Submission on Pharmac’s contestable fund for medicines for rare disorders

29 July 2014

Pharmac’s first step towards a policy for funding drugs for orphan diseases is spoilt by the devil in the detail. Some significant changes will be needed to make the proposal fair and workable. Here’s what we said to them.

Thank you for the opportunity to submit on this important policy consultation. Key points to our submission are:

1 – The $5 million investment is seriously inadequate for the needs.

Based on population size and other comparisons with similar funds in Australia and Scotland (for example), an amount estimated as $20 to $25 Million would be needed to give equitable access for NZ patients with these very rare disorders. But given that $5 million is the amount available for possible funding in the first round, how it is applied and what evaluation criteria are used, become crucially important questions. We address aspects of this below, in addition to our response to your consultation questions.

2 – The fund available produces potential benefits and potential harms. 

Potential benefits
  • It may be the start to a process that provides funded treatment to some patients who are currently denied access to the treatments they need.

Potential harms

  • The contestable nature of the proposal implies a likely winners and losers outcome, such that one or two patient groups might win funding while others will go without on a continuing basis. This could lead to serious inequities in access and outcomes across the patient groups in question.
  • This problem can be described as a moral hazard in the strong commercial nature of the proposal, such that a proposal (or two) that may be commercially attractive to Pharmac, may in fact lead to some patients with greater need missing out in the process. This hazard may thus lead to adverse selection when considered in light of equity principles set out in the Act and in your MoU with District Health Boards on which your management of pharmaceutical funding is based, and lead to a failure to achieve “best health outcomes” as you are charged to do. 

3 – Some restrictive provisions in the prerequisites and other matters stated in the consultation documents, combine to produce a triple jeopardy of hurdles for the patients in question. These three unreasonable hurdles are:

  1. The statements of the PTAC subcommittee for rare diseases in para 1.10 of the 20 June 2014 minutes are wrong in their reference to equity and unfairness potentially arising from differential levels of evidence for these diseases. They fail to adequately understand the inherent inequity and the way in which a differential level of evidence is one way of redressing this to achieve equity, rather than the reverse.  We encourage Pharmac to obtain independent advice, preferably from a philosopher with experience in health rationing, as to a more appropriate understanding of applied ethics in these circumstances. If not reviewed, that approach from the subcommittee is likely to seriously disadvantage some or all of these medicines in the evaluation process.
  2. The threshold of “substantially” improved absolute or relative age-specific life expectancy or quality of life, is a standard much higher than applied to evidence of treatment outcomes for other funding decisions that Pharmac usually considers. We note this is a phrase that was introduced into the Australian scheme in a review some years ago, with the result that no new treatments were funded under that scheme since. The use of the word “substantially” should not be used to add additional layers of expectations on the medicine in the evaluation process. That would be real inequity and unfairness in action. We ask you also to note that dissatisfaction with the impact of that phrase on the Australian scheme is the major reason for the latest review of that scheme. We urge you not to adopt their mistake just as they seem poised to undo it.
  3. The various references to Pharmac’s “statutory objective” in the consultation document and related papers seem to make it clear that despite any special consideration under this fund, and even if they pass hurdles 1 and 2 mentioned in this section, the medicines would still need to be considered cost effective against other possible investment decisions that could be made. This sets up a contradictory situation because all of the medicines in question are considered not cost effective by most standards. 
  • We draw your attention to the reasoning in your decision to decline funding for eculizumab and suggest that even with a 50% price cut the same conclusion could still be reached. We further note the special funds in Australia and Scotland are premised entirely on the fact that the medicines have been found “not cost effective” when assessed through the standard medicine funding process. 

We submit that these key points show serious deficiencies in the way Pharmac has constructed this proposal, with a consequent implication that it has been set up to ensure the evaluation of these medicines fail the tests and are rejected for funding. We restate our view that consideration of medicines for these ultra-rare diseases should be done with specific and different criteria as occurs in those other funds.

Here are our responses to your specific consultation questions:

Q1 – the proposed definition of rarity.

We think the threshold of 1 in 50,000 is a suitable level to set for the particular medicines and diseases in question. We suggest you use the phrase “ultra-rare” or “ultra-orphan” to distinguish them as a far less common subset of “rare” or “orphan” diseases which are more frequently defined around the 1 in 2000 level in a variety of national policy statements, especially in the European Union but also elsewhere, for a variety of research incentives, accelerated medicine registration, health service provision and social support policies.

In addition, we think the definition should be a guide only, rather than a fixed rule, so that any around the margins could still be considered as an appropriate use of the discretion you can choose to exercise at any time.

Q2 – A significant reduction in either life expectancy or quality of life.

We do not have major concerns with this phrase, in the sense that there would be little sense in treating any disease that had an “insignificant” effect on either of these two things. But the risk in accepting this phrase is in considering the flip-side of the argument made above about “substantially”, and how the phrase might be inappropriately construed to restrict the first entry point for consideration under this fund. Of course what is significant to the patient and what is considered significant by others might be debated, but in terms of patient needs and patients’ health outcomes, the patients’ view should be given strong consideration.

Q3 – Approval of the medicine by Medsafe or an international regulator.

We think this is appropriate. Such regulation is the prime evidence of efficacy and safety of medicines and should usually be a fundamental requirement. We are not aware of any situations where medicines likely to be considered under this fund are not regulated, but we would be happy to comment on any information Pharmac may have about such situations.

Q4 – Prerequisite 4 and 5 regarding effectiveness.

The two prerequisites would seem appropriate but for the qualifier in each of them. 

  • The first states “acceptable to Pharmac” which could import additional evidence over and above that required by the regulator, and expect a higher standard of evidence. We believe Pharmac should be strongly guided by the registration process, even to the extent of not putting so much emphasis on the “evidence” aspect when this can be so difficult to establish in such very rare conditions without waiting for an unacceptably long period of time to get long term treatment outcome data.
  • The second is the use of “substantially” and our objections to that are as outlined above.

Q5 – Suitable alternative treatments.

We note that most of these diseases do not have a comparable treatment available, once supportive care is put aside as you rightly do in these circumstances. But in order to provide a more robust provision regarding comparability, we think it is important to include aspects of suitability and acceptability, as for example, where the alternative might be very risky treatments such as transplants with their mortality or morbidity risks.

We look forward to seeing the outcome of this consultation.

John Forman
Executive Director