NZORD’s submission on Pharmac’s decision criteria proposal

20 May 2014

Thank you for the opportunity to submit on this important issue.


• NZORD has engaged with Pharmac for more than 10 years now to better understand the systems it uses in making decisions and to ensure those decisions provide for equitable outcomes across all patient groups.

• We welcomed this work as an attempt to give greater clarity about Pharmac’s thinking in relation to its responsibilities and its decision making, but we note that the overall effect of the proposed changes does not provide any greater transparency, nor accountability, about how decisions are actually made.

• We consider that these changes need to be seen in the light of other changes Pharmac has made over recent years in its decision-related policies. For example, the removal of rarity as an entry factor for exceptional circumstances consideration, and the removal of commentary on equity from PFPA documents, align with a declared intention in this proposal to exclude equity and community values as specific factors for consideration, and to refuse consideration of those with rare disorders as a specific population needing consideration of their health disparities. 

• Together, in our view, these changes represent an alarming retreat by Pharmac away from broader considerations indicated by the medicines strategy and other guiding documents, and at variance with the many submissions made by sector and public stakeholders over the years, into a fortress mentality of the narrowest possible view of Pharmac’s statutory objective.

• We note with concern that despite many submissions referring to Pharmac’s responsibilities when acting as the purchasing agent of DHBs, Pharmac has not mentioned nor responded to this point in its feedback table or elsewhere in its February consultation document, nor provided any specific response to this point when raised in correspondence and separate discussions between NZORD and Pharmac.

• Of particular concern is Pharmac’s simplistic dismissal of the place of community values in their decision processes. Yes there are a range of views on ethical frameworks, but distributive justice (especially as described by Beauchamp and Childress) is a dominant and very well established ethical principle in healthcare policy and decisions, including in healthcare rationing, and one which has clear and heavy influence throughout our health legislation and policy documents. We consider Pharmac’s reasoning about excluding specific consideration of the moral dimension to be disingenuous. Such behaviour is unbecoming of a public sector agency.

Despite these concerns and reservations, we do see the engagement opportunity of this consultation as a chance to submit ideas and criticisms that you might take into account, so here is our response to your specific consultation questions:

1. High-level summary

We welcome the inclusion of a high-level summary, particularly in relation to the legal framework and guiding documents, but note there is a lack of further explanation about the precise methodology Pharmac uses to assess these matters. This is touched on below, where we also address documents that are relevant to this area but are omitted.

2. How well would the proposed terminology “factors for consideration” reflect how PHARMAC does or should think about its funding decisions? What other options can you suggest for describing these?

We think factors for consideration is a more useful description, as “criteria” suggests a minimum threshold. We consider there should be a separate formulation of the factors for consideration for the different types of decisions made by Pharmac. For example, your paper highlights that individual factors may have a different weighting in respect of NPPA decisions.

3. How would the presentation of a decision-making matrix provide clarity over what PHARMAC considers when it makes a funding decision?

It was interesting for us to see your decision-making matrix, as it does help us understand how Pharmac currently sees its decision making role. But we think there are dangers with a decision-making matrix. It encourages “inside the box” thinking and results in needs, benefits and costs which do not clearly “slot” within a part of the matrix being omitted.  This also links with our strongly held view that broader factors (e.g. indirect costs, feelings of abandonment etc) must also be considered, which we touch on below.

We also do not think the “Principles of the Treaty of Waitangi” is sitting at the correct place in the matrix. It should be in the broader operating environment schematic.

4. Should the decision-making matrix be applied to all PHARMAC’s decisions including Schedule, Named Patients and implementation decisions? Why or why not?

No. As noted above, we consider there are dangers with any “matrix approach”. If a matrix is going to be adopted, there needs to be an “anything else” category, including scope for noting significant variables that can occur in different circumstances, so that the personnel completing the matrix have a place to record other factors relevant to the decision but not captured by the standard matrix features.

We consider that experience with past exceptional circumstances and NPPA decisions and reviews, and in light of comments from the Ombudsman, there is a clearly established need to distinguish factors for consideration for individuals from those used for large populations. We further submit that the proposed special fund for medicines for rare disorders (which ironically seems to directly contradict your conclusions in this proposal relating to rarity), clearly indicates the need for also distinguishing factors for consideration for “niche” populations, from those for individuals or large populations.

5. Are there other dimensions that you would include? Are there any dimensions that you would leave out? Why?

Yes, as above, there needs to be an “Other” or “anything else”. We also think it would be useful to include a “Public and consumer views”. 

It is important for the decision makers to consider how the community feels about a particular  medicine being funded and other factors relevant to the ethics of the funding.  For example, is the condition one usually caused by previous lifestyle choices of the patient or a genetic condition which the patient can do nothing to prevent? We also think Pharmac must consider any known factors which might influence a medicine’s ability to meet the other criteria (e.g. the large costs per patient in development of a medicine for a rare disease).  This section could also allow discussion on cover off matters such as potential drug trials that might be available, and possible entry and exit criteria that might be adopted. 

We note that we submitted on the need to obtain views from patients and their advocates and include these in decisions. Pharmac responded by suggesting this is a process rather than a criteria issue, and said it was out of scope for this review. We challenge that response. The views and concerns of patients are an intrinsic part of the health needs of patients. Pharmac’s current processes are deficient in not working to gather these in a systematic way, and its decision framework is also deficient in not including them as important factors for consideration.

6. What alternatives to the proposed decision-making matrix could PHARMAC use for presenting what it takes into consideration?

We think Pharmac must take into consideration additional factors. Assuming the matrix was expanded out to cover off less quantifiable “other” factors, then improving the consistency in presentation and transparency of decision making is something we support.  On that basis, we would tentatively support an expanded matrix (i.e. provided it included additional factors).

7. What factors for consideration could be omitted or what further ones could be included to inform PHARMAC’s decisions?

We restate here the importance of giving effect to the high level principles in the legal framework and guiding documents by drawing some practical connections between those principles and the outcomes that will be arrived at in decision making. We consider it is far from satisfactory for Pharmac to mention them but then effectively ignore them by offering no further comment on their influence or how they should be incorporated.  Within those principles are the right to life and the right to health, and the corresponding duty of government to provide through our health system. Moral frameworks are an important aspect of how those rights and duties are practically met in a resource-constrained environment. Pharmac has rejected any specific consideration of these matters based on disingenuous discussion about varied moral perspectives in society, and how it claims moral justification for its present approach, yet moral frameworks for allocation of resources in health are well established and widely applied in our health system. No other part of our health system seeks to excuse itself from proper application of high level guidance and moral principles.

The fact that Pharmac might be faced with added difficulties in dealing with topics that are less quantifiable than QALYs and budget management issues, is not a satisfactory reason for not accepting the responsibility to do so. 

Pharmac’s narrow perspective on its legislative brief is dominated by its emphasis on health economics and the predominance of health economics philosophy among its board and staff. Its mind seems closed to practical application of the broader principles, and especially to incorporating the moral factors that could modify its technocratic approach. 

We also urge Pharmac to take careful note of the growing consensus among political parties that your “one size fits all” approach is increasingly out of step.

We urge Pharmac to do serious self-examination and to seek independent review of its approach to these matters.

8. How useful is it to frame the factors for consideration within the broader operating environment that Pharmac operates within?

We think it is useful. Patients are confused by how the health system fits together. However we are concerned that this approach appears to give a sense of integration and connectivity, while at the same time Pharmac’s frequently stated default position is a narrow perspective on the legislative objective. This seems to us to be a device whereby Pharmac gives lip-service to wider concerns then effectively pushes them aside to focus on a very narrow aspect of its brief. We consider Pharmac is choosing, almost obstinately, to adopt this approach, despite ample guidance and widespread support for them to act with a wider perspective. We also believe a wider view would be consistent with its legislative brief, particularly in relation to the qualitative expressions “best” and “reasonably” contained within S46 of the Act, and not in conflict with it.

9. What key strategic or legislative obligations would you omit or include? Why?

References in the legal framework and guiding documents should include the Universal Declaration on Human Rights, the International Covenant of Economic, Social and Cultural Rights, the Gazette notice expanding Pharmac’s functions and the Memorandum of Understanding Pharmac has with DHB’s. The last of these we consider to be of significant importance, as is fundamental to Pharmac’s role and functions. We are alarmed by its lack of acknowledgement and reference in the document and suspicious of why it is apparently so specifically excluded and ignored by Pharmac in all of this discussion.

It may also be useful to include other legislation related to medicines e.g. the Medicines Act 1981. The value of including a broader rather than a narrower range of documents in this part, would be to assist those with an interest in Pharmac decisions being able to see the broader context within which the agency operates, and to provide context and reminders to Pharmac and its staff, that it does not act in isolation from the broader legal, ethical and social influences that are so important to our society.

10. What would be achieved by broadening the health disparity factor to include any population groups experiencing health disparities? 

We are very concerned about the basis on which Pharmac seeks to exclude patient groups defined by their disease characteristics, from consideration as a population experiencing health disparities. We see this as another example of disingenuous reasoning intended to exclude any special consideration for groups whose circumstances might make Pharmac’s job more difficult. There may be some situations where the relevant issues are entirely “health need” issues, but there certainly will be others where there are compounding factors that can leave the patient group significantly further disadvantaged in health status in ways that will be as real as any of the compounding effects of ethnicity or socio-economic status. 

For those with rare disorders, some typical examples include poorer overall health status and poorer prognosis because of delayed diagnosis and missed intervention opportunities, including frequent failures to adequately address secondary health issues, and less expertise available for their clinical care. Additional disadvantage for such patient groups can be the absence of existing therapeutic interventions and the high per-patient cost of developing novel therapies, which will disadvantage them in the usual process of evaluation of potential subsidies for medicines they need.

We urge Pharmac to think more broadly and openly about the many compounding disadvantages of rarity, and to pull back from its apparently hostile response to any specific consideration for them, driven it seems by its antipathy for the industry that is developing therapies for such diseases. The health and the wellbeing of those we represent is highly dependent on Pharmac putting aside its entrenched and irrational urge to battle hard with the orphan drugs industry, and instead engaging in respectful negotiations with them about price and access arrangements for the products they produce.

11. How is the Treaty of Waiting best reflecting in the proposed framework? Why?

The inclusion in the wider legal framework is relevant. As Pharmac operates as a purchasing agent for DHB’s the objective of DHB’s in section 22 of the NZPHD Act is also relevant “to reduce health disparities by improving health outcomes for Maori and other population groups”.

12. What would be the impact of removing the current decision criterion 9 (“such other criteria as Pharmac thinks fit”)?

We are still shocked that this criterion isn’t used by Pharmac particularly for NPPA and other exceptional circumstances applications.  Given the criterion isn’t used, we can see that the removal of it would add some clarity and transparency regarding what Pharmac does consider.  

However, we think there will be decisions where it is relevant for Pharmac to consider other factors. For example, if a medicine was funded in every other OECD country this may be a relevant factor for Pharmac to consider (as it may impact on the society’s expectation of New Zealand’s ability to fund the medicine). 

Pharmac must take care not to rigidly apply the same policy to every single decision it makes. There will be cases where exceptions need to occur (which we think is illustrated by the inclusion of section 48(b) of the NZPHD Act) and an “other” factors heading should be treated as a reminder by all staff to think about “is there anything else relevant to this decision that hasn’t been captured elsewhere”. 

13. What is your view on the proposed rewording of the factors for consideration?

As mentioned above, there is cause for cynicism where Pharmac indicates a wide range of issues it will consider, then separately puts a narrow emphasis on its legislative brief. Coupled with the policy changes over recent years which we have identified, and in light of frequent statements by Pharmac about how it measures “best health outcomes”, an informed observer will readily see the strong possibility that the current proposal for change, if adopted, will make little or no difference at all to the pattern of decision making to be expected from Pharmac in the future. 

14. Which factors, if any, are unclear or confusing?

No comment on this point.

15. How helpful would the inclusion of a supporting information document be? How would the draft document (appendix 5) provide more clarity and transparency?

We encourage transparency so the document is helpful. We understand Pharmac has agreed to include this document as a part of the final policy document so the explanatory information will be tied into the operational policies and procedures. However we do not agree with all of Pharmac’s approaches, in particular the manner in which Pharmac has manipulated discussion about populations, as mentioned above.

John Forman
Executive Director