PHARMAC considering a new way of contracting for medicines

Consultation has gone out today to health professionals and is available on PHARMAC’s website for anyone wanting to have their say about our annual tender process and a proposal to modify our contracting arrangements.

Every year PHARMAC invites tenders for the supply of certain medicines to DHB hospitals and/or to community pharmacies in New Zealand. This year, as part of the feedback we are seeking, we are considering a different approach to competitive procurement.

We currently award Sole Supply Status to community medicines, where we have only one brand listed in the Pharmaceutical Schedule for funding. In DHB hospitals we currently award Hospital Supply Status, which means the medicine becomes the primary brand that DHB hospitals buy, and the supplier is guaranteed a certain share of the market by volume.

“We are proposing a new approach where we would instead award Principal Supply Status for a medicine in both community and hospital medicines,” explains Lisa Williams, PHARMAC’s director of operations.

“This would mean that the principal supplier’s brand would be the main brand funded in the community and/or bought by DHB hospitals, and there would be an allowance for a certain volume of other brands to also be funded and/or used by DHB hospitals.

“The principal supplier would have most of the market, but for some medicines PHARMAC would be able to fund alternate brands for a smaller portion of the market. We believe this approach would allow PHARMAC to better support healthcare professionals when prescribing medicines for their patients.

“We have used this approach occasionally over the past ten years where appropriate but implementing Principal Supply Status would allow us to consistently do it,” says Ms Williams.

“Before we make a decision on this proposal, we want to hear from our suppliers, people working in the healthcare sector, advocacy groups and the wider public.

“Consultation is a very important step in our process. It’s how we check that what we are proposing can be implemented by the health sector and that it won’t have any unintended consequences.

“We are here to make more medicines available for more New Zealanders. We are regularly looking to improve how we implement and manage our competitive procurement activity. It is a significant aspect of our business, and we want to ensure that it runs smoothly and that we can achieve benefits for New Zealand while minimising any disruptions to people using pharmaceuticals and to the health sector,” concludes Ms Williams.