Decision to award market share for permanent coronary drug eluting stents to Abbott Laboratories NZ Limited

Hospital devices

Decision

We are pleased to announce the approval to award Hospital Supply Status (“HSS”) to Abbott Laboratories NZ Limited for the supply of permanent coronary drug eluting stents to DHBs, with a 35% Discretionary Variance (“DV”) Limit.

The HSS will apply from 1 August 2019 until 30 June 2022.

About permanent coronary drug eluting stents

Permanent coronary drug eluting stents (“DES”) are non-bioresorbable coronary stents coated with a pharmacological agent(s) known to suppress restenosis.

What does this mean?

DHBs for the term of the HSS:

  • must purchase a minimum of 65% of DES from Abbott, and
  • can choose to purchase a maximum of 35% of DES from suppliers other than Abbott.   

Timeline

List date

Xience Xpedition and Xience Alpine DES will be available for purchase by DHBs at the new HSS price

1 April 2019

Transition period

During this 4-month period DHBs will undertake any training and education that may be required and make the necessary changes to consignment stock of DES, before the HSS provisions are effective and compliance with the DV Limit is required.

1 April 2019

to

31 July 2019

HSS start date

The date at which DHBs must purchase the HSS brands of DES for 65% of cases, with no greater than
35% of other suppliers’ brands of DES being purchased.

     

1 August 2019

HSS end date

The date at which HSS with Abbott will end. The term of the HSS Agreement is 35 months.

30 June 2022

35% DV Limit

The purpose of the DV Limit is to allow DHBs to purchase a proportion of products within the DES sub-category from suppliers other than Abbott, while setting a limit on this so that the DHBs’ market share obligations to Abbott are met. The DV Limit will be the maximum percentage of the total DES market allowed for discretionary purchasing.

DV Devices

Within the DV Limit, DHB choice of a DV DES brand(s) will not be restricted in any way.

DHBs will be able to choose to purchase any of the DV DES listed in Part III of Section H of the Pharmaceutical Schedule, and/or DV DES not listed in Part III of Section H of the Pharmaceutical Schedule.

If a DHB chooses to purchase a DV DES that is listed in Part III of Section H of the Pharmaceutical Schedule, the DHB will be required to purchase the DV DES at the price, terms and conditions stated in the national contract for that device.

HSS Exemptions

DES purchased by DHBs for the purpose of registered clinical trials will not be counted as DV devices.

Any changes to the original proposal?

This decision was subject to a consultation letter dated 14 November 2018.

PHARMAC sought additional clinical advice from the Interventional Cardiology Advisory Group on some of the matters raised in response to consultation to better inform PHARMAC’s decision making.

As a result of additional time required to do this the dates in the original proposal have been moved forward by one month as follows:

  • List date: 1 March 2019 changed to 1 April 2019;
  • Transition period: 1 March 2019 to 30 June 2019 changed to 1 April 2019 to 31 July 2019; and
  • HSS Start Date: 1 July 2019 changed to 1 August 2019. 

Who we think will be most interested

  • Catheterisation laboratory clinical personnel including but not limited to:
    • Interventional Cardiologists
    • Nurses
    • Technicians
    • Radiography personnel
  • Procurement personnel
  • Service/Funding Managers
  • Suppliers

Detail about this decision

Under the Agreement with Abbott:

  • Abbott will hold a minimum of 3 months stock of the HSS DES in New Zealand and will provide consignment stock and consignment stock management services to DHBs;
  • Abbott will provide relevant DHB personnel with training, education and clinical case support; and
  • If new generations/models of Abbott DES are launched during the HSS supply period (1 August 2019-30 June 2022), national pricing will be negotiated with PHARMAC and, if agreement is reached, DHBs will be able to purchase the new DES as part of the HSS portion.

Transition Plan

In consultation with each DHB, Abbott will develop a transition plan for each DHB and will work with nominated DHB personnel to establish the requirements of the DHB, including but not limited to:

  • consignment stock levels;
  • stock-take intervals;
  • transition timeframes;
  • in-service requirements; and
  • required outcomes for successful product conversion.

Monitoring compliance with the DV Limit

Throughout the HSS supply period (1 August 2019 to 30 June 2022) the 35% DV Limit will apply. 

DV Limit compliance will be calculated at the end of each 12-month period.

If DV purchases are within the 35% DV Limit at a national level at the end of the 12-month period, the contract will be met.

If DHBs exceed the 35% DV Limit at a national level at the end of the 12-month period, Abbott will be entitled to seek compensation from any DHBs that exceeded the DV limit locally.  The formula used to calculate compensation is specified in the Abbott Agreement.

PHARMAC Support

PHARMAC will contact nominated DHB personnel prior to 1 April 2019 to discuss their DHB’s support needs and will also regularly liaise with them to work through any issues that arise during and after implementation.

Nominated DHB personnel will be provided with an implementation pack to assist with the transition to the HSS model for DES.

PHARMAC will provide opportunities for nominated DHB personnel to collectively discuss emerging issues in relation to the DES market share agreement or areas where clarification is required.

A copy of the Abbott Agreement has been provided to DHB Procurement Managers as part of this notification process.

Our response to what you told us

We’re really grateful for the time people took to respond to this consultation. All consultation responses received by 19 December 2018 were considered in their entirety in making a decision on the proposed changes.

The following issues were raised in relation to specific aspects of the proposal:

 Theme

PHARMAC Staff Comment

Support for the proposal

PHARMAC noted a number of DHB responses supported:

  • PHARMAC’s proposal to award HSS to Abbott for DES with a 35% DV Limit;
  • the proposed transition timeframe; and
  • proposed implementation activities.

Operational implementation

Clarification sought regarding specific terms and conditions of the HSS Agreement.

Clarification sought regarding product codes, descriptions and pricing for HSS and DV DES.

A copy of the HSS Agreement will be provided to Procurement Managers at the DHB – this contains all product codes, descriptions and pricing for the HSS DES.

National contracts for DV DES listed on the Pharmaceutical Schedule are held by DHB Procurement teams – these Agreements contain all product codes, descriptions and pricing for the DV DES listed on the Pharmaceutical Schedule/

Nominated DHB personnel will be provided with an implementation pack to assist with the transition to the HSS model. PHARMAC staff will work with DHBs during the transition and implementation period to answer questions and provide any information that may be required, including information regarding DV DES and other devices.

Managing market share 

DHBs may have difficulty ensuring the 65% HSS requirement is met.

DHBs have existing systems that track DES usage and allow for visibility of usage by Supplier. PHARMAC will support individual DHBs in tracking usage in the first year of the HSS period. PHARMAC will also provide each DHB with a statement of whether the national DV Limit was met or exceeded for that year.

Suitability of DV Limit

Feedback was received about the appropriateness of a 35% DV limit. With some responders considering the portion of cases requiring an alternative DES due to (case characteristics or DES characteristics) would exceed this DV limit.

PHARMAC sought feedback from individual DHBs which identified DHB variances in clinical opinion on the DV Limit. Some DHBs considered the Abbott DES would be suitable in greater than 65% of cases.

PHARMAC sought advice from the Interventional Cardiology Advisory Group (“ICAG”) and:

  • ICAG  has considered a broad range of characteristics (such as deliverability, visibility, expandability, conformability, radial strength, longitudinal strength, strut thickness, side branch access, lesion coverage, drug used, polymer used, material used and balloon used) which influence clinician selection of a particular DES in a particular clinical case in making its recommendation for the 35% DV Limit; and
  • ICAG did not identify any factors that would identify any DHB as having a known patient pool that would place the DHB at risk of exceeding the DES DV Limit.

On balance, PHARMAC considers the 35% National DV Limit recommended by ICAG to be clinically suitable. The 35% DV Limit is much larger than typically seen in PHARMAC market share models and acknowledges that Xience DES may not be suitable for treating all patients requiring DES implantation. PHARMAC considers the 35% DV Limit will allow DHBs to continue to treat patients with specific coronary lesions and/or comorbidities where treatment with a DES other than Xience DES is clinically indicated.

Impact of HSS on clinical trails

DES used in research should not be included in any market share calculations.

DES used for the purpose of registered clinical trials are exempt from inclusion in market share calculations.

Impact on purchasing /commercial decisions

DHBs provided feedback on perceived impacts of the proposal in relation to medical device purchasing/commercial decisions.

PHARMAC intends to provide individualised responses associated with points identified in responses.

Impact on access to advancements of DES technology

There is concern that the HSS model will prevent/delay DHBs from trying/adopting new technologies over the 3-year term.

The 3-years HSS period is too long without a review.

The proposed Xience DES are not the preferred DES for some clinicians.

The proposed HSS model will not prevent or slow DHB access to new DES. DHBs would continue to be able to purchase DES of their choice within the 35% DV portion of the market.

If new generations/models of Abbott DES are launched during the HSS supply period, national pricing would be negotiated with PHARMAC and, if agreement is reached, DHBs would be able to purchase the new DES as part of the HSS portion.

The ICAG have advised that a 3-year market share contract for DES to be reasonable.

Based on clinical experience and a review of regulatory status and evidence of effectiveness and safety the ICAG have advised that the Xience DES are clinically suitable for use in an HSS model with 35% DV Limit.

Patient health outcomes

Can PHARMAC provide DHBs assurance that if patient outcomes and success rates deteriorate due to the change of DES used, that the HSS Agreement will be terminated.

Patient outcomes are of utmost importance to PHARMAC.  Xience DES are well established products with long experience in the market and PHARMAC do not expect there would be any reduction in patient outcomes. PHARMAC has mechanisms and processes in place to take the appropriate actions in situations where the health and safety of a patient is concerned.

If you have any questions about this decision, you can email us at enquiry@pharmac.govt.nz; or call our toll free number (9 am to 5 pm, Monday to Friday) on 0800 66 00 50.