Device Advice - Issue 23
- Missed the recent device forums held nationally? Watch a summary of the presentation.
- Key themes of PHARMAC presentations at MTANZ HealthTech week.
- Approval of an agreement for the supply of medical devices used in the prevention of venous thromboembolism (VTE), with listing to commence 1 July 2017.
- Feedback sought on proposals to list a range of interventional cardiology products, and orthopaedic implants and associated products.
- RFP for the supply of negative pressure wound therapy equipment and consumables closes 21 July 2017.
In this issue
As of 1 July 2017, we have contracts across 8 categories for 45,000 medical devices from 33 suppliers. The contracts cover approximately $106 million of annual expenditure, with collective savings to DHBs estimated to exceed $38 million over 5 years, based on current usage.
During March, April and May, PHARMAC ran a series of DHB forums at North Shore l, Auckland City, Waikato, Tauranga, Hastings, Hutt Valley, Wellington, Christchurch and Dunedin Hospitals. Thanks to those who came along and asked questions. Your feedback will continue to inform our work going ahead. For those not able to attend, watch a summary of the forum presentation.
Medical devices forum presentation - video transcript
This is a presentation given at a series of medical devices forums held around New Zealand from March to May 2017.
PHARMAC has found the forums a great opportunity to engage with people working in the health sector on it’s medical devices activity
In today’s presentation we will give you an overview of our role, how we work, and we’re we are up to with our devices activity.
PHARMAC was established in 1993 and became a Crown Entity in 2000, at the same time that DHBs were established.
Our statutory objective is on this slide. We always show as it communicates clearly that our role is to maximise benefits to patients from within limited resources. This is what established PHARMAC in 2000, and what still drives us.
Our hospital medical devices work is the most recent aspect of our activity – starting in 2012.
The same overarching goal drives us – Best Health Outcomes, but we recognise medical devices are not the same as medicines.
We’ve taken a careful consultative approach to find out what we need to know and establish our role. Best health outcomes remains the overall focus, with national consistency and new technology investment key aspects of this.
Our decisions are informed by consultation and clinical input. We know that a ‘one size fits all’ approach won’t work for hospital medical devices. We recognise that devices are different to pharmaceuticals and we need to understand and take these differences into account.
We’ve already received a wealth of information from the sector and are building on that from our experience.
DHB and clinical staff provide important input into our work. We’ve established new relationships for this purpose – with groups of clinicians we haven’t engaged with before and technical experts in the hospitals such as Procurement Managers, Clinical Engineers and Clinical Product Coordinators. These have to help build our knowledge and understanding of the market and how our decisions might affect you.
The scope of our existing relationships with DHBs staff - COOs, CEOs, CFOs and CMOs – have also changed to include the broader scope of our work.
We have formal mechanisms for getting input into our work – including clinical advisory groups and our consultation process which anyone can participate in. We also have informal approaches which include meetings with sector stakeholder groups such as professional colleges and societies.
We also work closely with our health sector partners, including Health Alliance and NZ Health Partnerships as agents of DHBs.
So where are we up to?
We’ve been entering into contracts with suppliers since 2014. We now have 40,000 products under contract, covering approximately $103 million of annual DHB expenditure.
The majority of this activity has been national contracting. This involves listing products already used in DHBs and providing national pricing and consistency of terms for products. Under National Contracting DHBs can use the price information across the range of products to decide to change the products they use if they wish.
We’ve also undertaken a small amount market share activity which I’ll be talking about further shortly.
While we’ve made good progress, we estimate the full size of the market is about $650-$700 million-dollars so there is still a fair amount to do to get the total market under PHARMAC contract.
The next few slides show where we are up to with device categories and what’s next as we work progressively to expand our work in devices.
This slide shows categories that are almost completely covered by PHARMAC contracts.
We have work underway in these further categories and we’re aiming to have them under PHARMAC management by the middle of 2017.
Last year we consulted on areas we should pursue next. The categories listed on the slide reflect the results of that process. We expect to begin contracting activity this year, with contracts in place for all of these categories in 2018.
This slide includes categories we consider in-scope of medical devices, that remain to be worked through. We will start planning work for these categories soon and our aim is to have them under PHARMAC management by the end of 2019.
Change is not going to happen all at once. We’ll be taking a carefully planned and staged approach as we work to bring the full scope into PHARMAC. We will continue consulting as we go and you are welcome to contact us with any feedback you have, or interest in these areas at any time.
I mentioned earlier that most of our activity has been national contracting. Wound care is a case study for how our work can develop.
In 2014 we entered national agreements for wound care products which provided standard terms across DHBs while maintaining choices at DHB level. Over this time we have been building our knowledge and understanding of the market without disrupting DHB activity.
Ultimately we wanted to deliver greater value to DHBs from more competitive activity.
Once we had all the contracts in place, we wanted to encourage competition into the market. We wanted to see if we could get a lower price for same-quality items, by asking suppliers to give us their best price in return for a guaranteed share of the national market for that product.
Unlike national contracts – where product choice is optional, market share means restricting which products can be used by DHBs. Because of this we needed advice on which products were substitutable. We formed a wound care advisory group which is made up of wound care experts from DHBs, to provide us with this advice. We sought nominations for this group via professional bodies and DHBs.
The group reviewed the category and identified possible sub-categories for market share procurement. This involved identifying which items are equivalent and broadly interchangeable. The group identified 11 sub-categories which we consulted on.
The wound care advisory group undertook further evaluation of the products and recommended advancing six sub-categories based on feedback. The other sub-categories were not practicable to progress given the feedback, or the cost of change was too great given the value offered. We consulted on provisional contracts for the six sub-categories and made further changes as a result of feedback. Mainly around increasing the transition timeframes for DHBs and the definition of the categories.
In November last year we approved contracts that guaranteed market share for six wound care subcategories. While the contracts restrict product choice, there is some purchasing discretion to ensure clinicians are still able to access products appropriate for the clinical needs of their patients. These contracts are now being implemented and we are working closely with each DHB change manager through their transition.
We recognise the input of DHB clinical staff and management, the wider health sector and suppliers as we developed this concept. This move to market share procurement has been an important step forward for us. The introduction of competition has produced additional savings - an average saving of 20% - which has built on what we had achieved in that category.
Interventional cardiology is another category where we’re looking at building on our work to date and we’ve already formed an interventional cardiology advisory group with DHB clinicians.
In terms of next steps, I mentioned earlier we will continue with the expansion of our scope across all the categories over the next 2-3 years.
We’re conscious of the potential confusion given the current mix of agencies involved in medical devices and the DHB Procurement strategy also identifies this. We see the move in bringing the full scope of categories into PHARMAC as being an important part in addressing this confusion.
We’ll continue building our category knowledge and will consider further market share opportunities – ensuring these are clinically appropriate and implementable.
Over time, we’ll take a greater interest in new technology, although this is still some time away, and we would engage widely before this becomes a significant role.
If you’re interested in staying up to date with PHARMACs progress in medical devices, here are some ways you can do this or you can go to the PHARMAC website. We’re also always happy to respond to questions about our work, so feel free to get in touch.
PHARMAC Chief Executive, Steffan Crausaz and senior health economist Carsten Schousboe recently attended the Medical Technology Association of New Zealand (MTANZ) HealthTech Week. It was a good opportunity to talk to suppliers and hear from a range of speakers regarding device innovation. Both Steffan and Carsten presented about investment management and health economics. They covered the following themes:
- Medical devices activity right now is about building the catalogue of devices DHBs are using.
- The general assessment framework used for medicines can be applied across health technologies in general in a way that accounts for the differences that arise from devices.
- It is acknowledged that often medical devices come with less evidence than medicines - but limited evidence is a routine situation for us and we have expert clinical advisors for exactly that purpose.
- Previous consultations have helped to inform what the process ahead might look like, and we will consult with the wider sector again.
You can find a list of contracted suppliers for existing categories on our website, or search for products in PDF or excel format in ‘Optional Pharmaceuticals’ in Section H of the Pharmaceutical Schedule.
A request for proposals for the supply of negative pressure wound therapy equipment and consumables was issued on 13 June 2017 with all proposals to be submitted by 5.00pm on 21 July 2017.
Feedback is now sought, by 4 July 2017, on a proposal to list a range of interventional cardiology products supplied by Edwards Lifesciences (New Zealand) Limited. This proposal would result in 15 transcatheter aortic valve devices which are already supplied to DHB Hospitals, being supplied under a proposed national agreement with Edwards. DHBs purchasing these devices from Edwards would do so under the contracted price from 1 August 2017.
PHARMAC is pleased to announce the approval of an agreement with ArjoHuntleigh Limited for the supply of medical devices used in the prevention of VTE, with listing to commence 1 July 2017. For the DHBs that currently use these devices the agreement will deliver savings of approximately $380,000 per annum nationally, based on current usage.
Consultation on a proposal to list a range of orthopaedic implants and associated products supplied by Johnson & Johnson closed on 23 June. This proposal would result in schedule listings for around 13,300 orthopaedic implants and associated products, which are already supplied to DHB Hospitals. If approved, the products would be available for DHBs to purchase at the PHARMAC negotiated prices from 1 August 2017. We expect to notify the outcome of this consultation soon.
Most DHBs have now made the necessary changes to transition to the wound care products that have PHARMAC market share agreements. Thanks to all the DHBs and their procurement staff for their implementation efforts. A post implementation review of the implementation process will be undertaken and we’ll be asking for DHB input later in the year. This will help us to understand how we can better support DHBs for future similar activities.
Feel free to circulate this newsletter to anyone you think might be interested.
You are welcome to contact us directly at any time: firstname.lastname@example.org or 04 460 4990.
Last updated: 19 February 2019