Zaheer - University of Auckland

Report
PHARMAC, Pharmaceutical Schedule
and Subsidy for Medicines and Special
Foods
Zaheer-Ud-Din Babar, PhD
Senior Lecturer in Pharmacy Practice
School of Pharmacy, FMHS, University of Auckland
[email protected]
Objectives
• To understand pharmaceutical reimbursement
in New Zealand
• To understand why medicines are listed on the
Pharmaceutical Schedule
• To understand the role of PHARMAC, the use
of Special authority and Consideration of
Schedule H.
Medicines Costs
• Pharmaceutical costs are a major driver of health care
expenditure.
• During recent years drug expenditure has risen faster than
other healthcare costs in many countries.
REASONS
• New high-priced drugs
• Emerging resistant microbes
• Increase in life expectancy
• Increased more demand for speciality treatment/products
by patients
Source: Garc´ıa-Alonso MDC, Mari˜noso BG. The strategic interaction between firms and formulary committees:
Effects on the prices of new drugs. Journal of Health Economics 27 (2008) 377–404
Why to learn reimbursement and pricing of
pharmaceuticals?
• Unlimited needs-Resources
are limited
• Governments have to find
ways to rationalise the use
of medicines.
• Low availability and high
prices could be the major
barriers towards Access to
Medicines
Image Credit: Medicines New
Zealand , 2007
AVAILABILITY
AFFORDABILITY
PRICING
How to improve access and
affordability?
• Regulate Markets (Control Prices)
– Due to the distortion in the market forces, most governments seem to
think that regulation of the pharmaceutical market is necessary in
order to secure appropriate quality, safety and efficacy of medicines.
• Compulsory Health Insurance/Subsidy by the government
– Governments would also like to ensure that the population have
access to important medicines ( independent of patients/consumers
ability to pay)
• Reimbursement for Medicines
– Agencies have been set up to decide which drugs are value for money
(= Pharmacoeconomics)
• The National Institute for Clinical Excellence (NICE) in the UK
• Pharmaceutical Management Agency of New Zealand (Pharmac)
• Pharmaceutical Benefits Advisory in Australia
• Commission of Transparency in France.
Expenditures on Pharmaceuticals as % of total
Expenditures on Health
Country
Expenditur Country
e on
pharms
as % total
expenditure
Expenditure
on pharms
as % total
expenditure
Country
Country
Expenditur
e on
pharms as
% total
expenditure
Japan
Expenditur
e on
pharms
as % total
expenditur
e
19.8
Australia
14.2
France
16.4
Poland
27.2
Austria
12.4
Germany
14.8
Korea
25.8
Portugal
21.3
Belgium
16.8
Greece
17.6
Luxembour
g
8.4
Spain
21.7
Canada
17.4
Hungary
31.0
Mexico
22.9
Sweden
13.3
Czech
Republic
23.4
Iceland
13.1
Netherlands 11.5
Switzerland
10.5
Denmark
8.5
United
States
12.6
New
Zealand
12.4
Finland
14.6
Italy
20.0
Norway
8.5
Source: OECD Health Data 2008 – Version June 2008
http://www.oecd.org/dataoecd/46/36/38979632.xls.
Per capita spending on medicines in Australia, New Zealand, Canada
and the United States
•
•
Source: Calculations based on data from OECD Health Data 2008. Figures are expressed in Australian dollars using the general
purchasing power parity indices to convert currencies.
* New Zealand data for public spending on prescription drugs from PHARMAC, Annual Review 2006,
www.pharmac.govt.nz/suppliers/reports/AnnualReview.
Impact of PHARMAC on drug expenditure
$2,000
$1,890
$1,775
$1,800
$1,611
$1,600
Actual
$1,438
$1,400
$1,174
$1,200
Budget/Funding Path
$1,061
$965
$1,000
$880
$763
$800
$564
$599
$635
$653
$694
$714
$734
2012
$516
$534
$565
2011
$517
$510
2004
$504
2003
$400
$535
2001
$600
2010
$674
$601
2000
$200
2009
2008
2007
2006
2005
$0
2002
Drug cost (Millions)
$1,296
Year Ending 30 June
Real Expenditure at 1999 subsidies
Actual Expenditure and Budget/Funding Path
Source: PHARMAC
New Zealand Pharmaceutical Market
Publicly-funded hospital
pharmaceuticals
Publicly-funded
community
pharmaceuticals
Privately-funded pharmaceuticals
(Source: Pharmac 2009)
PHARMAC
• Established in 1993, the Pharmaceutical Management Agency
of New Zealand (PHARMAC) works within a fixed budget for
public spending on medicines in New Zealand.
• Fixed budget means that PHARMAC has to prioritise spending
( trade-off between different treatment options)
• PHARMAC uses this budget, along with a variety of supplier
contracts, to act as a national purchaser of medicines.
• Manage pharmaceutical budget on behalf of DHBs
Source: Morgan & Boothe (2009) Prescription drug coverage in Australia and New Zealand: a view from afarAustralian Prescriber
http://www.australianprescriber.com/magazine/33/1/2/4
PHARMAC
• Once a drug is approved for sale in New Zealand, drug companies can
apply to PHARMAC for it to be government funded.
• PHARMAC’s key roles are to decide whether a medicine will be subsidised,
the price the government is prepared to pay, and the conditions of access.
• Negotiate prices with pharmaceutical manufacturers
• Single purchaser of pharmaceuticals (PHARMAC)
– Monopoly purchasing = low prices!
– Subsidisation of new drugs is tightly controlled
– Pharmac uses rebates on list prices, tendering of off-patent drugs,
bundle agreements (where PHARMAC may list expensive new drugs in
return for the manufacturer discounting the price of other products it
supplies)
– Pharmac also uses access restrictions (special authorities) and
reference pricing to contain expenditures
Source: Morgan & Boothe (2009) Prescription drug coverage in Australia and
New Zealand: a view from afar- Australian Prescriber
http://www.australianprescriber.com/magazine/33/1/2/4
How PHARMAC works?
•
In community settings, only drugs on the pharmaceutical
schedule receive government subsidy.
• For the drugs which are not subsidised, New Zealanders have
to pay out of pocket.
• Patients generally make a co-payment for each medicine
listed in the schedule that they get dispensed.
• The consumers may need to pay an additional fee if the
subsidy level PHARMAC has set is less than the price charged
by the pharmaceutical company.
Cumming J, Mays N, Daubé J. How New Zealand has contained expenditure
on drugs. BMJ 2010; 340:c2441 doi: 10.1136/bmj.c2441
http://www.bmj.com/content/340/7758/Analysis.full.pdf
How PHARMAC works?
• PHARMAC uses a well documented process to determine
which drugs are added to the pharmaceutical schedule
• When a company applies to PHARMAC for government
funding for a new drug it submits information on the costs
and benefits.
• This information is assessed by PHARMAC’s Pharmacology
and Therapeutics Advisory Committee (PTAC), which advises
whether the medicine should be subsidised or not (However,
PHARMAC is not bound to accept PTAC’s recommendations).
Cumming J, Mays N, Daubé J. How New Zealand has contained expenditure
on drugs. BMJ 2010; 340:c2441 doi: 10.1136/bmj.c2441
http://www.bmj.com/content/340/7758/Analysis.full.pdf
Pharmacology and Therapeutics Advisory Committee (PTAC)
• PTAC is an expert medical committee which provides independent advice to
PHARMAC on health needs and the clinical benefits of particular
pharmaceuticals for use in the community and/or in DHB Hospitals.
• PTAC helps decide which community pharmaceuticals are to be subsidised
from public monies by making recommendations to PHARMAC.
• PHARMAC may obtain clinical advice from PTAC in relation to national
purchasing strategies for Hospital Pharmaceuticals.
• PTAC has number of subcommittees
– There may be additional specialist hospital representatives on PTAC
subcommittees
– One of the subcommittee is the Special Foods Subcommittee
Source: Pharmaceutical Schedule, January 2011, Volume 18 Number 0
http://www.pharmac.govt.nz/2011/01/01/Schedule.pdf
PHARMAC’s criteria for deciding funding for a
particular medicines
•
•
•
•
•
•
•
•
•
Health needs of the population
Specific health needs of Maori and Pacific peoples
Availability of existing medicines, treatment devices, and related products
Clinical benefits and risks
Cost effectiveness of meeting health needs by funding the drug rather than using
other publicly funded health and disability support services
Budgetary impact of any changes to the pharmaceutical schedule
Direct cost to health service users
Government’s priorities for health funding
Such other criteria as PHARMAC thinks fit (after appropriate consultation)
Source: PHARMAC. Operating policies and procedures of the pharmaceutical
management agency (“PHARMAC”). 2006.
http://www.pharmac.govt.nz/2005/12/22/231205.pdf
Pharmac has following functions under Section 103 of
the Crown Entities Act
• To maintain and manage a pharmaceutical schedule including
determining eligibility and criteria for the provision of
subsidies.
• To manage exceptional circumstances scheme ( to provide for
subsidies for the supply of pharmaceuticals not on the
pharmaceutical schedule)
• To promote the responsible use of pharmaceuticals;
• To manage the purchasing of any or all pharmaceuticals,
whether used either in a hospital or outside it, on behalf of
DHBs).
• In exceptional circumstances providing for subsidies for the
supply of pharmaceuticals not listed on the Pharmaceutical
Schedule.
Source: Pharmaceutical Schedule, January 2011, Volume 18 Number 0
http://www.pharmac.govt.nz/2011/01/01/Schedule.pdf
PHARMAC manages the National Pharmaceutical
Schedule
Community Pharmaceuticals
• The Schedule lists medicines available in the community and subsidised by
the Government with funding from the Pharmaceutical Budget
• In the community approximately 1848 Pharmaceuticals are subsidised by
the Government.
• Community pharmaceuticals are listed as Sections A to G of the
Pharmaceutical Schedule
Hospital Pharmaceuticals
• The schedule also lists medicines which are purchased by DHBs for use in
their hospitals.
• This also includes those hospital medicines for which national prices have
been negotiated by PHARMAC.
• Section H is allocated for Hospital Pharmaceuticals
Source: Pharmaceutical Schedule, January 2011, Volume 18 Number 0
http://www.pharmac.govt.nz/2011/01/01/Schedule.pdf
Section H of Pharmaceutical Schedule
• Section H of the Pharmaceutical Schedule includes Pharmaceuticals that
can be purchased at a national price by DHBs for use in their hospitals.
DHBs can also negotiate pricing with suppliers.
– These are referred to as National Contract Pharmaceuticals.
• Section H also identifies new pharmaceuticals used in hospitals, which
have been assessed by PHARMAC ( the results of this analysis is being
available to DHB Hospitals via PHARMAC’s website).
• Section H of the Pharmaceutical Schedule also list medicines which DHBs
can fund from their own budgets for use in the community:
– These medicines do not need a specific Hospital Exceptional Circumstances approval.
– These medicines are not are not subsidised from the Pharmaceutical Budget as
Community Pharmaceuticals.
• Source: Pharmaceutical Schedule, January 2011, Volume 18 Number 0
http://www.pharmac.govt.nz/2011/01/01/Schedule.pdf
Section H of Pharmaceutical Schedule
Section H lists Pharmaceuticals that DHBs fund from their own budgets. The
Hospital Pharmaceuticals are grouped into the following Parts in Section
H:
• Part I lists the rules in relation to Hospital Pharmaceuticals.
• Part II lists Hospital Pharmaceuticals for which national contracts exist
(National Contract Pharmaceuticals).
– These are listed alphabetically by generic chemical entity name and
line item, the relevant Price negotiated by PHARMAC and, if
applicable, an indication of whether it has Hospital Supply Status (HSS)
and any associated Discretionary Variance (DV) Pharmaceuticals and
DV Limit.
Source: Pharmaceutical Schedule, January 2011, Volume 18 Number 0
http://www.pharmac.govt.nz/2011/01/01/Schedule.pdf
Section H: Hospital Pharmaceuticals
• Part III lists Assessed Pharmaceuticals, which have been or are being
assessed by PHARMAC. (However, DHB Hospitals are not obliged to
implement those recommendations.
• Part IV lists Discretionary Community Supply Pharmaceuticals, which are
not Community Pharmaceuticals, but which a DHB Hospital can, in its
discretion, fund for use in the community from its own budget.
• The index located at the back of the Section H supplement can be used to
find page numbers for generic chemical entities, or product brand names,
for Hospital Pharmaceuticals.
Source: Pharmaceutical Schedule, January 2011, Volume 18 Number 0
http://www.pharmac.govt.nz/2011/01/01/Schedule.pdf
How to access data from schedule?
• PHARMAC has set up an interactive Schedule on the internet
http://www.pharmac.govt.nz.
• It can be used to calculate the cost of a prescribed Community
Pharmaceutical. The site takes into account the following:
– The quantity of Community Pharmaceutical prescribed
– The patient’s age
– Whether the patient has a community services card, high use health card or
prescription subsidy card, the fee for pharmacy services and prescription charges.
• Other information on PHARMAC website includes:
– Copies of the Annual Review
– Annual Report and Annual Plan
– Pharmaceutical Schedule, Pharmaceutical Schedule Updates, National
Hospital Pharmaceutical Strategy, other publications and recent press
releases.
Source: Section H for Hospital Pharmaceuticals Nov 2010.
http://www.pharmac.govt.nz/2010/10/28/SectionH.pdf
Special Authority
• Special Authority is an application process in which a
prescriber requests government subsidy on a
Community Pharmaceutical for a particular person.
• The particular person must be eligible according to
the access criteria.
• Applications must be submitted to the Ministry of
Health by the prescriber for the request to be
processed.
Source: Pharmaceutical Schedule, January 2011, Volume 18 Number 0
http://www.pharmac.govt.nz/2011/01/01/Schedule.pdf
Special Authority Applications
• Once approved, the prescriber will be provided a Special
Authority number which must appear on the prescription.
• Specialists who make an application must communicate the
valid authority number to the prescriber who will be writing
the prescriptions.
• The authority number can provide access to subsidy,
increased subsidy, or waive certain restrictions otherwise
present on the Community Pharmaceutical.
• Some approvals are dependent on the availability of funding
from the Pharmaceutical Budget.
Source: Pharmaceutical Schedule, January 2011, Volume 18 Number 0
http://www.pharmac.govt.nz/2011/01/01/Schedule.pdf
How special foods are funded?
• Pharmacology and Therapeutics Advisory
Committee (PTAC)
– Special Foods Subcommittee
– Often the decisions are made by using reference
pricing
– PHARMAC gets the following information from
the PTAC subcommittee:
• What is current practice?
• What is the clinical trial evidence for the new product and how
does it compare with other available products?
• How much additional benefit does the new product provide?
( Acknowledgement: PHARMAC, 2011)
What is reference pricing?
• In reference pricing, medicines/products are
classified into clusters based on similar
therapeutic effects.
• The payer sets a reference price (RP) for each
cluster based on a relatively low priced
product - for example, the minimum or
median price -- in the cluster.
Source:Danzon PM, Ketcham JD. Reference Pricing of Pharmaceuticals for Medicare: Evidence
from Germany, the Netherlands and New Zealand. NBER Working Paper No. 10007
September 2003 JEL No. I11, I18, L11, L51
http://www.econ.canterbury.ac.nz/personal_pages/john_fountain/econ337/reading/danzon
refpricing.pdf
Reference pricing in New Zealand
Supply
conditions
for
medicines
A positive list of medicines and related products reimbursed by
the government.
Date of
introduction
1993
Product
coverage
At least one subsidized drug in each subgroup, although not all
subgroups are reference-priced. A sub-group is defined
as a set of pharmaceuticals, which produce the same or similar
therapeutic effects in treating the same or similar
Condition.
Reference
price level
Full subsidy at the historically lowest price to cheapest products in
each therapeutic sub-groups or at the price of a newly admitted
product if its price is lower than the current subsidy.
Woodfield A, Fountain J, Borren P, Money and Medicines. An Economic Analysis of Reference Pricing and Related Publicsector Cost-containment Systems for Pharmaceuticals with Special Reference to New Zealand, Merck Sharp & Dome, New
Zealand, 1997.
Morton FS. The strategic response by pharmaceutical firms to Medicaid most-favoured-customer
rules. Rand Journal of Economics 1997;28(2):269–90.
Example of reference pricingElecare
• Elemental formula is used for the dietary management of children with
severe cow’s milk allergy and multiple food protein intolerance.
• The funding of Elecare has been considered by the Special Foods
Subcommittee of PTAC.
• The Special Foods Subcommittee recommended that Elecare be listed in
the Pharmaceutical Schedule if cost neutral compared to currently listed
elemental formula products.
Proposal relating to the funding of various Special Foods 30th July 2010
http://www.pharmac.govt.nz/2010/07/30/2010-0730%20Consultation%20on%20various%20Special%20Food%20funding%20proposa
ls.pdf
When to apply reference pricing?
• In addition the Subcommittee considered that
Elecare has the same or similar clinical effect
to Neocate and Neocate Advance and that
these products should be included in the same
reference price group.
• The Subcommittee considered that as these
products had a similar clinical effect and that
reference pricing was appropriate.
(If two products have the same clinical effect then
Pharmac would maintain that only the cheapest
should be funded)
Examples of reference pricing
Special Food
Brand
Form
Flavour(s)
Pack Size
Proposed
subsidy
(and, where
different,
price)
Elemental formula
1 kcal/ml
Elecare
Powder
Unflavoured
vanilla
400 g
$52.90
($56.00)
Elemental formula
1 kcal/ml
Elecare LCP
Powder
Unflavoured
400 g
$52.90
($56.00)
Special Food
Brand
Form
Pack size
Current subsidy Proposed
and price
subsidy
(and, where
different,
price)
Elemental formula
1 kcal/ml
Neocate
Powder
400 g
$63.97
(6$7.08)
$52.90
Elemental formula
1 kcal/ml
Neocate LCP
Powder
400 g
$63.97
(6$7.08)
$52.90
($56.00)
Appendix 1
( Special Foods, Vitamins, Minerals, Oral
electrolyte replacement products )
Special Food Details on Schedule
• From page 176 of the Pharmaceutical Schedule, January 2011 (224 pages,
1270 KB)
• SA0585 – Adult Products High Calorie: Two Cal HN
• SA0702 – Adult Products Standard 1.0 kcal/ml : Ensure Plus, Fibresource,
Fortisip, Isosource, Jevity, Nutrison, Osmolite, Resource Plus
• SA0702 Adult Products Standard 1.5 kcal/ml [ Isosoucre 1.5, Ensure Plus
RTH, Nutrison Energy Multifibre]
• SA0581 – Carbohydrate and Fat: Duocal Super Soluble Powder
• SA0912 – Carbohydrate: Moducal, Morrex Maltodextrin, Polycal, Polycose
• SA0588 – Respiratory Products- CORD Products: Pulmocare
• SA0594 – Diabetic Products: Diasip, Diason, Glucerna, Glucerna RTH,
Resource Diabetic, Resource Diabetic RTH
•
• Source: Pharmaceutical Schedule, January 2011, Volume 18 Number
0http://www.pharmac.govt.nz/2011/01/01/Schedule.pdf
Special Food Details on Schedule
•
•
•
•
SA0615 – Fat Modified Products: Monogen
SA0899 – Fat: Calogen, Liquigen, MCT oil (Nutricia)
SA0595 – Food Thickeners: Karicare Food Thickener, Resource Thicken Up
SA0732 – Foods used for Homocystinuria or maple syrup urine disease:
Maxamaid MSUD, Maxamum MSUD, MSUD Aid, XMET Maxamum
• SA0733 – Foods used for PKU: Aminogran Food Supplement, Aminogran
Mineral Mix, Analog LCP, Aproten, Loprofin, Loprofin Mix, Maxamaid XP,
Maxamum XP, Minaphlex, Phlexy 10
• SA0722 – Gluten Free Foods: Gluten Free Bread Mix 100% Bakels,
Healtheries Wheat and Gluten Free Baking, Horleys Bread Mix, Horleys
Flour, NZB
• Source: Pharmaceutical Schedule, January 2011, Volume 18 Number
0http://www.pharmac.govt.nz/2011/01/01/Schedule.pdf
Special Food Details on Schedule
• SA0589 – High Protein Products: Fortimel
• SA0603 – Infant Formulae – For Gastrointestinal And Other Malabsorptive
Problems: Elecare, Neocate, Pepti Junior, Vivonex Pediatric
• SA0604 – Infant Formulae – For Milk Intolerance: Delact, S26 Soy, Karicare
Goats Milk Infant Formula
• SA0602 – Infant Formulae – For Premature Infants: S26LBW, Similac
Special Care
• SA0601 – Infant Formulae – For Williams Syndrome: Locasol
• SA0757 – Infant Formulae – Lactose Intolerance and Cows’ Milk Protein
Intolerance: Karicare All Ages
• SA0962 – Metabolic Mineral Mixture
• SA0583 – Oral Supplements: Ensure, Sustagen Hospital Formula
Source: Pharmaceutical Schedule, January 2011, Volume 18 Number
0http://www.pharmac.govt.nz/2011/01/01/Schedule.pdf
Special Food Details on Schedule
• SA0607 – Paediatric Product For Children Awaiting Liver Transplant:
Generaid Plus
• SA0606 – Paediatric Product For Children With Chronic Renal Failure:
Kindergen
• SA0896 – Paediatric Products: Nutrini, Pediasure (1 page, 3 KB)
• SA0586 – Products for Undialysed End Stage Renal Failure: Suplena
• SA0582 – Protein: Protifar 90, Promod, Resource Beneprotein
• SA0587 – Renal Products: Nepro, NovaSource Renal, Nutrison
Concentrated RTH, Renilon 7.5
• SA0592 – Specialised And Elemental Products: Alitraq, Elemental 028
Extra, Peptisorb RTH, Vital HN, Vivonex TEN
Source: Pharmaceutical Schedule, January 2011, Volume 18 Number 0
http://www.pharmac.govt.nz/2011/01/01/Schedule.pdf
Vitamin Products
• Vitamin A with Vitamin D and C ( solution 1000 u
with Vitamin D 400 u and ascorbic acid 300 mg per
10 drops)
• Pyridoxine hydrochloride (Tab 25 mg or Tab 50 mg)
• Thiamine hydrochloride ( Tab 50 mg)
• Vitamin B Complex (Tab strong BPC)
• Ascorbic acid (Tab 100 mg)
• Alpha tocopheryl acetate (water solubilised solution
156 iu/ml)
• Multivitamins (tab or powder or oral liquid)
• Vitamins (fat soluble vitamins A,D, E, K)
Mineral Products
• Calcium carbonate (tab 1.25 g ( 500 mg elemental) or tab 1.5 g
(600 mg elemental) or tab 1.75 g ( 1 g elemental)
• Sodium fluoride (Tab 1.1 mg (0.5 mg elemental)
• Ferrous fumarate (Tab 200 mg ( 65 mg elemental)
• Ferrous fumarate with folic Acid (Tab 310 mg ( 100 mg
elemental) with Folic acid 350 ug
• Ferrous sulphate ( tab long acting 325 mg (105 mg elemental)
• Ferrous sulphate with folic acid (tab long acting 325 mg (105
mg elemental with folic acid 350 ug
Oral electrolyte replacement
products
• Compound electrolytes ( powder for solution for oral
use 5 g)
• Dextrose with electrolytes ( solution with
electrolytes)
• Potassium bicarbonate ( Tab eff 315 mg with sodium
acid phosphate 1.937 g and sodium bicarbonate 350
mg)
• Potassium Chloride ( Tab eff 584 mg (14 m eq) with
chloride 385 mg (8 m eq) or tab long acting 600 mg
Acknowledgement
• I would like to thank PHARMAC for giving
comments on earlier drafts of this
presentation.

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