Pharmac contracts 70 percent of medical devices

NEWS - eHealthNews.nz editor Rebecca McBeth

Pharmac has national contracts for 70 percent of medical devices used by Health New Zealand Te Whatu Ora and is working to cover the full scope.

Catherine Epps, Pharmac director of medical devices, told the MTANZ Conference on June 24 that the definition of medical devices used by the agency includes ‘software as a medical device’ that is intended for a therapeutic purpose.

“Both artificial intelligence and precision medicines are two emerging areas which will have a significant impact on us, which may or may not come into our medical devices scope, and this will largely depend on the use and the application of the device itself,” she said.

Only medical devices used by Health NZ Te Whatu Ora in hospitals or specialist services are within Pharmac’s scope.

This includes devices that are provided by hospital services for people to use in their own homes, such as remote monitoring for Hospital in the Home services.

However, any remote monitoring devices used by or provided by primary care or community providers, such as hospice or NGOs, are out of scope.

“Thinking at this stage is the software that is integrated with the device will be in scope, whereas information storage or transfer software is likely to be out of scope. If a product is promoted and regulated as a medical device, we will likely see that in scope too,” said Epps.

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She said as of June 2024, the Pharmac schedule includes around 168,000 contracted line items from over 140 medical device suppliers.

These national contracts cover approximately $607 million of annual health New Zealand hospital expenditure on medical devices and have saved the health system in excess of $100 million so far.

Pharmac was given responsibility for managing hospital medical devices in 2012, however a review of the agency in 2022 found the agency was “ill-placed” to coordinate the complex medical devices supply chain.

The review recommended that cataloguing and contracting of devices move to Health NZ, however the previous government rejected this proposal and contracting is now being done by both agencies, creating frustration for industry.

David Seymour, associate minister of health (Pharmac), told the MTANZ Conference that contracting for medical devices will either be “all in or all out” of Pharmac within a year.

Epps said Pharmac involvement in the hospital medical devices program is beneficial in “driving for better value, as well as consistent and equitable access to hospital medical devices.

“It is building a clearer picture of what devices are being used in hospital settings to enable better decisions to be made and improve health outcomes,” she said.

Pharmac had been due to take over management of medical devices completely from Health NZ in 2025, but the timeline for this appears to have been pushed back.

MTANZ chief executive Cushla Smyth said the association agreed with the 2022 review which recommended that coordinating the medical device supply chain sit with Health NZ.

She said Health NZ has 111 people working in the medical devices space and Pharmac only around 20 and industry did not see how they could manage the significant task of assessing and procuring all hospital medical devices.

“Not only do they have five times the procurement staff, they have direct access to clinical input across the spectrum from clinicians through to allied health,” says Smyth.

“There are also considerations for medical technology around interoperability and cyber security which are managed by the extensive digital teams within HNZ who ensure alignment with national digital strategies.”

Epps said the Health Sector Catalogue (HSC) provides the single source of product data for medical devices and this is expected to cover all of those used in hospitals over the next financial year.

Health NZ does not have to use the national contracts, but “will generally prefer contracted products to those not contracted over time,” she said.

“At a high level, data about the devices themselves will be on HSC and the data held by Pharmac will be about the contract terms and conditions.

“You will also see more integrated processes emerging. Pharmac and Health New Zealand are working to develop a national process pertaining to health technology and you'll hear more about that as both agencies are committed to engaging with the sector and sharing information as we develop these processes,” said Epps.


Picture: Catherine Epps, Pharmac director of medical devices, speaking at the MTANZ Conference

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