Charities Commission Registration CC22512

Submission from NZORD on Pharmac’s review of its Operational Policies and Procedures - May 2005.

NZORD is a charitable trust that works to provide information, support and resources for health and disability support groups, particularly those that have small numbers and limited resources and capacity, and to assist their voices being heard in policy setting and decision making processes.

Overview:
It seems appropriate to begin with an acknowledgement of the important role that Pharmac plays in helping ensure access to pharmaceuticals for those who need them, to achieve the best health outcomes reasonably achievable for those people, and to manage the budget provided. This may seem a moot point as it is provided in legislation and not directly the subject of this consultation. However it is included for a number of reasons:

1. We think there is wide acceptance in New Zealand of the valuable role of Pharmac in helping to manage and control the past rapid growth in pharmaceutical expenditure, and to actively engage in the market to influence prices paid and total costs. The systems used are perhaps delivering for us the true value of many pharmaceutical products purchased, as willing seller and willing buyer reach agreement through the various tendering and contracting processes used.
2. There are clear and measurable benefits to our health system as a whole, in having that pro-active role undertaken by Pharmac.
3. The core objective must be the focus of Pharmac’s role, and therefore of its operating policies and procedures, and some of our later comments address aspects of the draft OPP in relation to that objective.
4. Many concerns and frustrations expressed by various groups about decisions of Pharmac, have common themes that relate to a failure by Pharmac to secure for them the best health outcomes that are reasonably achievable, thus calling into question aspects of the policies and procedures, and budget provisions. This raises the legitimate question of whether the focus and implementation of the operational policy and procedure is leading in some instances to failure to achieve the core objective for sections of the eligible population, and identifies a need to scrutinise and change the policy and procedures.

Section 1.2.3 - Public law obligations.
This section makes only a general reference to those obligations, yet they are important matters and often at the core of groups’ concerns with Pharmac policy and procedures. We believe this section would be enhanced, and therefore public understanding of Pharmac’s public law obligations would be enhanced, if specific items were elaborated on:

• Spelling out fair process for decision making including, for example, by indicating time-frames for decisions, criteria for possible extension of those time-frames, and the automatic approval of an application if Pharmac fails to decide within a given time.
• Specific reference made to Acts such as the Bill of Rights Act, the Human Rights Act, and other relevant legislation that may impact on decisions regarding access to therapies, and clarification of how Pharmac will include those in its decision making processes.
• Elaboration of key common law and ethical principles relating to duty of care (and thus treatment) that are relevant to the decision making process, and clarification of how they will be considered.
• Addressing the potential conflict of issues outlined in items 2 and 3 above, and the conflict in the first phrase of the core objective, with budget limits set by government, and clarifying how Pharmac as an agent of government will address those issues with the applicant and with government itself.

Identifying evidence-based medicine as core criteria in decision making.
This could perhaps be incorporated in the public law section, or in the decision criteria section of the policy and procedures. It is an important principle that is implicit in the core objective in the Act, in much Pharmac discussion on decisions, and in the schedule detail itself. There would be value in having this spelt out in the policy and procedures with some elaboration of how this is implemented in decisions.
More specifically, there should be reasons required of Pharmac when it decides not to follow the advice of its expert advisory committee, PTAC, on pharmaceuticals and their benefits.

Recognising that Pharmac and its processes are often a “blunt instrument”.
It may be apparent to Pharmac that much dissatisfaction with its decisions results from possibly unintended consequences. For example:

• Individual patient intolerance of alternative drugs.
• Difficulties in administration of subsidised drugs e.g. lack of slip coating.
• Lack of suitable paediatric formulations in alternative drugs funded.
• Supply problems arising from sole supply arrangements.

A reasonable conclusion from analysis of these problems, is that budget management goals have taken a priority in such cases, over the goal of securing best health outcomes. A suggested inclusion in the policy and procedures is specific reference to this tension and such possible results, and outlining a series of measures that might be taken to guard against them, such as:

1. “Grandparenting” access to existing medicines, or procedures to return to that medicine if intolerance or complications show.
2. Trials of alternatives to establish potential problems.
3. Steps to ensure the needs of specific sub-groups are adequately addresses in tendering and consultation.
4. Risk management strategies implemented to reduce the likelihood of supply problems e.g. dual suppliers in preference to sole supply.

Dealing with high-cost therapies.
The difficulties of comparing these to lower priced drugs in the rationing process, are obvious. We submit that equity of access and avoidance of disparities for affected populations (distributive justice) can not be satisfied when such an imbalanced system continues. It is long overdue for a more rational and equitable method to be put in place to manage the best health outcomes for those needing high cost therapies. A separate funding pool, ring fenced from the general pool, and with its own appropriate criteria, is strongly urged as a practical method of restoring equity and reducing disparities. Such a provision should be added to the operating policies and procedures.

Cost Utility Analysis.
There is specific reference in the CUA material on the site that cost utility is a tool to aid decision making, not the whole criteria, and that other matters need to be taken into account. The operational policy and procedures should in turn clarify that the CUA cannot be used on its own as a reason to deny an application and that fuller reasoning must be given. This point is stated because of replies that simply decline a request because it is “not cost effective”.

Widening of Pharmac’s role.
There is concern in many support groups about Pharmac being involved in “mission creep”. Examples include:

1. The recent discussion paper on industry funding of support groups, which is seen as a very inappropriate intrusion into the affairs of other groups, especially in circumstances where Pharmac is a very non-transparent and non-disclosing organisation, and where Pharmac clearly has a bias and a vested interest in the outcome.
2. The tendency for Pharmac to become more intrusively involved in the doctor/patient relationship and in treatment decisions. We doubt that it was even intended by the Act that Pharmac would go so far from the big picture of tendering, contracting, cost containment and budget management, to be so intimately involved in some clinical decisions to treat or not. This is happening especially in relation to high cost therapies and was described to us by one patient as “Pharmac deciding who will live and who will die”. In the particular situation described, it is a very accurate assessment of the situation. Pharmac should note the statutory and ethical risks inherent in this type of situation (outlined in the public law discussion above), the conflicts with its role as budget manager, and seek Ministerial guidance and ethical guidance on the matter. 

A number of groups have expressed the view that Pharmac should stick to its core business and this is a view NZORD shares.

Factoring in other decision criteria.
There is a level of scepticism among groups that Pharmac is adequately considering the consequences of its decisions not to subsidise certain drugs, whether in terms of later hospital admissions, direct costs to individuals, or other supports required. To help develop a more transparent decision making process, we suggest the addition of further sections to 2.2 Decision Criteria:
(j)  the personal burden on the health status and care requirements of health service users, and on the health status and care requirements of those who support or care for them
(k) in making its decisions Pharmac will disclose the weightings given to these decision criteria.

Recommendations of the 2000 review.
We urge Pharmac to take note of the recommendations of this earlier review of the policy and procedures.

1. That it is important to establish a better working relationship between Pharmac and all of the stakeholder groups in New Zealand.
2. Ensure that in the consultation process groups are given an adequate amount of time to respond to requests for input. In the case of smaller organisations two to three weeks may not always be sufficient.
3. That the amount of money that Pharmac manages for drug subsidies will need to be increased because more widespread use of certain pharmaceuticals will lead to greater savings in other parts of the healthcare budget.
4. That while the Official Information Act lays down the general principle of availability and information may be withheld where making information available would be likely to prejudice the commercial position of the person who supplied the information - this is not a conclusive reason for withholding information. That is, the criterion of commercial confidentiality may be outweighed by other considerations that render it desirable in the public interest to make that information available.The public interest criteria is not an escape clause that Pharmac may choose to apply if it wishes, but a consideration that Pharmac are obliged to weigh. Pharmac's decisions under the OIA are subject to appeal to the Ombudsman, who is required to make the same assessment of the competing considerations.

We do not think that the past 5 years’ experience indicates a ready acceptance by Pharmac of those earlier recommendations. They still seem appropriate and relevant now. We suggest that the widespread concerns expressed about Pharmac imply a failure of Pharmac to effectively implement its obligations in section 49 of the Act, to consult in implementing their objectives and carrying out their functions.

Final note:
This submission is based on information gleaned over many years of discussion with a large number of support group leaders, health professionals, and individual patients, plus some limited discussion with staff of Pharmac and a small number of industry representatives. Close scrutiny of media and sector discussions about medicine policy and the role of Pharmac have also informed this submission.

John Forman
Executive Director