Pharmac keeps medical devices role despite it failing to curb costs

By Phil Pennington for RNZ 

The government is persisting with a way of buying hugely expensive medical devices that has been proven ineffective.

Pharmac has failed to deliver many savings and has yet to set up a way to assess medical devices technologically, even the high-risk and high-cost ones, despite 10 years of trying.

Pharmac's brief to get the best deal on drugs was expanded in 2012 to do the same for medical devices - everything from cheap tongue depressors to high-tech hip implants.

A review of the agency last month found that despite 20 people working on medical devices, it has not worked out a method.

"Savings have proved much harder to make than expected," the review, that was largely accepted by the government, said.

"Pharmac thought it could extract savings in the same way it did with pharmaceuticals but found it could not."

The president of the NZ Orthopaedic Association, surgeon John McKie, was unequivocal when asked by RNZ whether the Pharmac system has worked.

"No. This has been going on for over 10 years. Members of our association have put forward proposals that we believe would have resulted in some savings," McKie said.

"There's been no buy-in at all."

Pandemic exposes failings

The review said Pharmac was "ill-placed" to coordinate the extremely complex medical devices supply chain.

This hit home during the struggle to secure basic medical items in the early stages of COVID-19.

"Those managing the COVID response needed information quickly about the location and number of medical devices, and Pharmac could not supply that information.

"Those stocks could not be reallocated and ran out in some areas, with other areas holding stocks," the review said.

Read the full report (2.2MB )

Unlike with medicines which it controls firmly, Pharmac has signed few contracts with medical device suppliers, most notably in 2016 for wound care products, which delivered "modest" savings.

Both device suppliers and hospitals are free to resist its influence, and have done so, the review found, saying it "operates too remotely from clinical and operational matters in hospitals and health services".

"Pharmac is no longer the most appropriate agency to lead this function. It should move to Health NZ," it recommended to the government.

Devices added to extensive catalogue

Pharmac's major achievement, and one the government has been keen to focus on, is cataloguing 150,000 devices over 10 years, with another 100,000 to go.

But no doctor or hospital is bound to use the catalogue to buy devices and the list can be difficult to use.

Samantha Murton, who chairs the Council of Medical Colleges, went looking for a type of diabetes monitor but could not find it among the catalogue's thousands of pages.

"Certainly from a general practice point of view, it's quite tricky looking through this list and what's available and what's not," she said.

"From a hospital perspective, there's such a vast array of things I imagine it would be very difficult."

Murton accepted Health NZ may be too busy to take this on now, but said something had to change as Pharmac was not protecting taxpayer dollars enough.

"Obviously this is too complex for that to be effective.

"I think we do need to consider whether this is something we continue to pursue or whether we make it a much smaller beast than it currently is," by focusing perhaps on high-cost devices only, she said.

The review suggested Pharmac carry on its long-running work of developing a way for assessing if devices were safe and effective, but transfer the cataloguing and contracting of devices to Health NZ - though perhaps gradually, at Health NZ's pace.

The government's response was to reject any transfer at least until after a new Therapeutic Products Bill was in place.

This bill, in the works since 2018 and likely not implemented till next year, seeks to correct the stark lack of regulation of medical devices, a yawning gap exposed by the harm done to some women by surgical mesh.

Health Minister Andrew Little
Health Minister Andrew Little Photo credit: Newshub

Health Minister Andrew Little was not ruling out Pharmac keeping the devices job long term, but said it was entirely wrong to suggest he was leaving it to limp along.

"This is a function that could transfer to Health NZ, but I did not want it to happen straight away.

"Is it practical to ask Health NZ with everything else it now has to develop and streamline and bed down, to pick up a massive procurement function that is functioning adequately, if not perfectly? No, it's not," Little told RNZ.

"I think this is a question of sequencing."

Would Pharmac change its approach in the meantime?

"I'm confident that it is working very diligently to establish better relationships with the rest of the health sector including the Ministry, including Health NZ, including the Māori Health Authority ... and with clinicians," Little said.

Read the government's response (PDF)

The College of Nurses said it agreed with the minister that the status quo was best as health authorities had enough to do.

Surgeon John McKie said Pharmac did a good job on medicines, but on devices it had been a case of opportunity lost for years to try to find ways that would work.

"There's nothing in it financially for us, but we're trying to get better value, more service for the community, out of the public health dollar," McKie said.

"But there hasn't seemed to be any serious engagement in doing that, so everyone's been happy just to buy implants at whatever the prices are and just pay the bill and keep on keeping on."