1. PHARMAC What is PHARMAC? PHARMAC - the Pharmaceutical Management AgencyPHARMAC - the Pharmaceutical Management Agency A New Zealand Government Agency (Crown Entity)A New Zealand Government Agency (Crown Entity) Manages the subsidisation of medicines for New Zealanders using government fundsManages the subsidisation of medicines for New Zealanders using government funds Set up in 1993Set up in 1993 25 staff - a mix of medical, scientific, pharmacy, and economics backgrounds25 staff - a mix of medical, scientific, pharmacy, and economics backgrounds

2. PHARMAC PHARMAC’s Roles and Responsibilities PHARMAC Objective: “To secure for eligible people in need of pharmaceuticals the best health outcomes that are reasonably achievable from pharmaceutical treatment and from within the amount of funding provided”

3. PHARMAC PHARMAC’s Roles and Responsibilities PHARMAC functions To maintain and manage a pharmaceutical schedule that applies consistently throughout NZ, including determining eligibility and criteria for the provision of subsidies.To maintain and manage a pharmaceutical schedule that applies consistently throughout NZ, including determining eligibility and criteria for the provision of subsidies. To promote the responsible use of pharmaceuticals.To promote the responsible use of pharmaceuticals. To manage the purchasing of any or all pharmaceuticals, whether used in a hospital or outside of it, on behalf of DHBs.To manage the purchasing of any or all pharmaceuticals, whether used in a hospital or outside of it, on behalf of DHBs.

4. PHARMAC

5. Why have there been savings?

6. PHARMAC Operating Framework Published Operating Policies and ProceduresPublished Operating Policies and Procedures Independent medical advice from Pharmacology and Therapeutics Advisory Committee (PTAC)Independent medical advice from Pharmacology and Therapeutics Advisory Committee (PTAC) Feedback from Consultation with suppliers, medical groups, and patientsFeedback from Consultation with suppliers, medical groups, and patients All decisions considered against published Decision CriteriaAll decisions considered against published Decision Criteria

7. PHARMAC DECISION CRITERIA Health needs of eligible peopleHealth needs of eligible people Health needs of Maori and Pacific peoplesHealth needs of Maori and Pacific peoples Availability and suitability of existing pharmaceuticals and other therapiesAvailability and suitability of existing pharmaceuticals and other therapies Clinical benefits and risksClinical benefits and risks Cost effectiveness (compared to purchasing other health care and disability services)Cost effectiveness (compared to purchasing other health care and disability services) Overall budgetary impact (both pharmaceutical and total health budget)Overall budgetary impact (both pharmaceutical and total health budget) Direct cost to usersDirect cost to users Government priorities for health funding/Government objectivesGovernment priorities for health funding/Government objectives Other criteria (with appropriate consultationOther criteria (with appropriate consultation

8. PHARMAC Pharmaceuticals Community Care Hospital Primary Care Public Health

9. PHARMAC Assessing value - Prioritisation Cost Utility Analysis (CUA)Cost Utility Analysis (CUA) Net Costs and BenefitsNet Costs and Benefits Perspective of the health sectorPerspective of the health sector QALYsQALYs

10. PHARMAC What is CUA? Measure health outcomes in a common “currency” with and without the intervention (currency used at PHARMAC is the QALY)Measure health outcomes in a common “currency” with and without the intervention (currency used at PHARMAC is the QALY) Estimate the resources used (in “$s”) with and without the interventionEstimate the resources used (in “$s”) with and without the intervention –Cost of drug net of any savings from reduced use of other drugs –Plus any costs or savings in other parts of health sector –Plus any change in direct costs to patients Estimate change in costs and change in health outcomes attributable to the proposed intervention and express results as a ratio of costs to benefits – QALYsEstimate change in costs and change in health outcomes attributable to the proposed intervention and express results as a ratio of costs to benefits – QALYs

11. PHARMAC Why use CUA? “... is far preferable to the vague notion of ‘priority groups’ whose champions are left to compete on unclear terms with more powerful competitors in the annual scramble for resources.” (A Williams 1997)

12. PHARMAC How is CUA used? Rank proposals from best to worst at increasing QALYs (referred to as QALY league tables)Rank proposals from best to worst at increasing QALYs (referred to as QALY league tables) Rankings can be used to determine what to fund ORRankings can be used to determine what to fund OR They can act as guidelinesThey can act as guidelines PHARMAC uses CUA as a guide, in conjunction with consideration of other Decision CriteriaPHARMAC uses CUA as a guide, in conjunction with consideration of other Decision Criteria

13. PHARMAC Investment Priorities Potential investment Likely cost (approx) per annum A treatment for venous thromboembolism $250,000 Treatments for menorrhagia (alternative to hysterectomy) $1 million Wider access to new treatment for glaucoma $40,000 Treatment for refractory depression $3-5 million Treatment for end stage renal failure $1-2 million New treatment for Parkinson’s Disease $2-4 million

14. PHARMAC What QALYs look like

15. PHARMAC Measuring beyond resource costs

16. PHARMAC

19. Looking at Gaps

20. PHARMAC Looking at gaps (cont.) Combining:  estimated numbers of non-uptaking eligible people, with  the consequent QALY losses from untreated cardiovascular disease (when compared with statin treatment, according to the eligibility criteria in place each month). Statin non-uptake over the 10-year period July 1991 to June 2001:  115,000 potential QALY gains not realised  = 6,930 ‘statistical deaths’ through missed opportunities to gain QALYs (from 115,000 potential QALY gains not realised). This number is of deaths higher than the number of road deaths reported to the LTSA during the same time period (5,499).