Device advice - Issue 6

Issue 6 - 15 July 2014

Your views on PHARMAC’s devices management approach

PHARMAC has now completed its latest round of consultation on the approach to management of hospital medical devices.

The discussion document described the first steps PHARMAC will take to move from optional national contracts for selected medical devices to a national management approach which applies more tools to gain greater benefits.

As outlined, PHARMAC will continue to seek clinical input to inform our work as we move into new device areas, category by category, over time.

The consultation forums held in DHBs around the country, along with the special meetings with particular groups, again provided a great avenue for us to hear your thoughts and ideas on the approach and implementation considerations.

Thank you to everyone who came along to talk to us and to those who took the time to send us a formal submission. If you have any further questions, please get back in touch with us.

We are currently considering all the information we’ve received and some common themes are emerging.

Early key themes

In general, the responses to the approach were positive and sought to further clarify PHARMAC’s intentions. We will endeavour to provide as much information as possible as we move towards national management.

One of the strongest themes to emerge was the importance of PHARMAC continuing to consult with appropriate groups to gather information as we consider different categories over time.

The on-going need for PHARMAC to make sure we have the right people in the room at the right time as we move forward was expressed by both DHB staff at the forums, as well as other clinical and non-clinical advisory groups through written submissions.

Clinical and non-clinical input, along with clinical evidence and cost effectiveness – amongst other elements – will be critical when we make decisions about medical devices.

Another common theme was that of concern over the possibility that by undertaking a national management approach, there was a risk of losing an innovative supplier market and reducing timely access to new technology.

A concern raised during the forums was how PHARMAC would manage capital items. While we recognise that management of capital items involves a range of different issues to other products, we are still working through how we will approach this. It is not expected that PHARMAC will look to begin management of capital expenditure items in the near future but when we do, we will seek advice from experts at that time.

It’s important to note that the approach outlined is intentionally flexible, to allow us to apply whichever tools are appropriate, according to the particular characteristics of the device or device category we are considering at the time.

We also anticipate that the approach will encourage, rather than discourage suppliers in the market. PHARMAC wants to see a competitive device supply market in New Zealand.

We intend to consider this latest information along with that previously provided, to inform our overall understanding of what’s important to you and what we need to be mindful of, as we move through categories and increase our management activity.

You can read summaries of all of our previous consultations, along with an executive summary covering all issues previously raised, on our website:

Activity to date

PHARMAC’s activity to negotiate national contracts for some medical devices is moving along, and savings for the sector are already significant.

As of 1 July 2014, PHARMAC has listed over 3,000 hospital medical devices on the Pharmaceutical Schedule, covering national expenditure of about $28 million per annum.

Minimum savings achieved for DHBs to date are about $1.2 million per annum (5-year Net Present Value (NPV) of $5.2 million).

National contracts are now available with seven suppliers for ranges of wound care products, sutures and disposable laparoscopic equipment.

The most recent listings were for ranges of wound care products supplied by Protec Solutions and WM Bamford’s – about 370 lines and minimum potential savings of $400,000 NPV.

We are continuing negotiations with these and other suppliers on what other opportunities there are.

The national contracts aim to get national consistency, transparency and where possible a reduction in cost for particular items. DHBs still deal directly with suppliers to obtain these products but if they take up the contract, they pay a national price negotiated by PHARMAC.

Key opportunities for DHBs

PHARMAC is working on ways to reduce implementation barriers and help DHBs switch to, or increase the use of, brands that are under national contract.

DHB Chief Executives, Chief Operating Officers and Chief Financial Officers will have received some information about particular opportunities where making changes could create significant savings.

Two key contracts could offer DHBs good value; USL’s contract for sutures and Applied Medical’s contact for disposable laparoscopic equipment.

Where to next

Wound Care Advisory Group

Wound care is a complex area, with thousands of different products. Activity to date has seen $26.5 million of the $32 million a year spend come under PHARMAC contracts. We intend to increase this work and to gather more information from suppliers so we can compare prices with the aim of finding further savings.

PHARMAC is to establish a wound care advisory group to provide clinical advice in the wound care category. Our work to date has built understanding of the current market, and we are beginning to receive data from suppliers on current usage patterns. This group will assist us in determining strategies going forward.

To establish the group, PHARMAC sought nominations from a variety of specialities such as district nursing, podiatry, emergency departments, theatre, surgical and medical areas. We also approached the New Zealand Wound Care Society, the Royal Australasian College of Surgeons and the New Zealand Nurses Organisation.

Consultations

We are currently consulting on a proposal to list a range of sutures, wound care items and laparoscopic equipment supplied by Covidien. This proposal offers potential minimum national savings of about $650,000 annually (about $2.5 million NPV).

We invite you to respond to this consultation and will let you know the outcome of this shortly.

Interventional cardiology

We are currently in negotiations on a range of interventional cardiology equipment, with the potential for significant annual savings if an agreement can be reached. We will provide an update on this activity as soon as we are able.

While we have identified some categories where we are starting activity, we have indicated we will be receptive to any approaches in categories where there might be value for DHBs in PHARMAC getting involved. We will carefully manage any overlaps with other contracts and processes where they exist.

Other activity

PHARMAC will be considering more categories over time. We will regularly update you as activity progresses and let you know when we are considering particular categories of products. Watch our website for the most recent activity and consultations on proposals to list more products on the Schedule.

Medical devices and PHARMAC’s Decision Criteria review

PHARMAC recently consulted on proposed changes to our decision criteria. These changes outlined a new approach to our decision making which we propose will apply to medical devices as well as medicines.

This consultation is now closed, and we have reviewed all the feedback received via written submission and through other stakeholder engagements. A summary of submissions reflecting the key themes and views presented to us has now been published on the PHARMAC website:

We are now in the process of incorporating the feedback received into a final proposal for change which we will take to the PHARMAC Board. The final decision will be made public later this year.

Keeping you informed

We will regularly be updating all interested groups about the progress of the devices work programme. Feel free to circulate this newsletter to anyone you think might be interested in this work.

You are welcome to contact us directly at any time with proposals, suggestions or concerns.

Email us: devices@pharmac.govt.nz or give us a call: 04 460 4990

You can also find all of our medical devices information on our website:

Other PHARMAC business

If you would like information about other PHARMAC activity, you can also sign up to receive one of our other newsletters like Inpharmation to keep up-to-date with how this work might affect you.

You may be interested in PHARMAC’s activity over the past year and you can read this in our Annual Review [PDF, 938 KB].

If you want to stay in touch with the review of all PHARMAC’s Operating Policies and Procedures go to: www.pharmac.health.nz/about/operating-policies-and-procedures