Part 3: How well did Pharmac manage risks and flow-on effects?

Pharmaceutical Management Agency: Changes to the frequency of medicine dispensing.

Our expectations

3.1
We expected that Pharmac would have:

provided guidance to doctors and pharmacists to adequately address the risk that close control could affect projected savings to a greater extent than expected;
ensured that the necessary changes to the information technology to make and pay pharmacy claims were made to implement all-at-once dispensing from 1 October 2003;
considered and quantified the flow-on financial effect of all-at-once dispensing on patients, identified any untoward consequences, and taken effective mitigating actions;
taken steps to minimise the quantity of medicines dispensed to patients but not used; and
agreed, with district health boards, who would be responsible for collecting and disposing of any unused medicines.

Guidance to doctors and pharmacists

3.2
Section 49(b) of the New Zealand Public Health and Disability Act 2000 requires Pharmac to take measures, when appropriate, to inform the public, groups, and individuals of its decisions about the Schedule.

3.3
As part of its plans to implement all-at-once dispensing, Pharmac identified doctors and pharmacists as important audiences, among others. Pharmac identified specific messages for them within its overall implementation objective, which was to ensure a smooth transition to all-at-once dispensing.

3.4
Pharmac set out a timeline for implementing each stage of its communication plan. Pharmac announced its Board’s decision to implement all-at-once dispensing in the days immediately following the July Board meeting, which involved contacting doctors and pharmacists directly, and issuing media releases.

3.5
Each doctor and pharmacist on Pharmac’s mailing list was written to when announcements were made. Pharmac’s communications to doctors informed them that over two-thirds of all medicines dispensed could be dispensed all at once. Doctors were also advised that close control was available if all-at-once dispensing was unsuitable for individual patients. Letters to pharmacists informed them of the implications of all-at-once dispensing for pharmacy practice.

3.6
In addition, Pharmac promoted the benefits of all-at-once dispensing to patients by running a multi-media campaign from September to December 2003. The campaign included posters, brochures, and leaflets in several languages, an 0800 number, and a web page. It also included advertising in newspapers and on radio. Doctors were sent posters, brochures, and leaflets to display on their premises and give to patients.

3.7
Pharmac gave communication packs to district health boards, to help them work with affected individuals and groups within their area (including doctors and pharmacists), and respond to queries.

3.8
In addition to Pharmac’s planned announcements, it contacted doctors and pharmacists if their feedback to Pharmac indicated a need for additional information or to clarify information previously provided.

3.9
After implementation, Pharmac’s monitoring of the effect of all-at-once dispensing showed that, between January and July 2004, the national average rate of dispensing under close control varied between 20% and 23%. Rates for individual district health boards ranged between 12% and 36%.

3.10
It is clear that Pharmac’s initial estimate of 5% was too low, at least for the first financial year. Once the effect of higher than anticipated rates of close control became apparent, Pharmac highlighted the issue to district health boards for their action. In May 2004, Pharmac provided detailed information to district health boards to allow them to work with specific pharmacies and doctors to improve the rates of all-at-once dispensing. Pharmac noted an improvement in June 2004, but at the time of our audit it was too early to say whether this improvement indicated a trend.

Ensuring pharmacy claims were paid on time

3.11
All-at-once dispensing meant that changes were needed to the commercial software that pharmacists use to submit their claims to HealthPAC, and the claims validation and payments software used by HealthPAC to administer pharmacy claims.

3.12
During the consultation phase, Pharmac had advised HealthPAC and the commercial software suppliers that changes would need to be made quite quickly once Pharmac’s Board decided to go ahead with all-at-once dispensing.

3.13
In the days following the Board’s decision to partially reintroduce all-at-once dispensing, Pharmac notified HealthPAC and the commercial software suppliers of the specific changes to the software that were needed to implement the new rules. Pharmac worked with the suppliers to answer queries as they arose.

3.14
HealthPAC updated and tested its software in time to deal with the first fortnightly batch of pharmacy claims after 1 October 2003. The major supplier of software to pharmacists had installed and fully tested its updated software by 16 October 2003. Pharmac does not know when smaller suppliers installed their updated software.

3.15
After we started our audit, we decided to review Pharmac’s actions to inform the commercial suppliers of prescribing software (used by doctors) of the changes needed to implement all-at-once dispensing. We did this because the prescribing software prompts doctors to prescribe to comply with the Schedule. It reduces the work pharmacists need to do to clarify any prescriptions, including dispensing instructions, which could be inconsistent with the Schedule.

3.16
Pharmac knew, during the transitional period, that fully updated prescribing software could not be installed in doctors’ surgeries before 1 October 2003. This was partly because suppliers also needed to accommodate changes to primary health care funding. Pharmac’s main concern was to ensure that pharmacists knew how to interpret prescriptions if doctors’ prescriptions conflicted with the Schedule from 1 October 2003. Pharmac arranged for transitional measures to apply until the software could be updated. The detail of these changes is contained in Appendix 2. The interim measures were a reasonable response to take to accommodate the suppliers.

Financial effects on patients

3.17
We identified 4 potential financial effects on patients of all-at-once dispensing:

fewer visits to pharmacies;
cash flow issues;
additional “blister” packaging¹⁰ costs; and
additional fees.

Visits to pharmacies

3.18
Pharmac’s information to doctors, pharmacists and the public, stated that a benefit to patients of all-at-once dispensing could be fewer visits to pharmacies to collect their medicines. This is correct for patients who only use medicines that are dispensed all at once, but may not be true for all patients.

3.19
All-at-once dispensing created, for some patients, what Pharmac calls “mixed prescriptions” – items that pharmacists dispense in different quantities. For example, if a patient collects 2 medicines, one may be dispensed in a 90-day quantity, and another in three 30-day quantities. Pharmac identified that this group of patients could have the same number of visits as they did with monthly dispensing or, in some circumstances, fewer visits.

3.20
All-at-once dispensing did not increase patients’ travel costs to collect medicines and could have reduced them if they had fewer visits to pharmacies.

Cash flow issues

3.21
When patients collect their medicines, they also pay any prescription charges¹¹ and any manufacturers’ surcharges¹². All-at-once dispensing does not affect the total amount patients pay for either charge, but Pharmac and others were aware that some patients could have difficulty paying the full amount all at once (instead of spreading the charges over 3 months).

3.22
Pharmac conducted detailed analysis to determine which patients could be required to pay higher charges all at once. Their analysis showed that over 80% of patients without community services cards, and over 94% of people with community services cards, would not be paying higher charges all at once. Increases would be less than $10 for each medicine for most of those patients who would be affected. However, the cost of collecting a 90-day supply all at once could be prohibitive for a small number of patients who have to pay a manufacturers’ surcharge.

3.23
The Schedule allows doctors to prescribe a 90-day supply of medicine to be dispensed more frequently, under close control, if patients have difficulty paying charges all at once. Activating this mechanism relies on the doctor and patient discussing the issue.

Blister packaging costs

3.24
Pharmac projected that all-at-once dispensing would reduce most pharmacists’ income from dispensing fees. Consequently, Pharmac anticipated that some pharmacists could introduce charges for blister packaging, which helps patients take, and caregivers administer, the right medicines at the right time. Some pharmacists may have provided this service “free” to patients, and to residential care services, under monthly dispensing.

3.25
Pharmac also anticipated that charges for blister packaging could be passed on, by residential care services, to patients. Pharmac considered that some or all district health boards might fund the cost of blister packaging after all-at-once dispensing was reintroduced when they had not previously done so. If they did, this could reduce their savings from all-at-once dispensing. Pharmac did not quantify the potential cost to district health boards, or the potential effect on savings, because there was insufficient information available.

Additional fees

3.26
Pharmacists are restricted by their contracts with district health boards from charging patients additional dispensing fees. But they are able to charge a fee, for example, for filling prescriptions after normal business hours.

3.27
Some pharmacists charged these fees under monthly dispensing. More pharmacists have been reported as charging fees of $1-2 after all-at-once dispensing was reintroduced. Pharmacists have stated that more pharmacists are charging these fees more frequently in an attempt to recover some of the revenue lost from the partial reintroduction of all-at-once dispensing. We did not attempt to survey pharmacists to determine how widespread the practice had become.

3.28
Pharmac did not identify an increase in additional fees to patients as a potential consequence of the decision to partially reintroduce all-at-once dispensing.

Minimising the quantity of unused dispensed medicines

3.29
Before all-at-once dispensing was reintroduced, Pharmac received submissions supporting all-at-once dispensing and arguing that patients would use more of the medicines that doctors had prescribed for them. Other submissions argued the opposite; that patients would not use all the medicines dispensed, or take them as prescribed, unless patients returned to pharmacies monthly to have their compliance with the prescription reviewed.

3.30
It is not clear whether the quantity of medicine available to patients affects how much medicine patients actually use. Pharmac accepted that some patients would, and some would not, use the additional medicines provided to them under all-at-once dispensing. Pharmac estimated that the additional medicines to patients was equivalent to a 6% increase in dispensing, and surmised that the amount of unused dispensed medicines could increase by the same amount (under certain assumptions). Pharmac was unable to get sufficient information to determine how realistic this figure was.

3.31
The medicines approved for all-at-once dispensing at 1 October 2003 were those that, under monthly dispensing, patients had been collecting, on average, more than 60 days of a 90-day supply. For example, if a patient had collected all three 30-day quantities of their medicine, the collection rate would be 3. All the medicines on the all-at-once dispensing list had average collection rates of 2.3 or more, and 79% of these medicines had collection rates of more than 2.75.

3.32
Average collection rates can hide a lot of variation, so the quantity of a medicine used by individual patients will vary. However, the method that Pharmac used to identify medicines that would make savings for district health boards, when dispensed all at once, minimised the potential increase in the quantity of unused dispensed medicines. In addition, when clinically appropriate, the Schedule allows medicines on the all-at-once dispensing list to be dispensed under close control, and for periods less than 90 days. If used, these provisions act to reduce the quantity of unused medicines.

3.33
We could find no agency that collects reliable national or regional trend data about the quantity of medicines dispensed to patients that were subsequently returned to pharmacies for disposal. This meant we could not assess the reasonableness of Pharmac’s estimate by comparing the quantity of medicines returned to pharmacies before and after the partial reintroduction of all-at-once dispensing on 1 October 2003.¹³

Collecting and disposing of unused medicines

3.34
Pharmac recognised all-at-once dispensing could lead to more unused dispensed medicines in the community, and that these would need to be disposed of safely. Pharmac discussed the issue with the district health boards. Pharmacists already had disposal methods in place; the concern was whether the existing arrangements would be sufficient to cope with any increase in the quantities of waste medicine caused by the partial reintroduction of all-at-once dispensing. Given that the quantity of waste could be increased, the expected reduction to pharmacists’ dispensing fee income generated discussion among district health boards about the adequacy of the payment to pharmacists within existing, publicly funded, revenue.

3.35
It is not clear who – Pharmac, district health boards, or the Ministry of Health – is responsible for funding the collection and disposal of publicly and privately funded unused medicines. District health boards have identified that the Accident Compensation Corporation and local government have some responsibilities for funding medicine waste management, as do patients and service providers.

3.36
Pharmac informed interested parties, during the consultation period before the decision to partially reintroduce all-at-once dispensing was made, that district health boards had agreed that the safe disposal of unused dispensed medicines would be their responsibility. Pharmac stated that district health boards proposed to run local DUMP (Disposing of Unused Medicine Properly) campaigns.

3.37
The wider issues of health promotion, the need to reduce the amount of medicines in the community, and the potential hazards of waste medicines to the environment were not raised with pharmacists during consultation on the partial reintroduction of all-at-once dispensing.

3.38
We surveyed all district health boards to ask them what they were doing about managing waste medicines, including:

waste generated from district health board-funded activity (that is, unused dispensed medicines); and
privately generated and funded waste, such as expired medicines, damaged medicines that have not been dispensed, and waste over-the-counter medicines.

3.39
The responses showed that the district health boards take different approaches to funding the collection and disposal of waste medicines, and are at different stages of active involvement.

3.40
Eight district health boards paid for waste medicines to be collected, and a further 6 intended to fund collection services in future. Nine district health boards funded the disposal of waste medicine, and a further 6 intended to. One of the larger district health boards considered that pharmacists were already funded for waste collection and disposal through the pharmacy claims process.

3.41
No district health boards held reliable trend information about the quantity and type of waste medicine before and after the partial reintroduction of all-at-once dispensing. A few district health boards had begun to collect data about the quantity and type of waste medicine collected for disposal; most held no information about waste medicines, or knew how much of that waste was hazardous.

3.42
Several district health boards told us they had projects planned for 2004-05 to collect data about waste medicines, and some projects included trial DUMP campaigns. Others had already completed projects and were using the data to work with pharmacists and doctors to identify effective medicine (including waste) management solutions for the problems identified. District health boards indicated to us that some solutions could be to encourage more effective prescribing, and health and disability support services to assist patients to take medicines effectively, so that the potential for unused dispensed medicines is reduced.

3.43
The district health boards that did not intend to fund waste medicine collection and disposal told us that medicine waste management was not a problem that pharmacists had raised with them. They were giving priority to other medicine management issues, and would continue to monitor the situation.

Minimising risks to patients

3.44
Several safety concerns were raised with Pharmac during consultation about the proposal to partially reintroduce all-at-once dispensing. These included concerns about the potential for increased rates of poisoning and thefts of medicines from patients’ homes, patients’ ability to cope with having more medicines at home, and the safe management of medicines in residential care services.

3.45
After we started our audit, we decided to comment on these issues because they have the potential to disadvantage patients. They do not relate directly to achieving savings or the financial effects of all-at-once dispensing on patients.

Poisoning and theft

3.46
All-at-once dispensing results in more medicines being in homes for two-thirds of the days of a 90-day treatment period. This creates the potential for more poisoning (accidental or deliberate) and thefts of medicines from patients’ homes.

3.47
Pharmac concluded, within the limits of the data available, that because monthly dispensing had not decreased poisoning when it was introduced in 1996, all-at-once dispensing was unlikely to increase poisoning. Pharmac’s conclusion was reviewed by the Pharmacology and Therapeutics Advisory Committee, which considered that the data was limited and it was difficult to form a view.

3.48
To be safe, Pharmac excluded from all-at-once dispensing those medicines that it, on the advice of the Pharmacology and Therapeutics Advisory Committee, judged to have abuse potential and significant safety issues. However, if doctors continue to have concerns about larger quantities of medicines being in particular patients’ homes, then they can prescribe the medicines to be dispensed under close control, or prescribe them for shorter periods.

3.49
The Police advised Pharmac that medicines with abuse potential are targets for theft, but were comfortable with the partial reintroduction all-at-once dispensing – as long as particular medicines could be removed from the list if concerns were identified.

Patients’ ability to manage more medicines at home

3.50
During the consultation period, Pharmac received submissions arguing that some patients, in particular the elderly, would not be able to safely manage a 90-day quantity of medicine at home, which could lead to a reduction in compliance. The Schedule allows doctors to use close control to restrict the quantity of medicines dispensed to patients if they cannot safely manage a 90-day quantity of medicine. This relies on the doctor and patient discussing the issue.

3.51
Alternatively, if a doctor prescribes a 90-day supply of a medicine to be dispensed in one quantity, and the dispensing pharmacist believes the patient cannot manage that quantity of medicine safely, the pharmacist can ask the doctor to amend the prescription to have the medicine dispensed under close control.

Safe storage of medicines in residential care services

3.52
When all-at-once dispensing was reintroduced, the existing rules for residential care services were reinforced; medicines could not be dispensed under close control for patients residing in these services. This is because residential care services are legally responsible for managing medicines safely. If doctors prescribed a 90-day supply of medicine for a patient, the full amount would be dispensed. Some residential care services were concerned about their ability to manage the larger quantities of medicines safely.

3.53
Residential care services can avoid having larger stocks of medicine by asking doctors to write new prescriptions each month (rather than 3-monthly) for patients requiring a 90-day supply of a medicine on the all-at-once dispensing list. (The doctor may charge more for this service, because it is for administrative rather than clinical reasons.) Another option is for the residential care service to pay to have more frequent dispensing.

3.54
After discussions with district health boards and the Ministry of Health, Pharmac presented a proposal in November 2004 for the Schedule to be amended. The change would introduce a new rule that allows all-at-once and monthly dispensing for patients in residential care services. It would give the residential care services having difficulties with safe medicines management another option, and return to the situation existing from 1996 to 2003. If Pharmac’s proposal is accepted, its implementation depends on funding being made available, and HealthPAC being able to collect enough information to identify pharmacy claims for patients who live in residential care services.

Our conclusions

3.55
Pharmac’s communications to doctors and pharmacists adequately addressed the risk that close control could affect projected savings, by promoting the benefits of all-at-once dispensing for patients.

3.56
Pharmac took reasonable steps to ensure that changes to the information technology for pharmacy claims were made in time to deal with the first fortnightly batch of pharmacy claims after 1 October 2003. The transitional period might have been too short, because the major supplier of software that pharmacists use to make pharmacy claims did not install its software until 16 October 2003.

3.57
Patients who only collect medicines that are dispensed all at once will have fewer visits to pharmacies. Patients who also collect medicines dispensed in smaller quantities will have the same number of visits, or in some cases fewer, as they did with monthly dispensing. All-at-once dispensing did not increase patients’ travel costs to collect medicines, and could have reduced them if they had fewer visits to pharmacies.

3.58
Patients pay no more in prescription charges and manufacturers’ surcharges under all-at-once dispensing. For patients having difficulty paying these charges all at once, the Schedule provides a mechanism (close control) to spread the charges over 3 months. However, using close control relies on doctors and patients discussing the issue.

3.59
Patients are financially disadvantaged by the partial reintroduction of all-at-once dispensing if they are paying additional fees to obtain their medicines, or paying for blister packaging that pharmacists may not have charged for under monthly dispensing.

3.60
The method that Pharmac used to identify medicines for all-at-once dispensing minimised the potential increase in the quantity of unused dispensed medicines. Pharmac did not have credible information indicating, with any certainty, whether patients take more medicines if they have more dispensed to them. We agree with Pharmac’s view that it is difficult to estimate how much of the additional medicines provided to patients would go unused.

3.61
In our view, research should be undertaken to identify what effect, if any, giving medicines to patients in 30-day or 90-day quantities has on patients’ compliance with the prescription. The research should focus on those patients who are perceived to be at risk of harm from all-at-once dispensing. (Submissions to Pharmac during consultation on the partial reintroduction of all-at-once dispensing indicate this would include the elderly, and patients taking medicines to treat mental illness.) The results of this research should be used to inform future changes to dispensing regimes, and allow changes to be made for effectiveness reasons as well as to achieve efficiencies.

3.62
Pharmac should be responsible for considering this issue because it determines the maximum quantities of each medicine that can be dispensed (within the limits set by regulation).

Recommendation 4
We recommend that the Pharmaceutical Management Agency use its existing powers to ensure that independent research is undertaken to determine what effect, if any, dispensing medicines to patients in 30-day or 90-day quantities has on patients’ use of those medicines.

3.63
There is a lack of clarity among Pharmac, District Health Boards New Zealand, and the Ministry of Health about who is responsible for funding the collection and disposal of publicly and privately funded unused medicines. The lack of clarity of the roles of the various entities in funding the collection and disposal of medicine waste should be addressed.

Recommendation 5
We recommend that the Ministry of Health take the lead in discussing and agreeing with district health boards and the Pharmaceutical Management Agency, and other organisations as required, where the responsibilities will lie for monitoring unused medicine, and for funding the collection and disposal of publicly and privately funded unused medicines.

3.64
District health boards hold little or no data about the quantity and type of unused dispensed medicines. At the time of our survey of district health boards, in November 2004, 40% of district health boards funded the collection and disposal of unused medicines (which includes unused dispensed medicines), and another 30% intended to do so. Several district health boards were to gather data during 2004-05 to help them choose the most effective arrangements to prevent and manage medicine waste. Collecting nationally consistent data about unused dispensed medicines helps to identify the reasons for, and types of, medicines being returned for disposal.

Recommendation 6
We recommend district health boards collect consistent data about the quantity and type of unused dispensed medicines funded by them, to improve the quality of prescribing, the effective use of medicines, and reduce waste.

3.65
District health boards could consider the actions other countries have taken to encourage the return of unused medicines. For example, Australia¹⁴ has a scheme to encourage the return of unwanted medicines (whether publicly or privately funded) for safe disposal. The scheme enables monthly reporting, for instance, of the total kilograms collected for disposal. France¹⁵ introduced its medicine collection and disposal scheme primarily for environmental reasons; it needed to reduce the quantity of all waste going into landfills.

3.66
Adequate mechanisms are available in the Schedule to manage the potential risks of having larger quantities of medicines in homes and residential care services as a result of all-at-once dispensing. The mechanisms rely on the doctor, patient, pharmacist, and residential care services manager actively considering the risks and taking mitigating actions.

10: When pharmacists put medicines into disposable trays that are divided into clear blister bubbles. Each bubble holds a complete dose of the tablets that the patient needs at particular times of the day.

11: Prescription charges are also called co-payments.

12: Manufacturers’ surcharges are the portion of the cost of a medicine that is not subsidised.

13: Medicines returned to pharmacies are only a portion of unused dispensed medicines. The remainder are disposed of into the sewerage system or landfills.

14: www.returnmed.com.au.

15: Macarthur, D 2000, Any old drugs? Two schemes for the disposal of unwanted medicines in Europe, The Pharmaceutical Journal, vol. 264, no. 7082, pp223-4, February 5.

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