Managing Prices for Hospital Pharmaceuticals: A Successful Strategy for New Zealand?

Abstract

Objectives In 2002, as part of a National Hospital Pharmaceutical Strategy, the New Zealand (NZ) government agency PHARMAC commenced a 3-year period of negotiating prices for 90% of hospital pharmaceuticals on behalf of all NZ public hospitals. The present study was undertaken to determine the effects of this first year of “pooled procurement.” Methods Using price changes and volume data for each of their top 150 pharmaceutical items, chief pharmacists at 11 public hospitals calculated projected cost savings for the financial year July 2003 to June 2004. Researchers calculated total projected savings for all 11 hospitals, and for three types of hospitals. Estimates of projected savings were made for all 29 major public hospitals by using savings per bed and savings per bed-day. A sensitivity analysis was undertaken. Items showing savings were categorized by using the Anatomical Therapeutic Chemical classification system. Results For the 11 hospitals, the top 150 items comprised 612 different items. Projected savings for 2003 to 2004 were NZ$2,652,814, NZ$658,984, and NZ$127,952 for tertiary, secondary, and rural/special hospitals, respectively. Percentage savings as a median (range) of the total top 150 expenditure were: tertiary 5.28% (3.09–16.05%), secondary 7.41% (4.67–12.85%), and rural/special 9.55% (6.27–10.09%). For all 29 hospitals, estimated projected savings were NZ$5,234,919 (NZ$3,304,606–NZ$8,044,482) by savings per bed, and NZ$5,255,781 (NZ$2,936,850–NZ$8,693,239) by savings per bed-day. The main contributors to savings were: agents for infections, the nervous system, musculoskeletal system, and blood/blood-forming organs. Conclusion The first year of pooled procurement under the National Hospital Pharmaceutical Strategy (2002–2003) has resulted in moderate savings. For all 29 major public hospitals, savings of around NZ$5.2 million ($2.9 million–$8.7 million) or 3.7% were projected for 2003 to 2004. Longer-term effects, however, on patient outcomes and availability of pharmaceuticals, as well as on pharmaceutical expenditure, have yet to be evaluated.