Evidence of meeting #42 for Health in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was pharmac.
A recording is available from Parliament.
As an Individual
No, it's not. Is it Medicines New Zealand you're talking about?
As an Individual
They are the representatives of the patented pharmaceuticals companies.
Conservative
Rachael Thomas Conservative Lethbridge, AB
Would you disagree with those figures, then? Would you say that the wait time is not 2.4 years in New Zealand?
As an Individual
As I said before, I'd like to know what their source is, because the comparisons don't stand up, in my mind.
Conservative
As an Individual
What is more concerning to me is the vast number of people in this country—the figure I hear is somewhere between 10% and 20% of people—who don't fill a scrip because they can't afford to. They don't have access.
Conservative
Rachael Thomas Conservative Lethbridge, AB
You don't know what percentage of the population in New Zealand isn't able to fulfill their prescription?
Conservative
Rachael Thomas Conservative Lethbridge, AB
Okay. All right.
Can you comment on why there is the increase in—?
Conservative
The Vice-Chair Conservative Len Webber
I'll have to cut you off there. Your time is up, and we have to move on. We have a presentation also from two individuals from New Zealand via teleconference, and it's important that we get them on here right away, Mr. Brougham, because it's 5:55 in the morning for them and it was very kind of them to come to present to us.
Mr. Clerk, are we ready to have the presentation from...?
It will take about 30 seconds to get the teleconference TVs up and running; then we'll get the presentation going through them.
Mr. Brougham, if you would like to stay and perhaps take some questions afterward in questioning by individuals, that would fantastic.
Conservative
The Vice-Chair Conservative Len Webber
We'll suspend for about 30 seconds in order to get the teleconferencing going.
Thank you.
Conservative
The Vice-Chair Conservative Len Webber
I'd like to resume the meeting, please. If everyone would please be seated, I'd like to welcome our friends from New Zealand, all the way from...where exactly in New Zealand are you from?
Heather Roy Chair of Board, Head Office, Medicines New Zealand
We're in Wellington.
Conservative
The Vice-Chair Conservative Len Webber
Well, welcome.
I'd like to welcome here Ms. Heather Roy. Heather is the chair of the board in the head office at Medicines New Zealand. It is an industry association representing companies engaged in research, development, manufacture, and marketing of prescription medicines.
We also have here Graeme Jarvis, who is the general manager, also at Medicines New Zealand.
I understand it's 5:55 in the morning in New Zealand—
Conservative
The Vice-Chair Conservative Len Webber
We really appreciate your being here today and presenting to us here in Canada. We are undertaking a study on pharmacare, and your testimony here today will be listened to with deep thought. We will hopefully gain something from your knowledge in New Zealand.
I would like to start the presentation now. You have about 10 minutes to present to us, and then you'll get some questioning from our panel here, from all three parties in the House of Commons in Canada. I would ask that you start your presentation, and we'll question you after that.
Thank you.
Chair of Board, Head Office, Medicines New Zealand
Thank you very much for inviting us to come and to give our view about our Pharmac model here in New Zealand.
I've been chair of Medicines New Zealand for five years, and prior to that I was a member of Parliament in the New Zealand Parliament for 10 years. For much more of my career, then, I was actually sitting on your side of the table, so it's interesting to be at this end.
I'll just have Graeme briefly introduce himself, and then we'll start our presentation.
Dr. Graeme Jarvis General Manager, Medicines New Zealand
Good morning. It is quite early morning for us, and almost lunchtime for you, I guess.
I've been the general manager here at Medicines New Zealand for a little over two years. Before that I worked in a variety of industries, where I was mainly involved with innovation, export development, and product development. That's it's my background.
Chair of Board, Head Office, Medicines New Zealand
Thank you.
I'm not sure how much you know about the New Zealand medical system, but it is a largely socialized medical system. It has many similarities to the Canadian system. You might want to ask some more questions about that later on, but we thought we would go straight to the way in which pharmaceuticals in New Zealand are registered and funded so that you would have a good basic understanding of that.
In a nutshell, we have a regulatory agency called Medsafe, which in United States terms is the FDA equivalent. This body makes decisions about which medicines may be marketed on the basis of their safety and effectiveness. That process in New Zealand works well on the whole. Registration occurs quite quickly, particularly when we compare it to the way in which it happens elsewhere in the world.
Then we have the medicines funding agency, Pharmac, which I think we've not heard much of in Matthew's presentation, but which he will be talking to you about. It's responsible for funding the vast majority of medicines in New Zealand. The private market of New Zealand is tiny and insurers generally fund only what Pharmac approves. Pharmac comprises a secretariat and a clinical committee called PTAC, which is short for the pharmaceutical technical advisory committee, which also has various speciality clinical subcommittees.
Although Pharmac bases its operations on a health technology assessment, or HTA, framework, specifically using cost-utility analysis, there are a number of elements of HTA best practices that are not applied.
For example, the clinical committee that I spoke of, PTAC, is not independent of the secretariat. These problematic aspects have led to a system that has been criticized by patients and clinicians for being unresponsive to patients' needs, inconsistent in its decisions, and responsible for major delays in accessing new treatments. In this, New Zealand sits well behind other OECD nations.
One of Medicines New Zealand's recommendations for greater transparency is that the clinical committee be independent of the secretariat as a way of putting in place normal checks and balances needed in a funding system of this type.
The other point I would make, just at a high level, is that Pharmac is exempt from key elements of the New Zealand Commerce Act. Because of this, it can negotiate very aggressively. It does deals, and it trades by bundling contracts. For example, we'll fund this drug for X if you'll sell us this other drug for Y, and it can and does pursue sole-supply relationships. Sole supply means that Pharmac can contract a company to supply 100% of the market, for three years normally, and it often changes the entire patient population to the next cheapest option once that contract ends. Doing that brings some issues with it.
That, I hope, sort of sets the scene for you.
I'm going to hand over to Graeme now to talk briefly about the strengths and the weaknesses, as we see them, of the New Zealand Pharmac setting.
General Manager, Medicines New Zealand
Thank you very much.
I'll limit my discussion points to innovative or patented medicines. Obviously, as the industry association for patented medicines, we don't represent generics and over-the-counter products, so bear that in mind.
For anyone, the biggest strength—and I'm sure Matthew spoke at length about it—is the cost containment or the kept budget that Pharmac has. From a health perspective, it's the one component of our health care budget that has remained relatively stable, at around 5% of the total federal health care budget over the past decade or so. You have to give Pharmac credit for that. Ironically, health care costs are going up in New Zealand, as with the rest of the world, with trends such as a chronic disease boom in the aging or older population.
Often one of the highlights that's pointed out to us is that Pharmac is doing a great job because the life expectancy is above the OECD average. Basically, it's above the OECD average as a result of health and medicine standards in New Zealand. It's about 80.3 years of life expectancy. However, even the New Zealand treasury has noted that life expectancy measures are not a particularly useful indicator for a health system's efficiency, obviously because it's influenced by a lot of other factors, be they the living conditions, socio-economic status, or lifestyle choices. That's often the example given to us about the strength of the Pharmac system
From the weakness side, we do have some issues from a new or innovative medicines perspective. There have been a lot of studies, comparative or otherwise, showing that New Zealand lags behind the rest of the world in terms of accessing new or innovative medicines. We're 20th out of 20 comparable OECD countries. In fact, only 13% of a list of 247 innovative medicines were actually funded in New Zealand over a five-year period. For reference, there was a three times greater rate of access in Canada, despite the different systems that I understand you run.
The other thing is that the actual process for registration is quite slow. A published study, not by us, in 2011 highlighted that the lag time between the listing of a medicine by Pharmac on the schedule and its actual registration was 3.6 years. We've done an updated internal study because that study is quite old. We've shown for the newer medicines that it's over four and a half years, so that lag time seems to have been increasing over the past five or so years.
As Heather Roy also mentioned, at times the Pharmac approval process is not transparent. We've seen this from publicly released information from PTAC, the technical advisory committee. There have been 91 cost-effective medicines that they have recommended, which Pharmac funds, but the average waiting time for these medicines—because remember, they're recommended but they've not been funded—is now over three years for these 91 medicines, and that's not just in one therapeutic area. There are things like mental health and depression medicines, cancer medicines, medicines for diabetes, medicines that I understand people in Canada can get access to but New Zealanders simply can't. Type 2 diabetics don't have access at the moment through public schemes. It is the same with asthma and arthritis.
There have even been what have been termed high-priority medicines, so they were recommended by the committee with a high priority, and these have been waiting for up to six years and are still not funded. They're not available to the health care system and they're not available to patients.
You may say, “Well, what does this mean?” “There's only a certain amount of money” is often the thing that's used.
Well, there are studies that have been done on pharmaceutical innovation, and we think they have an effect on patient outcomes and the broader health care system, and, in fact, on society. These are based on what we term real-world data, so it's not clinical trial information, which is often used for health technology assessments, but actual real-world data.
One particularly good study done in Australia in 2015 showed that in 2011 alone, the investment in innovative medicines led to a net savings upstream in the health care system of $1 billion New Zealand.
We've also had a study done in 2016 that was talked about in the New Zealand Parliament. It is currently going through the review process. It showed that just in cancer alone, for every $1 spent and invested in cancer medicines in New Zealand, $1 was saved in terms of the hospitalization costs. That's reduced hospitalization costs, reduced time for patients to be in there, as well as things like improving survival rates and reducing life-years lost, and hence mortality, by over 5%. In fact, for every new cancer medicine that was introduced in New Zealand, the cancer mortality rate dropped by 5%.
That's quite important from a monetary perspective, a budget perspective, and a patient outcome perspective. The study was done repeatedly when we funded it, but then data was collected from public sources away from us. Sadly, the study concluded that had New Zealand invested more in these new cancer medicines, the impacts that I've talked about and noted above may have been far greater, both for patients in the New Zealand health care system and in fact for the clinicians, who would have had access to even more tools to treat the patients.
Finally and most importantly, it's not just us stating these sorts of views. In 2010, the then Minister of Health commissioned a report looking at the role of Pharmac, with the potential to expand it. It was referred to as the Sage report. It requested that some operational corrections be made to Pharmac's procedures around the lack of transparency on the scientific processes for making decisions, the time frames for funding decisions to be made, the lack of direct stakeholder access to the clinical committee, to PTAC, and the lack of ability to challenge a funding decision or the presence of any appeals process.
As well, questions were asked over the practice of bundling. It was felt that bundling led to decision-making processes that focused on cheap prices or good deals but not necessarily the best solution for the patients or the health care system in general. Regrettably, none of those steps have really been implemented, despite the way that Pharmac is now changing its model and is now, in fact, looking after medical device procurement for the public health system.
The other thing to note, I think, is that it's not just us saying these things—
Conservative
The Vice-Chair Conservative Len Webber
Please finish your last comment, Mr. Jarvis. We are going to start our questioning soon.