatropin by PHARMAC's apparent acceptance and instead a separate agreement needs to be negotiated. PHARMAC is not liable in any way whatsoever for any direct or indirect loss (including loss of profit), damage or cost of any kind incurred by you or any other person in relation to this RFP. PHARMAC will consider your proposal and information exchanged between us in any negotiations relating to your proposal, excluding information already in the public domain, to be confidential to us and our employees, legal advisors and other consultants, the Ministry of Health and DHBs (Confidential Information). However, you acknowledge that it may be necessary or appropriate for PHARMAC to release Confidential Information: (i) (ii) pursuant to the Official Information Act 1982; or in the course of consultation on a provisional agreement entered into with a supplier; or in publicly notifying any approval by the PHARMAC Board of that agreement; or otherwise pursuant to PHARMAC’s public law or any other legal obligations.

(h)

(i)

(j)

(iii)

(iv)

PHARMAC may consult with you before deciding whether to disclose Confidential Information for the purposes described in sub-clauses (i) to (iv) above. You acknowledge, however, that it is for PHARMAC to decide, in its absolute discretion, whether it is necessary or appropriate to disclose information for any of the above purposes, provided that PHARMAC shall act in good faith in disclosing any Confidential Information. 6. Anticipated timetable (a) Following receipt of proposals, PHARMAC anticipates: (i) (ii) the Evaluation Committee evaluating proposals in August 2009; negotiating with submitter(s) of one or more preferred proposals in August/September 2009; consulting on one or more provisional agreement(s) in September/October 2009; PHARMAC’s Board or Chief Executive considering one or more provisional agreement(s) in or after November 2009,

(iii)

(iv)

provided that the above time frames are only approximate and may be extended, without notice being required from PHARMAC, if any stages of the RFP process take longer than anticipated. A270739 8

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(b)

Under this indicative timetable, the earliest that changes to the Pharmaceutical Schedule could be implemented is 1 January 2010. As noted above, please be aware that if a proposal for Sole or Dual Subsidised Supply is accepted, the date of implementation of Sole or Dual Subsidised Supply will be up to 6 months from the notification date to allow for an orderly transition to any such arrangement.

(c)

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Schedule 3: Current listing and market information The following information relates to the estimated subsidised market size of somatropin in the community. The information is approximate and indicative only. PHARMAC makes no representation as to the accuracy of this information or as to the level of sales or likely sales of somatropin and, while PHARMAC has taken all reasonable care in preparing the information set out below, it accepts no liability for any errors or omissions in the information. PHARMAC is not obliged to notify you in the event of any change to the figures below. The number of subsidised vials of somatropin dispensed in the community for the years ending June 2007, June 2008 and June 2009 is shown below (note that 2009 figures are extrapolated based on part-year data):

Year ending 30 June 2007 3187 149 693 2376 542 74,400 Year ending 30 June 2008 2849 167 635 2411 417 68,600 Year ending 30 June 2009 3306 287 725 2587 502 78,200

Pharmaceutical Cartridge 36 iu (12 mg) per vial Cartridge 16 (5.3 mg) iu per vial Inj 5 mg Inj 10 mg Inj 15 mg Total mg dispensed (approx)

For the 2008/09 financial year, total somatropin expenditure is estimated to be approximately $4.7 million. The number of patients receiving somatropin has remained relatively stable over the past few years, with 210 patients approved for treatment in June 2007, 198 in June 2008, and 210 in May 2009. At present, the average dose is approximately 1.1 mg per patient per day. Background to somatropin management in New Zealand • Applications for somatropin are assessed by the New Zealand Growth Hormone Committee (NZGHC), a group of three Paediatric Endocrinologists contracted by PHARMAC to determine which patients are eligible for subsidised somatropin treatment under the Special Authority criteria, and, for approved patients, the appropriate dose of somatropin. Applications are managed within PHARMAC by the NZGHC Coordinator. Once a patient has been approved for treatment by the NZGHC, PHARMAC contacts the relevant supplier of somatropin notifying them of a patient’s approval and provides details of the patient’s NHI and clinician details. The supplier then makes contact with the treating clinician to instigate training with the patient. Somatropin suppliers also supply injection pens, needles, sharps containers and other relevant educational material free of charge to approved patients. Suppliers operate an 0800 number to answer any queries from patients and their families and through which 10

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patients can order supplies of needles, sharps containers, replacement injection devices etc. • Somatropin is not dispensed by retail pharmacies; PHARMAC contracts with a single pharmacy (currently based in Auckland) to dispense and distribute somatropin directly to eligible patients throughout the country (it is delivered to each patient’s nominated delivery address). This contract is in place until 30 June 2010. Each month, the NZGHC Coordinator generates prescriptions and an order for all patients approved for treatment. NZGHC members sign somatropin prescriptions for all patients approved for treatment. A pharmacy contracted by PHARMAC dispenses somatropin in accordance with the dispensing instructions supplied by PHARMAC, packages the product in plastic containers (provided by the supplier), and sends it to each patient’s nominated delivery address by overnight courier (paid for by the supplier). The current distribution process is not “cold chain”, but PHARMAC is investigating the use of better insulated containers for the distribution of somatropin in the warmer months (October – March) where there is a risk of somatropin being exposed to higher temperatures. Somatropin suppliers are responsible for supplying product to the dispensing pharmacy each month and for the cost of couriering somatropin to individual patients throughout the country. Currently suppliers provide an account through which the dispensing pharmacy can order courier bags and book deliveries.

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Schedule 4: Proposal form An electronic version of this form is available on request greg.williams@pharmac.govt.nz . You should expand the boxes as necessary. Greg Williams PHARMAC Level 9, Cigna House 40 Mercer Street PO Box 10-254 Wellington New Zealand Dear Greg Proposal for the supply of somatropin In response to your request for proposals (RFP) dated 25 June 2009, we put forward the following proposal in respect of somatropin. Set out below is further information in support of our proposal. (a) Our contact details: Name of supplier Contact person Address Phone Facsimile Email address from

(b)

Details of pharmaceutical presentation: Chemical name Strength (e.g. 10 mg) Form (e.g. solution for injection) Brand name Pack size Packaging type (e.g. vial)

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(c)

Key features of our proposal:

(d)

Information relating to pricing ($NZ, GST exclusive), including any related conditions or proposed terms affecting cost for PHARMAC (e.g. price in return for sole supply, risk sharing mechanisms, etc.):

(e)

Evidence of market approval and any other required consents: Date of market approval (please attach copy of Medsafe Gazette notice) OR Date of submission of dossier (please attach confirmation from Medsafe that dossier has been submitted) OR Expected date of dossier submission to Medsafe

(f)

Information about our ability to ensure the continuity of supply of the pharmaceutical:

(g)

Information about our previous supply performance and relevant expertise:

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(h)

Proposals/suggestions (e.g. pricing, risk sharing arrangements, etc) regarding the pharmaceutical not expressly identified in this RFP that we would like PHARMAC to consider as part of our proposal:

(i)

Reasons why PHARMAC should accept our proposal:

(j)

Additional information that PHARMAC should consider when evaluating our proposal:

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