Device advice - Issue 8
Hospital medical devices newsletter
Your update on PHARMAC’s Hospital Medical Devices programme
Issue 8 - 9 December 2014
At a glance
- Almost 6,000 hospital medical devices listed so far, covering $36.5m expenditure
- Minimum national savings so far of over $2 million per annum
- National contracts in place for wound care products, sutures, disposable laparoscopic equipment and interventional cardiology products
In this issue:
- PHARMAC's devices management approach
- Changing the way we make funding decisions
- Activity to date
- Where to next
- Achieving savings from national contracts: a case study
- Other PHARMAC business
- Keeping you informed
PHARMAC will shortly be publishing a summary of submissions to the discussion document on the approach to devices management.
We appreciate the time submitters have taken to provide feedback. The information received from this consultation, along with the previous submissions and notes taken at various meetings, will inform how PHARMAC undertakes and increases its management activity over time.
The processes PHARMAC uses to make funding decisions on medicines and medical devices will change from the end of 2015.
There will now be 15 factors for consideration (replacing the nine previous decision criteria), with the key changes including consideration of the impact on the person, their whanau, the community and the wider health sector when the person receives the medicine or medical device; consideration of the impact on health of Māori and consideration of the health impact on broader populations that are facing health disparities.
Given the significant changes to the decision-making framework, including the work behind the scenes that PHARMAC needs to undertake to our internal processes to accommodate the new factors, the changes will not come into effect until late 2015.
Additional information to help explain each of the factors for consideration is available on our website.
We will provide more information to our stakeholders on what this means before the new framework is put in place.
PHARMAC now has 10 national contracts in place for ranges of hospital medical devices, with more on the horizon in the new year.
As of 1 December 2014, PHARMAC has listed over 5,900 hospital medical devices on the Pharmaceutical Schedule, covering national expenditure of about $36.5 million per annum.
Minimum savings achieved for DHBs to date are over $2 million per annum. This will continue to grow as more DHBs take up the opportunities under the national contracts and move their product mix towards more of the better value brands.
National contracts are now available with suppliers for ranges of wound care products, sutures, disposable laparoscopic equipment and interventional cardiology products.
The most recent listings were for ranges of interventional cardiology products supplied by Bio-Excel and Medtronic, including access devices, catheters, balloons, compression devices, wires and stents. The agreements cover national expenditure of about $2 million and offer DHBs who use these products initial combined national savings of about $350,000 per annum, based on current usage.
Further wound care products supplied by USL have also been listed and include adhesive and non-adhesive dressings, silicone pad dressings and towels.
The national contracts aim to get national consistency, transparency and, where possible, a reduction in cost for particular items. While DHBs still deal directly with suppliers to obtain devices, by ordering these products, they pay a national price negotiated by PHARMAC.
While the contracts are currently optional for DHBs to take up, we are talking to DHBs about changing their mix of products to a higher proportion of the better value brands to capitalise on savings.
The new Wound Care Advisory Group has met for the first time providing objective clinical advice to PHARMAC to assist in informing the long term approach to the management of the Wound Care category.
The group reviewed the structure of the Wound Care categories and subcategories listed on the Pharmaceutical Schedule and have made recommendations to PHARMAC to ensure that the subcategories are listed appropriately.
The Group is likely to meet again in February 2015.
A consultation on a proposal to list around 330 more interventional cardiology products supplied by Terumo Australia Pty Ltd has just closed and submissions are being analysed. If a national contract is put in place, this would result in estimated national savings of $117,000 per annum, based on current use of these products.
We are also continuing to consider proposals from further suppliers of interventional cardiology products already being used in DHBs.
Discussion with suppliers of orthopaedic implants is continuing and there are opportunities that we are exploring. We will keep you informed of any further developments in this category.
Categories in planning stages include:
- Mechanical compression devices and consumables
- Sterile wraps and associated consumables
- Surgical gloves
- Disposable instruments
- Hand Hygiene
- Anti-embolism compression hosiery
IV infusion bags
As indicated previously, for the first time, PHARMAC has included a hospital medical device – empty intravenous infusion bags – in the annual 2014/14 Invitation to Tender.
This 2014/15 tender is currently open for all prospective suppliers to submit bids and suppliers will be bidding for Sole Supply Status in the community and/or Hospital Supply Status in DHB Hospitals.
The tender closes at 5 pm 18 December 2014 and from early 2015 decisions will begin to be made to award tender contracts.
All bids will go through an evaluation process outlined in the Invitation to Tender document before any decision is made.
We will keep you informed of any updates.
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.
Clear communication and a strong willingness among staff to find savings were key components to Southern DHB being able to make the most of PHARMAC’s Applied Medical national contract.
But ingenuity has not been lost, as not only has Southern managed to achieve almost $135,000 of savings annually, they’ve also worked with the supplier to make accessing the devices more convenient for clinical staff.
Procurement Manager Jayne Ladbook says it wasn’t too complicated to make the change to the national contract.
“It was really fortuitous that Southern had previously run a process for evaluating laparoscopic supplies, so we had already standardised most of this product range across the DHB,” Jayne says.
“What we needed to do, in order to really capitalise on the Tier 2 pricing, was take a look at what we were buying that was with other suppliers. We considered other items we were getting from elsewhere and whether these could relatively easily be replaced by items supplied by Applied, and that wouldn’t require significant upheaval or change to clinical practise, or the need for evaluation.
“So we found that by changing some verres needles and suction irrigation products, which required a small change to clinical practise, that put us over the threshold to get the Tier 2 pricing. So that’s been a significant saving for us – especially as we are all under substantial financial pressure.”
Southern’s staff believe in striving to find ‘fit for purpose products at the most competitive price.”
But not content with receiving a good price for the products, Jayne says they then looked at how to make them more convenient for the end users to access, given they currently purchase all the products separately.
“Applied has been flexible in accommodating our requirements to make up kits which include everything in one place. All the items are individually wrapped, which means if they’re not used during one procedure, they can be used somewhere else. We’ve worked out what we want in the kits that suits our purposes, without things we don’t need.
“We’ve now come up with a proposed kit that is cost neutral against buying items separately – and assuming clinicians can come to agreement on the contents it’s potentially more convenient,” Jayne says.
Southern intends to do an evaluation of the convenience of the kits, to see if the DHB continues with these.
Jayne says the secret to any successful implementation is “good communication at all levels”, which includes the relationships between the procurement staff, suppliers and the end users of the product.
“We try to operate on a no surprises policy – we strive to let everyone knows what’s going on and the rationale for change (or not), including any evaluations that have been carried out; when and how change is going to happen.”
PHARMAC has welcomed a report evaluating the implementation of the blood glucose meter sole supply arrangements in the community and has already made changes as part of learning from the experience.
In 2012, PHARMAC moved to a single supplier for subsidised diabetes blood glucose meters, which involved transitioning 100,000 patients to one of three funded meters.
The change saved about $10 million per year, which enabled PHARMAC to invest in new pharmaceuticals, such as the blood-thinning drug ticagrelor, new medicines for multiple sclerosis, and two brands of insulin pumps.
PHARMAC commissioned the evaluation to identify what went well and what we could do better when implementing future community funding decisions.
A range of recommendations were made in the report, including clarity in the consultation process, regular face to face meetings with key stakeholders and consideration given to wider health sector impacts of decisions.
PHARMAC has already begun to make changes to these and other processes to ensure a smoother transition for patients and clinicians in future.
You can read the full report on the PHARMAC website.
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: firstname.lastname@example.org or give us a call: 04 460 4990
You can find all of our medical devices listed as an Addendum to Section H of the Pharmaceutical Schedule.
For general information about our activity visit PHARMAC and hospital medical devices.
You may be interested in PHARMAC’s activity over the past year and you can read this in our Annual Review.
If you want to stay in touch with the review of all PHARMAC’s Operating Policies and Procedures follow the link.
Last updated: 18 June 2019