Deputy Health Minister David Seymour Letter of expectation Decision-making on the pharmaceutical agency Pharmac could fundamentally change the best way the organization makes decisions. Some of those changes could also make Pharmac's work tougher and its decisions less popular.
The letter has received considerable attention because the Minister expects Pharmac to pay less attention to the embedding of Te Tiriti o Waitangi within the health sector. This has already resulted in Resignation of a director.
But a few of Seymour's other expectations have received less scrutiny than they deserve.
Pharmac currently has a core job (his Legal objective): to attain the very best health outcomes throughout the resources provided.
In his letter, Seymour calls for a reform of the funding model to have in mind “positive fiscal impacts”. This would require a change to Pharmac's statutory objectives and will ultimately do more harm than good to some New Zealanders.
Consideration of productivity
Pharmac evaluates latest medicines based on their cost and the potential savings for the remainder of the healthcare system. These are then compared with the extra health advantages of the brand new medicine.
Currently, a drug is funded if it provides sufficient profit and the budget is obtainable. If the drug doesn’t provide sufficient profit or if Pharmac cannot currently afford it, it goes to their Investment List Options.
In his letter, Seymour called on Pharmac to be certain that:
Updates its decision-making and evaluation models to contemplate the broader government-wide financial impact of funding or not funding a drug or medical device, and has tools to contemplate the broader societal impacts.
Pharmac is asked to have in mind the impact of a drug on economic productivity. This implies that the assessment takes into consideration whether a drug helps people to proceed working because they don’t get sick, or whether it helps them to return to work after being sick.
Global, 60% of drug authorities have in mind the broader effects of medicines to various degrees, but there is no such thing as a clear agreement on the very best approach. Some countries consider the prices and health consequences of caregivers or parents, while others consider the time they’re unable to work.
The time spent away from work – lost productivity – may be measured with a “Friction costs' approach (which counts the hours not worked until one other employee takes over the work of a sick person) or a 'human capital' approach (where the indirect costs are the time lost attributable to illness valued on the market wage).
However, there may be a risk that those that usually are not considered ‘productive’ and who’ve low-paying jobs might be deemed less vital for treatment. This could include older people, individuals with disabilities and their carers, individuals who may never work due to their illness, and folks who face discrimination within the workplace (Women, Māori and PasifikaFor example).
If the pharmaceutical industry is to take productivity into consideration, the federal government must recognise that this might exacerbate existing inequalities.
Greater patient involvement
A International study published in 2021 Pharmac recognized for its open advisory practice in developing his “Factors to contemplate” Model.
But in his letter of expectations, Seymour says he expects Pharmac to do more to involve patient groups and whānau within the decision-making process.
While this sounds positive, it could also result in greater involvement by the pharmaceutical industry. Many patient advocacy groups receive funding from industry organizations. A recently published Australian study found that pharmaceutical firms had given AU$34 million to patient organisations over a four-year period, often at a time when the businesses' drugs were being scrutinised for public reimbursement.
These kinds of conflicts of interest must be managed, especially in a rustic with a really lively Lobbying sector and few safety precautions, even with highest levels of presidency.
Role separation
Pharmac can also be asked to contemplate separating roles in valuation and procurement. According to the Minister:
The organization could […] Benefit from a more functionally separated procurement process.
By assuming each roles, Pharmac can negotiate more effectively with the pharmaceutical industry – a novel feature in New Zealand. Separating the roles potentially compromises Pharmac's ability to barter by limiting the use of data about value.
Currently, Pharmac actively manages the drug plan in its role as purchaser. They use numerous Price and negotiation strategies.
Many of the less cost-effective treatments are placed on the investment options list within the hope that a deal may be negotiated later. Pharmac negotiates deals to finance these barely less beneficial drugs by negotiating higher terms for other treatments.
This could, for instance, involve bundling products from the identical pharmaceutical company or negotiating a lower cost for a more widely used drug in an upcoming tender.
Separating assessment from procurement makes such deals unlikely to occur. This implies that Pharmac, given its limited budget, could have to say 'no' to funding a selected item more often, and every of those decisions carries the danger of causing further problems for the federal government.
The a part of Pharmac (or another agency) that does the valuation could not ask whether a treatment is inexpensive. Instead, it could have to make a decision how much each healthy 12 months of life is value and factor that into its decision-making.
To accommodate this latest number, firms are increasing the costs of recent drugs, making even the cheaper drugs costlier and putting more pressure on limited pharmaceutical budgets.
image credit : theconversation.com