Inquiry into Improving New Zealand s Environment to Support Innovation though Clinical Trials

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1 1 Inquiry into Improving New Zealand s Environment to Support Innovation though Clinical Trials Response to Health Committee request for information: PHARMAC s policies and processes for funding newly registered medicines and for post-trial access to medicines for clinical trial participants Ministry of Health Report to Health Select Committee Report No 3, 28 July 2010

2 2 Background 1. This report responds to the Health Select Committee s request for information on PHARMAC s policies and /or processes for: listing drugs newly registered in New Zealand on its pharmaceutical schedule funding post-trial access to drugs for patients who are enrolled in a clinical trial. 2. The request followed the Committee s hearing of submitters in Auckland on 23 June The Ministry has requested advice directly from PHARMAC on this matter. This report describes PHARMAC s role; outlines the process for listing pharmaceuticals for public funding; and sets out their policy on funding post-trial access to medicines for trial participants. The rationale for this is also set out. PHARMAC s role 4. PHARMAC s central role is to manage the pharmaceutical budget on behalf of District Health Boards, and to decide which medicines are funded by the Government. The list of funded medicines is published in the Pharmaceutical Schedule. 5. PHARMAC assesses which medicines provide the best health results and the best value, and then works with pharmaceutical companies to make these medicines available to New Zealanders. This means that the Government fully or partially pays the cost of most community prescription medicines for New Zealand. 6. The Pharmaceutical Budget is funded by District Health Boards and is a set amount each year which cannot be exceeded. For this reason trade-offs must be made to ensure that those medicines that are funded produce the greatest benefit, as it is not possible to fund all medicines. 7. PHARMAC s other three main roles are to: promote the optimal use of medicines; manage the subsidy of some hospital medicines and products; and manage Exceptional Circumstances schemes and other special access programmes. Listing new medicines on the Pharmaceutical Schedule 8. PHARMAC s core role in relation to the funding of new medicines involves assessing the relative benefits of new medicines and making funding decisions for new medicines within the fixed budget. PHARMAC assesses both proprietary (first of kind) and generic medicines for funding. 9. Under normal circumstances, PHARMAC does not fund medicines that have not gained marketing approval from Medsafe, New Zealand s medicines and medical devices safety authority. 10. Medsafe is responsible for regulating therapeutic products in New Zealand. Marketing approval means that Medsafe has established the quality, safety and efficacy of a medicine for the purpose for which it is to be used. Without marketing approval, medicines cannot be generally marketed (sold) by the supplier and for this

3 3 reason we usually do not fund prior to such approval. 1 More information is available on Medsafe s website: ( 11. Following marketing approval by Medsafe, PHARMAC engages in a range of work in relation to reaching a funding decision for a new medicine. This work falls into the broad areas of clinical, economic and commercial assessments and is governed by PHARMAC s operating policies and procedures: ( 12. PHARMAC initially seeks clinical advice on new funding applications from its expert committee of clinicians the Pharmacology and Therapeutics Advisory Committee (PTAC) and its expert subcommittees. PTAC considers PHARMAC s nine decision criteria when providing its advice: the health needs of eligible people within New Zealand; the particular health needs of Māori and Pacific peoples; the availability and suitability of existing medicines, therapeutic medical devices and related products and related things; the clinical benefits and risks of pharmaceuticals; the cost-effectiveness of meeting health needs by funding pharmaceuticals rather than using other publicly funded health and disability support services; the budgetary impact (in terms of the pharmaceutical budget and the Government s overall health budget) of any changes to the Pharmaceutical Schedule; the direct cost to health service users; the Government s priorities for health funding; such other criteria as PHARMAC thinks fit (with appropriate consultation). 13. An economic assessment is also undertaken by PHARMAC staff in order to determine the relative cost effectiveness and budget impact of the new medicine compared with other funding options. This allows PHARMAC to compare the cost effectiveness and cost of different treatments for different diseases and, as there is a fixed budget, prioritise, taking into account the nine decision criteria above, those new medicines which provide the greatest benefit and can be funded. 14. Throughout this process PHARMAC staff undertake commercial negotiations with suppliers to ensure that PHARMAC is gaining the best value prior to making a decision to fund a medicine, and to ensure that there is sufficient funding available to purchase the medicine over its expected growth path. A better commercial deal for one medicine may also mean more medicines can be funded overall. 1 In a small number of cases, PHARMAC lists medicines that have not received pre-marketing approval from Medsafe, on the basis that the medicines are provided in accordance with the requirements of Section 29 of the Medicines Act 1981, which allows off-label prescribing. This usually occurs as a stop-gap measure in instances in which the company has applied for registration and a decision is pending. One example is older non-registered medicines that are funded as replacements for other older medicines that are no longer being supplied, and for which there is a small but significant patient population in New Zealand.

4 4 15. Final decisions to fund medicines are made by PHARMAC s Board of directors, or the Chief Executive under delegated Authority, with reference to the same nine decision criteria. 16. While this is a linear description of the funding process, in reality changes (such as the emergence of new evidence, change in medicine price during negotiation, receipt of new applications) can occur throughout the assessment process, which can mean that some steps are repeated and the relative position of a medicine on the priority list may change over time. 17. A copy of the information sheet Making funding decisions provides further information: Funding post-trial access to medicines for patients enrolled in clinical trials Pharmaceutical company obligations 18. In PHARMAC s view, pharmaceutical companies conducting clinical trials have ethical obligations to trial participants. Once the company has provided access to a medicine at no cost or at a reduced cost, either on compassionate grounds or as part of a bona fide clinical trial, PHARMAC considers the company is ethically obliged to continue to offer the medicine unconditionally so long as there is demonstrable clinical benefit to that patient and the patient is aware of potential continued risks. 19. While continued funding post-trial is a cost to the pharmaceutical companies, these companies do enjoy financial returns through their ability to use the data collected from trial participants to support exclusive patent applications, regulatory approval dossiers and marketing material. Without the patients who participate in the clinical trial, these benefits would not be possible. PHARMAC s policy 20. PHARMAC does not have an explicit policy on the issue of funding post-trial medicines for trial participants. In general, it considers such funding would be inappropriate (see detail in the next paragraph). However it does not have a blanket rule prohibiting such activity as there may be circumstances that PHARMAC has not yet envisaged in which funding post-trial access would support PHARMAC achieving its legislative objective. 21. In PHARMAC s view, it would be generally be inappropriate for PHARMAC to fund post-trial medicines for trial participants, because: in Phase I-III trials, prior to marketing approval by Medsafe, the quality, safety and efficacy of the medicine has not been established or assessed to the satisfaction of Medsafe (the purpose of clinical trials is to establish evidence for consideration in registration processes such as those undertaken by Medsafe). Funding medicines without Medsafe registration increases the risk of harm to consumers; automatic funding of medicines (following Phase I IV trials, or compassionate access) by PHARMAC would undermine PHARMAC s prioritisation approach and be contrary to PHARMAC s legislative objective of achieving the best health outcomes possible from within the available funding (as PHARMAC would not be able to prioritise and fund those treatments that provide the greatest value);

5 5 public funding of pharmaceuticals for trial participants only would give rise to inequities in access that would be difficult for PHARMAC to justify. PHARMAC s funding approach is population and nationally based. Listed medicines are only limited to defined sub-groups of patients (targeted) if there is evidence that the sub-group benefits are greater than those experienced by the general patient group, such that funding a treatment for the former is prioritised over the latter; a policy of guaranteeing such funding by PHARMAC would make PHARMAC a price-taker, with the supplier setting the amount that had to be paid. PHARMAC s ability to say no in negotiations is crucial to achieving value for money from pharmaceutical spending. In the absence of PHARMAC being able to say no in negotiations, suppliers would not be incentivised to agree to a lower price, either for the clinical trial patients, or for funding for the whole patient population. 22. If the Government considered that public funding for pharmaceuticals for trial participants warranted further investigation in terms of an economic case for attracting clinical trials to New Zealand, PHARMAC would be pleased to assist as appropriate. If the outcome was a decision to provide such funding, PHARMAC considers that another agency should be charged with the responsibility for administering such funding, so as not to contradict its legislative objective. Contact details 23. If the committee has any further questions they are invited to contact Fiona Rutherford, Senior Policy Analyst by or phone

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