PHARMAC and hospital medical devices
From bandages, to catheters, to orthopaedic drills – a huge variety of medical devices are being purchased by hospitals to help diagnose and treat patients.
The Government tasked PHARMAC to begin managing hospital medical devices on behalf of DHBs in 2012. The expectation is that the PHARMAC model will achieve value for money and allow people around the country to have equitable access to treatments wherever they live.
Eventually PHARMAC will be responsible for the management of hospital medical devices. We are taking a phased approach which means moving forward in a carefully planned way.
We have spent a lot of time consulting with the health sector about how we do this, and feedback has helped inform our processes and the activity we have already completed.
Engaging with clinicians and the wider health sector continues to be the cornerstone of PHARMAC’s work. We are committed to developing and enhancing our relationships with the large and varied group of people who interact with hospital medical devices in DHBs.
PHARMAC will continue to work in a transparent and consultative way with the sector, to achieve the objectives the Crown has set for us.
We welcome your comments and feedback about the proposed approach at any time.
Areas of activity
Through consulting with the sector and our wider stakeholders, we identified 12 categories to begin national contracting work.
Categories where PHARMAC has national contracts in place, and is in discussion with suppliers, as of 1 February 2016:
- wound care products
- disposable laparoscopic devices
- interventional cardiology
- orthopaedic products
- sterile wraps and associated consumables
- medical thermometers.
Categories where PHARMAC is undertaking planning:
- disposable instruments
- mechanical compression devices and consumables
- surgical gloves
- hand hygiene
- anti-embolism compression hosiery.
When we are ready to progress to further categories of medical devices, we will consult with the sector again.
Stages of activity
1. National contracting
Our initial work starts with negotiating national contracts with suppliers to set national prices on items that DHBs are already purchasing. So far we’ve been able to achieve annual savings to DHBs of around $5 million, based on current volume. There is the potential for greater savings if DHBs make further use of PHARMAC-negotiated contracts.
In this stage, DHBs can continue using the products that they currently purchase. For any products they purchase that PHARMAC has a contract for, they will need to utilise the PHARMAC national agreements at the new pricing.
The aim of this work is to offer early savings for the sector on products DHBs are already using, but it is also helping inform how we plan to do things going forward.
We now have national contracts covering over 14,600 medical device items in half of the 12 categories we are initially working in. While our national contracting work continues in these categories, we are now also ready to move to a more competitive process.
2. Market share procurement
This next stage of our medical devices activity sees us offering suppliers an assured portion of the market in return for competitive pricing and a quality range of products.
Unlike the national contracting stage where DHBs can choose whether to change products or not, this stage requires DHBs to purchase products for which PHARMAC has market share agreements in place. This will happen in a staged process at the same time as national contracting. For some categories we will continue to negotiate national contracts and for others, we will begin to move some products to market share agreements. Where market share agreements are entered, DHB hospitals will be required to purchase from a select number of suppliers (this is the case for community and hospital medicines).
PHARMAC consulted in April 2015 about our proposed approach to market share procurement and what this would look like for wound care, for which national contracting has been substantially completed. The market information and clinical advice we’ve received from the Wound Care Advisory Group (WCAG) has enabled us to progress to a market share approach in some wound care ranges. We will consult on any proposed agreements that might arise from this process.
Last updated: 26 April 2016