2015/16 invitation to tender (medical)

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Details of the proposed 2015/16 Tender

In accordance with PHARMAC’s 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), PHARMAC is consulting on a proposal to tender certain pharmaceuticals for Sole Subsidised Supply to community pharmacies and/or Hospital Supply Status for supply to DHB hospital pharmacies.

Attached to this letter (as Schedule Two) is a list of pharmaceuticals that we are considering tendering for Sole Subsidised Supply and/or Hospital Supply Status. Pharmaceuticals are sorted into therapeutic groups and then listed alphabetically in each group by chemical, form and strength. Each pharmaceutical has a ‘C’ and/or ‘H’ next to it to indicate whether it is proposed to be tendered for community and/or hospital supply.

In general, the proposed Tender process would be similar to the 2014/15 Tender. 

We are seeking feedback on the approach outlined in the following pages, in particular on:

• The proposed tender process and timeline;
• The actual or potential clinical implications of awarding Sole Subsidised Supply and/or Hospital Supply Status to the pharmaceuticals listed in Schedule Two, including the impact of a brand switch on patients and clinical staff; and
• For hospital pharmaceuticals, your views on the appropriate Discretionary Variance (DV) Limit for each pharmaceutical, in the event you consider a 1% DV Limit to be clinically unacceptable.

Background

Since 1997 PHARMAC has been using the strategy of tendering pharmaceuticals for sole supply of pharmaceuticals for a fixed period of time. Regular tendering has proven to be an effective way to encourage competition among suppliers of pharmaceuticals. As in the past, the community and hospital tender processes would be run in unison, however, the pharmaceutical list for community and hospital supply may be different.

Key aspects of awarding a Tender for Community pharmaceuticals:

• For community pharmaceuticals, the tender winning brand would be the only subsidised brand for up to approximately 3 years. The Sole Subsidised Supply period would conclude on 30 June 2019 for all Tenders awarded from the 2015/16 Tender.
• No other brand of the pharmaceutical would be listed (or subsidised) in Section B of the Pharmaceutical Schedule during the Sole Subsidised Supply period. 
• Other brands could continue to be marketed, sold and dispensed during the Sole Subsidised Supply Status period, but they would not receive a subsidy. 
• Any pharmaceutical that currently carries a manufacturer’s surcharge (that is, the additional patient charge above that of the patient co-payment) would become fully subsidised if a tender was awarded for that pharmaceutical.

Key aspects of awarding a Tender for DHB Hospital pharmaceuticals:

• For DHB hospital pharmaceuticals, the Hospital Supply Status brand would be the only brand DHB Hospitals could purchase (subject to any allowance for alternative brands under the agreed DV Limits) for up to approximately 3 years. The Hospital Supply Status period would conclude on 30 June 2019 for all tenders awarded from the 2015/16 Tender.
• No other brand of the pharmaceutical would be listed in Section H of the Pharmaceutical Schedule during the Hospital Supply Status period.

Tender timelines

The proposed timelines for the 2015/16 Tender are as follows:

Date	Event
3 August 2015	Consultation with suppliers, medical groups and interested parties on the proposed pharmaceutical list and draft Invitation to Tender.
27 August 2015	Final date for receipt of Alternative Commercial Proposals (ACPs) to tendering by PHARMAC.
3 September 2015	Final date for all consultation to be received.
September 2015	PHARMAC considers feedback from consultation, negotiates with suppliers over any ACP proposals it considers would meet PHARMAC’s Decision Criteria and enters into provisional contracts with suppliers where appropriate.
September 2015	Meeting of the Tender Medical Evaluation Subcommittee of PTAC to consider clinical issues in relation to the proposed Tender list.
September/October 2015	Consultation and Board decisions on Alternative Commercial Proposals.
Early November 2015	Issuing of the 2015/16 Tender.
17 December 2015	Invitation to Tender closes.
From end of January 2016	Board decisions on the first Tender winners announced.

Contractual obligations for suppliers

A copy of the draft terms and conditions which would form the terms of the 2015/16 Tender contract is available on the PHARMAC website: www.pharmac.health.nz, or by phoning PHARMAC on 0800 66 00 50.

Proposed inclusion of the following provisions in the 2015/16 Invitation to Tender

Pharmaceutical price

PHARMAC propose to include provisions in the 2015/16 Invitation to Tender that amend the terms and conditions relating to pharmaceutical price changes in the market.

In summary, PHARMAC propose to amend the price change date for a pharmaceutical that is currently listed and awarded a tender to the following:

• If the pharmaceutical is currently listed on the Schedule, then the price must change from the 12^th of the month prior to the start date, and the supplier must provide price support to wholesalers (or other such distributors) to ensure pharmacy can purchase stock at the new price; or

• If the pharmaceutical is currently listed on the Schedule, then the supplier may reduce the price from the 1^st of the month prior to the start date instead of price support to wholesalers (or other such distributors) provided there is more than 2 months lead time.

The incumbent supplier must note in its tender bid which of the above price change criteria would apply to its pharmaceutical. If there is no notification provided by a supplier then the price change on the 12^th of the month prior to the start date with price support to wholesalers (or other such distributors) would be considered the default position. 

If the pharmaceutical has a rebate, PHARMAC may at its option ask suppliers to reduce the price of the pharmaceutical on the 22^nd of the month prior to the start date provided the supplier provides price support to wholesalers (or other such distributors) to ensure that pharmacy can purchase stock at the new price.

PHARMAC acknowledge that price support would require wholesalers (or other such distributors) to provide information on stockholding of a pharmaceutical to allow a supplier to provide price support which would include stock on hand of the pharmaceutical on the 12^th of the month prior to the start date.

For pharmaceuticals that are not currently listed on the Schedule, the provisions stated in the terms and conditions of the draft 2015/16 Invitation to Tender will apply.

Unresolved Tender bids

PHARMAC would review any unresolved Tender Bids from 2013/14 Tender and the 2014/15 Tender prior to issuing the 2015/16 Tender, and may close the tender for some of these items, and reissue them as part of the 2015/16 tender. The following Tender Bids remain unresolved, and may potentially be added to the 2015/16 Tender following consultation:

2013/14 Invitation to Tender

2014/15 Invitation to Tender

Should any unresolved Tender Bids be declined, PHARMAC would consider including those pharmaceuticals in the 2015/16 Tender. Currently unresolved Tender Bids have not been included in the draft pharmaceutical list set out in Schedule Two.