August 2001 issue Pharmacy Today magazine

PHARMAC TARGETS HOSPITAL DRUGS

With Pharmac making inroads into hospital pharmacy, some fear the patient will be forgotten in the drive for cost efficiencies.

Health professionals, with an eye on Pharmac's "track record" with subsdidised medicines in the community, have reservations over how Pharmac's pricing strategies may effect treatments.

After months of preparation, Pharmac has announced it will work with district Health Boards on drug purchasing for hospitals.

Although details remain sketchy, the Association of Salaried Medical Specialists view Pharmac's move into hospitals with unease.

Options reduced

President Peter Roberts says while cost reductions to District Health Boards are welcome, if Pharmac's existing strategies are brought to bear on hospital budgets, clinicians will find their prescribing options reduced.

"As a group of specialists, our concern is that our hands could be tied in how we can treat our patients. Because of their (Pharmac's) track record, we have grave concerns that decisions will be cost driven and not balanced by clinicians' views if less than the best drugs are available, then I have objections."

One hospital pharmacy manager fears any use of reference pricing could reduce supplier competition to the point where supply becomes unreliable.

The regular listing and delisting of pharmaceuticals available may add further risk to the complex process of prescribing and dispensing, he says.

New Zealand Medical Association chairman John Adams shares similar concerns.

"If legitimate savings are made, well and good, but hospital doctors are concerned they will see the same situation in hospitals as they see in the community.

"The mechanism of savings is not important as long as it doesn't compromise clinical treatment and patient safety."

Different role

Pharmac chief executive Wayne McNee says Pharmac's jurisdiction will initially cover a limited list of hospital pharmaceuticals, focusing on specific areas, yet to be defined.

"We don't propose at this stage that Pharmac decides what new technology will enter the sector as we do in the community. We will look at that in the future."

In some areas, Wayne McNee says there may be less brands available, but he sees no significant reduction in prescriber choice.

While Pharmac's role in hospitals will differ from the community, it is confident some existing strategies can be transferred to the hospital sector. Tendering for pharmaceuticals is one likely purchasing tool, he says, and a limited hospital pharmaceutical schedule will be developed.

A Hospital Advisory Committee (HAC), comprising hospital purchasing and pharmacy managers will be set up to advise on Pharmac's proposals and the implementation of the purchasing strategies. Depending on how talks with DHBs progress, Pharmac expects to start its new duties in six to nine months.

Savings

Although savings in the first year are likely to be negligible, Pharmac's negotiating and purchasing power is expected to make annual savings of around $7 million to $10 million from an estimated national bill of between $100 million and $140 million.

Most DHBs currently negotiate directly with pharmaceutical companies. However, Auckland-based Health Support Limited does this work for hospitals in greater Auckland, Northland and Bay of Plenty, comprising some 40% of the national total. A spokesman for the Minister of Health says pricing discrepancies are illustrated by one product's price having a 200% variation.

Wayne McNee says hospital budgets are projected to rise after recent decreases, caused mainly by hospital-only pharmaceuticals, such as statins and anti-psychotics, moving to community dispensing.

Work to amend the Public Health and Disability Act and Pharmac's accountability documents is already underway in preparation for the move.

New Zealand Healthcare Pharmacists Association president Ian Winwood believes Pharmac's move to take over negotiating resulting in standardised and lower prices, will be beneficial, particularly for smaller, provincial hospitals. Although concerns remain, he expects HAC's role will balance clinical and financial considerations.

Mixed views

Meanwhile, the pharmaceutical industry appears to have mixed views.

While the Minister of Health's office is claiming support from the Researched Medicines Industry (RMI), the RMI says it has yet to reach a decision.

GlaxoSmithKlines medical director Dr Ian Griffiths does not foresee major problems for his company. He believes the co-ordination of hospital drug purchasing is a logical step and Pharmac's involvement "may be generating unnecessary fear."

Baxter Healthcare has a large interest in generic intravenous products for hospitals and expects generics to be an early focus. The company's market manager Carey Lee is expecting a reduction in revenue and says some companies could leave the market.

AstraZenica business director for pharmaceuticals Lance Gravatt sees continuity of supply becoming an issue in the future. He believes Pharmac's sometimes simplistic approach may ignore the complex requirements of diverse hospital environments.

One point of contention for companies has been Pharmac's request to DHBs for detailed information on their contracts with suppliers.

Some pharmaceutical companies have already written to hospital pharmacies reminding them of confidentiality clauses written into the contracts.

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