Pharmac decision-making framework good regulatory practice

Pharmac is consulting on its proposed framework for making decisions on drug funding, and for its new roles in funding hospital medicines and medical devices. The decision-making framework is of interest to the medical and pharmaceutical sector. More generally, Pharmac's approach represents good decision-making practice and provides an excellent model for other regulatory agencies.

The decision-making framework builds on the current policies and procedures. The most significant changes are to restate the existing decision-making criteria as factors for consideration and specify those factors within Pharmac's overall legal responsibilities.

The proposed decision-making framework is open for consultation until Monday 21 April 2014.

Recognising the overall context

At present, Pharmac sets out decision criteria as part of its operating policies and procedures. It proposes to recast them in the new decision-making framework as factors for consideration. Although there is no indication that the criteria were improperly applied in the past, the change better recognises their role within the legal framework that Pharamc acts under.

Pharmac is required to give effect to the overall statutory objective of securing, 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.

A wide range of factors could potentially be relevant under this objective. The factors for consideration proposed in the consultation document provide an indication in advance of the factors that Pharmac considers are likely relevant.

Specifying the factors in advance is a very sensible and practical step for decision-makers to take. It assists parties in preparing applications for approvals, provides some predictability for interested parties, and should speed up decision-making.

The danger in specifying relevant factors in advance is that they will be applied too rigidly, with the result that the decision-maker fails to take into account the special circumstances of a particular case. This can result in decisions breaching administrative law principles and subjected to judicial review.

The change in terminology from "criteria" to "factors for consideration" recognises this issue and, particularly, that the term "criteria" could have caused confusion. Pharmac also states that the extent to which any one particular factor is relevant, if at all, and the weight to be given to each factor is for Pharmac to determine on each occasion. If Pharmac applies the factors in this way, it will be safe from challenge.

A change that Pharmac could consider is to more clearly explain how the factors for consideration advance the overall statutory purpose and other legal requirements that apply to Pharmac. At present, it is not clear how some of the factors relate to the statutory objective or other requirements. While a small and simple step, it would further assist in achieving regulatory best practice.

Medical devices

Pharmac is, over time, taking over responsibility from DHBs for the purchase of medical devices. The first agreements have already been signed, and more devices will be added to the scheme over time through further negotiations with suppliers.

In earlier stages of the consultation, questions were raised as to whether separate criteria should be specified for medical device. Pharmac recognises that there are substantial differences between devices and medicines, but provisionally considers that these can be dealt with in the decision-making framework and the way the factors for consideration are worded.

Changes in the criteria

The proposed factors for consideration include a reasonably small number of changes from the existing criteria. These include:

  • Recognising that disparities in health outcomes affects groups in society in addition to Maori and Pacific peoples
  • Removing the statement that Pharmac can consider matters other than those listed. This statement is unnecessary, as Pharmac is able to do so under ordinary administrative law rules and, indeed, must do so in some circumstances
  • Clarifying unclear wording in various places
  • Inserting references to medical devices

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