PHARMAC medical devices forums 2017
PHARMAC recently held a series of forums in DHBs around the country to provide an update on our hospital medical devices activity.
PHARMAC’s work in medical devices is expanding with national contracts and market share agreements. We are keen to continue our partnership with DHB staff to ensure our processes are mindful of the implications for patients, clinicians and staff.
If you couldn't attend one of the forums, here's the 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.
Forums were held in the following hospitals:
Wednesday 1 March, 12-1pm
Conference Centre, Tauranga Hospital
Monday 6 March, 12-1pm
Waiora Room, Level 4, Waiora Building, Waikato Hospital
Tuesday 14 March, 12-1pm
Auditorium, Clinical Education Centre, Auckland City Hospital
Friday 24 March, 12-1pm
Nordmeyer Room, School of Medicine, Wellington Hospital
Monday 27 March, 12-1pm
Awhina Conference Room 1, North Shore Hospital
Monday 10 April, 12-1pm
Learning Centre Auditorium, Hutt Hospital
Wednesday 19 April, 12-1pm
Oncology Lecture Theatre, Christchurch Hospital
Tuesday 9 May, 12-1pm
Room 120 & 121, Hunter Centre, School of Medicine, Dunedin Hospital
Thursday 11 May, 12-1pm
Rooms 1 & 2, Education Centre, Hastings Hospital
Last updated: 28 June 2017