Indirect costs such as loss of labour and the impact on family members undertaking care duties should be a part of Pharmac's decision making, say health economists. Photo: RNZ
An overhaul of the way Pharmac decides to fund drugs for people with chronic long term diseases is needed, say health economists, who are asking the agency to consider the wider societal burden of the disease when making funding decisions.
A new study, commissioned by the Multiple Sclerosis Society of New Zealand (MSNZ), analysed the cost-effectiveness of Ocrelizumab - which got funded as a treatment for primary progressive multiple sclerosis (PPMS) in New Zealand last year - six years later than Australia.
It found that indirect costs for MS - such as loss of labour and the impact on family members undertaking care duties - account for more than half of the total cost to society for the disease, and that was currently not considered by Pharmac in their funding assessments.
The report found that Pharmac would be justified to spend 4.7 times more on patients with PPMS per year, compared to what they currently spend - based on a model that focuses solely on healthcare costs.
The study highlighted that ocrelizumab slows disease progression and delays wheelchair dependence by 4-6 years on average.
MSNZ president Neil Woodhams said the wider financial impacts of MS on people and families needed to be recognised in Pharmac's funding decisions.
"Somebody might have Multiple Sclerosis for 30 or 40 years, and that can have very significant costs, not just to Pharmac, but also to the health system in general, and to the family and to the person with MS,
"If somebody stops working at aged 40 because they have MS, it impacts on their retirement savings, it impacts on their whole economic life, and those costs should be taken into account, in our view, when assessing how much to pay and when to pay for a drug," he said.
Woodhams said a cost-benefit model, widely used overseas, was recommended by the Treasury in 2015 for all budget initiatives, but it was never clear why Pharmac had not adopted it and continued to use a cost utility model.
Woodhams said while the study focused on one drug for MS, its findings had implications for the way Pharmac funded all chronic disease drugs and devices.
"The report we commissioned makes clear that Pharmac's traditional funding decision model, often waiting years to access the cheapest medicines possible, is not necessarily a cost saving when the costs to wider society are taken into account," Woodhams said.
"People with MS, as in other chronic conditions, want to continue working, being productive and contributing to the economy, With our health and disability systems under critical financial pressure, we need to change the approach to funding medicines for the sake of New Zealand. Let's be the ambulance at the top of the hill, not the bottom," he added.
Health economist Dr Richard Milne, who was one of the researchers undertaking the study, said the cost effectiveness of funding drugs for chronic diseases would be much higher if Pharmac took into account the wider societal costs.
He said if Pharmac adopted a new funding evaluation model that considered more than just the healthcare costs, it could have significant implications for what it prioritised.
"That would mean the diseases with long term chronic implications for society would in fact become more fundable, and either they would have to expand the pharmaceuticals budget or - and I hope this is not the case - they'd have to reduce the funding for some short term diseases," he said.
Dr Milne said New Zealand's pharmaceutical budget was too small compared with other countries, and that it needed more investment.
