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Analysis of Pharmac’s new exceptional circumstances policy

Some improvements but notable failure to deal with specialised medicines for rare diseases – August 2011

At the end of June 2011 Pharmac released its new exceptional circumstances policy for dealing with medicines that are not on the Pharmaceutical Schedule. This Named Patient Pharmaceutical Assessment (NPPA) policy resulted from an extensive review process put in place over three years ago following pressure from NZORD and many other patient groups concerned about lack of access to new medicines for rare diseases. NZORD’s submission on this review can be found at this link, and more details of the review process is available at Pharmac’s website. This analysis of the new policy has been reviewed and endorsed by a number of rare disease groups and other interested stakeholders, and is supported by a written review by public law specialist Roger Palairet (PDF available here).


Some improvements have been made to the policy but significant problems remain. In particular Pharmac has by its own admission, failed to resolve the issue of access to specialised medicines for rare “orphan” diseases. And while they have improved some of the entry criteria for assessment under this scheme, they have retained the existing “whole population” decision criteria, instead of adapting them as we advocated, and as they initially proposed in the consultation document.

For the first time since principles of seriousness and urgency were raised by us in submissions on the Medicine Strategy over 5 years ago, Pharmac has finally included them into a policy process, and they seem to have done this in a way that is serious in its intent to provide for those who may have tended to miss out when whole populations are the main focus for Pharmac.

The consultation process followed by Pharmac in reviewing the EC scheme was close to exemplary in terms of process, and they really do seem to have listened to some key points made by submitters and adjusted their policy accordingly. This is likely to result in better consideration for some individual patients or small patient groups that may have been on the margins in the past, and been excluded from funding.

However it seems from the policy wording and from associated statements in their responses to submissions, that it will continue to be a significant challenge to win funding for novel medicines for very rare diseases, because Pharmac do not accept, and probably do not adequately understand or know how to deal with, the wider dimensions outside of their narrow cost-effectiveness, CUA (cost utility analysis), and budget management approach to the issues.

Their rejection of explicit consideration of moral factors and community values suggest that it will not be any easier to win funding for highly specialised medicines for rare diseases in the future, than it has been in the past, where very few such medicines have been approved for funding, while the entire policy and decision making process is left in Pharmac’s hands. That is, of course, unless the political environment around access to medicines leads to a shift in resources and a shift in approach to these particular problems.

It is noteworthy that recent political statements by all major political parties at a Medicines New Zealand political forum, suggest that Pharmac’s difficulties in dealing with this specific problem has been noted by all of them, and that they expect progress to be made on this. All gave indications that a different policy approach is being seriously considered by them.

Continued pressure of public opinion and political perspectives are the most likely way in which improved access to medicine for rare diseases will actually occur, despite the apparent improvements in the EC policy and a modest increase in funding available in the exceptional circumstances budget.

Detailed analysis:

  1. The first pathway for consideration has been changed to Unusual Clinical Circumstances. This is a significant shift from their earlier preference for Unique circumstances, which we had noted was legally suspect as far narrower than the legislative requirements, and was also strongly criticised by many submitters as being far too restrictive.
  2. Within this category and also in the other pathway (Urgent Assessment) they have now included “there are no other treatments available” as a trigger for consideration, in addition to the earlier provisions about existing treatments being unsuitable as they have been tried and failed or have produced significant side effect that treatment cannot reasonably be continued. This is a significant point that we and others recommended in our submissions and which obviously helps the prospects of novel therapies gaining entry into the exceptional circumstances assessment process.
  3. We submitted that the definition of urgency and significant deterioration should be clarified as there was a risk that a narrow interpretation of weeks or just a few months could significantly disadvantage those with longer term degeneration as not being considered urgent. Pharmac responded by including a provision in its explanations and prerequisites that specifies “serious clinical circumstances would, within a timeframe of 6 to 12 months, be expected to experience either significant deterioration or miss the opportunity for a significant improvement in clinical outcomes (length or quality of life).” This is helpful to many categories of patients, especially for those with slower and longer term degeneration, and suggests they will be considered along with those with more acute needs. It seems to avoid the problem we foresaw that such groups would generally be excluded from consideration under the EC policy.
  4. The new policy also states explicitly that “Pharmac retains the discretion to consider applications outside the NPPA policy.” While their general powers under the Act might always give them this discretion, it seems helpful for this to be stated so clearly in the policy document, as it is less likely that they will be able to reject applications solely because they do not neatly fit the entry criteria.
  5. The announced estimate of increased expenditure on exceptional circumstances from $4 million to $8 million per year has been confirmed by Pharmac as a slightly “blurry” figure because of the concurrent consolidation of three different schemes, and some difficulty in assessing what is actually paid from where under existing arrangements. However they are open about this and there does not seem to be any attempt to fudge the figures. They admit to some possible double-counting but say the real increase per year could be closer to $2.5million per year, rather than $4million.
  6. The policy refers to Pharmac’s 9 existing decision criteria and does not indicate any other factors when considering EC applications. This is clearly a rejection of submissions suggesting additional matters, or different perspectives, that should be taken into account when considering applications for individuals and small groups, compared to whole populations. This is despite Pharmac themselves proposing in their consultation document to add in some variations to the decision criteria for exceptional circumstances, to allow for this specific point. Rejecting any changes to the decision criteria is also an obvious rejection of explicit consideration of the moral dimension in decision making, which we and other submitters suggested.
  7. Elsewhere in the EC review documents Pharmac makes it clear it sees no place for broader social factors to be taken into account. They say “the ethical, legal and practical issues associated with consideration of a named patient’s non-clinical circumstances means that it is not appropriate that Pharmac take them into account in decision-making.” This is a matter of considerable dispute for many groups and observers, and underpins the view of many that Pharmac is dealing with issues outside of its expertise when matters of fairness, equity and community values need consideration – especially in circumstances where there is rarity, complexity, and other complicating factors. It is noteworthy that politicians are now stating publicly that the complexities of dealing with issues outside of Pharmac’s core expertise of getting the best deal on medicines for the whole population, are a reason for putting responsibility for managing access to highly specialised medicines for orphan diseases, elsewhere in the health system.
  8. The covering media release states “patients no longer need to have a rare condition to be considered for funding”. This is logical as rarity should not be an obligatory criteria. However the exclusion of rarity, when considered in terms of other comments in Pharmac’s response to submissions, gives rise for considerable concern. They also state “there is no robust rationale for treating pharmaceuticals for rare diseases differently from other medicines.” This challenges the basis of extensive rare disease legislation and policy from the US Congress, the European Union and several other jurisdictions, and provides a stark example of Pharmac drawing a strong line as to how far they are prepared to go in addressing the issues of pharmaceuticals for rare diseases.
  9. Pharmac mention in a covering statement that “the door is still open to considering funding applications for chronic long-term conditions that are treated with very high cost medicines. We will continue to treat these applications on a case-by-case basis and as already occurs, where we consider the health gains from treatment justify the funding, and where funding is available they will be approved.” This appears to offer some hope to those with very rare conditions, but once more Pharmac see this in predominantly health economic terms of the comparative cost of health gains and budget management, to the exclusion of matters like equity and community values that are indicated in major health policy documents in New Zealand.
  10. NZORD submitted to Pharmac that medicines for very rare diseases with a likely high cost per patient were inherently disadvantaged by their standard decision criteria, because they would be unlikely to compete on cost effectiveness grounds with medicines for larger populations. We argued the decision criteria needed to counter this disadvantage with specific considerations, but Pharmac rejected this. But interestingly they rejected it by saying the CUA process “estimates the additional benefit of medicines .... on a cost per patient basis so the size of the patient population does not affect the CUA result.” Clearly they have misunderstood our point and produced an erroneous counter to it, because higher unit cost associated with rarity certainly does impact directly on comparative cost-effectiveness.
  11. In a recent meeting with Pharmac where they explained aspects of their new policy, they openly admitted their new policy “has not solved the problem of highly specialised medicines for rare diseases.” We would have expected them to maintain that the new policy and their discretion provided a suitably robust framework for considering these medicines, especially given that the two Ministers (Health Minister Tony Ryall and Associate Minister Peter Dunne) both made it clear in press releases last year that the review of the exceptional circumstances scheme was the vehicle by which this particular issues was to be addressed. It is a significant admission from Pharmac that their review has not delivered on that aspect of the politicians’ expectations, let alone the expectations of rare disease groups. Clearly this leaves the National Party’s 2008 election manifesto promise to work towards a solution for access to highly specialised medicines, dramatically undelivered.

John Forman
Executive Director