Submission on Consultation Paper on the Introduction of a Standard Drug Formulary in Hospital Authority

1. The Consumer Council provides its comments below in response to the consultation paper released by the Hospital Authority (HA) on the 'Introduction of a Standard Drug Formulary in Hospital Authority'.
2. Introduction of the proposed Standard Drug Formulary (SDF) in the HA and the arrangement for the supply of drugs falling outside the SDF can have great impact on consumers of medical services. This paper sets out the Council's views as to the implications of the introduction of the SDF to consumer interests.

COUNCIL'S VIEWS

3. The Council recognizes that users of public health care services are in a position very different from that of buyers of ordinary goods and services. They rely heavily on their doctors on the prescription of drugs suitable for their conditions and the drugs they receive are heavily subsidized. They tend to accept drugs prescribed and supplied through government pharmacies rather than explore alternative drugs outside.
4. Notwithstanding that, on the introduction of the proposed SDF under which patient choice will come into play, consumers should be enabled to find out easily what drugs fall within or outside the proposed SDF, have easy access to drugs, and be informed about the criteria the review panel of the SDF is taking.
5. The Council considers that the guiding principles to safeguard consumer/patient interests in relation to the proposed SDF and the supply arrangement for drugs outside the SDF are as follows:

• access and affordability: no one is to be denied treatment or drug therapy on account of impecuniosity;
• certainty of supply: drugs should be made available at all times in adequate supply to achieve the desired treatment result;
• quality and safety: drugs supplied should be with assured quality, especially for those supplied outside the public hospital system;
• transparency and fair process in determining the SDF;
• consumer information: should be adequate, available and easily understandable; and
• competition perspectives should be considered.

Access, affordability and certainty of supply

6. Patients will be very concerned that formulation of the SDF and budget cut in drug expenditure will limit the range of drugs provided to them within the standard fees and charges. The Council is of the view that the selection of drugs for inclusion in the SDF should be driven by proven safety and efficacy data and not predominantly the shift of treatment cost.;
7. Further, if different hospitals are allowed to stock only part and not all of the drugs listed in the SDF, a problem remains as to how to ensure patients in similar clinical conditions would have similar access to drug therapy. The Council considers that HA should provide further elaboration in this respect.
8. Effective use of drugs also depends on the actions of doctors. The Council is therefore of the view that the drafting of clinical guidelines on the use of dugs should not undermine clinical independence or introduce inflexibility into medical treatment while ensuring equitable access to drug therapy under the SDF. Clear explanations from doctors will help patients assess the need to buy drugs outside the SDF and to make an informed choice.
9. For patients requiring the use of costly but effective drugs falling outside the SDF, the Council notes that there is a safety net already in place to provide financial assistance in meeting the expenses on this type of drugs. The Council suggests that HA should continue to widely publicize the safety net and have doctors/social workers make referrals to it in appropriate cases so that not only those patients who are in need will be catered for, also that the general public will be so informed to have an accurate picture of the system currently in place.

Transparency and fair process

Public confidence in the SDF review mechanism

10. An essential condition for the acceptability and meaningful use of the SDF is a development and review process which involves wide consultation among various stakeholders. It is therefore important that the selection, change or deletion of a drug for inclusion in or removal from the SDF should be transparent and made known to the public.
11. The Council can appreciate the concern that involving patient or public opinion in the drug selection process of the SDF may interfere with professional decision making that may not work to the public interests. Nevertheless, in order to ensure transparency and fairness in the drug selection process, treatment procedure and use of drugs, the Council is of the view that the public should be adequately informed of the criteria adopted in deciding the SDF, whether in the formulation and in the subsequent reviews.
12. It is noted that the HA proposes to review the SDF periodically. To enhance public confidence in the integrity of the review mechanism, the Council suggests that steps should be taken to

• set out a fixed timetable for review and update of the SDF, preferably at intervals of no more than 2 years as new drugs evolve rapidly;
• make public announcement on the review schedule and the changes made for purpose of enhancing greater openness and transparency;
• involve patient groups, frontline doctors and/or professional peer reviews at various review stages where appropriate; and
• require declaration of interest by the review panel.

13. A fixed review schedule would enable all stakeholders (including patient groups, medical professions and the pharmaceutical industry) to provide their respective inputs at the appropriate timing.

Adoption of a 'phase-out' approach in implementation

14. The Council considers that the implementation process of the SDF should be flexible and adaptable to different situations as regarding the change or deletion of drugs on the SDF.
15. It therefore recommends that a phase-out approach may be appropriate as this would allow time for patients to gradually shift to the use of other drugs or to finish a course of treatment before change over.

Patients on Non-standard drug should be given standard subsidy

16. In case that a patient chooses to buy non-standard drugs at his own expense, the Council is of the view that government subsidy should continue and that the patient is required just to pay the difference between the costs of standard drugs and the non SDF drugs (if HA can practicably work out the difference). Allowing patients to top up above the costs of standard drugs in return for provision of drugs outside the SDF will make such drugs available to patients at a lower cost.

Making a channel available for patients to reflect opinion

17. Other than involving patient groups at the various review stages, the Council proposes that there should be a mechanism set up for patients to reflect opinions or grievance with regard to access to drugs and safety net issues.
    18. The Council understands that there are currently complaint mechanisms available in the public health care system to allow patients to lodge complaints with the HA. However, the suggestion of putting in place an additional mechanism is intended to allow patients to seek adjudication on access to drugs or petition for the inclusion of a drug in the SDF.
     

Consumer information

Availability of accessible and understandable SDF

19. The Council believes that if patients are to take good care of their health, they will have to have more information. At present, the proposed SDF is listed in English generic or proprietary names, on the HA's website. Non-English readers, non-medical professions and non-computer users may find the SDF difficult to comprehend or access.
20. In order to enable the public to fully appreciate the contents of the SDF, and for patients to be properly informed, the Council suggests that both Chinese and English generic and trade names of the drugs should be made readily available as far as possible, and the SDF should be accessible to all including non-computer users.

Need for reliable drug information and independent advice

21. Patients who need to purchase drugs outside the SDF require complementary services to enable them to know better about drugs (e.g. information on the recommended use, dosage, adverse effects, contraindications, warning of these drugs, the variety of drugs serving similar purposes, and means to differentiate counterfeit drugs) to make informed choices.
22. The Council considers that the information available to them should be reliable, convenient to use and easy to understand. An example of such services is the provision of a searchable database with information on names, usage and alternative choice of drugs. Correct use of this tool will improve patient safety and limit superfluous medical spending.
23. In addition, the Council suggests that independent advice should be provided to answer patients' enquiry with respect to price range, quality and sales channels of a drug. The public needs high quality, independent and objective drug information as expounded in paragraphs 21 and 22 above, the Council looks upon the medical and related professional bodies and the government in encouraging such initiatives to happen.
24. The Council appreciates that doctors have done a lot to educate patients about how and when to take their drugs. Building on this block, attending doctors should keep on informing their patients about the choice of drugs and warning on important risks and side effects of different drugs.

Competition perspectives

Appropriate form of drug supply mechanism

25. The Council provides its views on the proposed options (as referred in paragraph 18 of the consultation paper) for supply of drugs outside the SDF from the perspectives of consumer protection and market competition.
26. With regard to option (a) of advising patients to purchase drugs from community pharmacies, the Council is of the view that this option would be inconvenient to patients in several aspects. Patients are unlikely to be knowledgeable about drugs, and it is difficult for them to tell sub-standard and counterfeit drugs which may create hazards. The availability of drug would be less certain which may possibly delay treatment. Also, it would be harsh to expect patients who are unfit to shop around for the best-buy or else risk paying variable prices for the drugs at different outlets. Moreover, this option would be impractical for some drugs that require special administration methods that should be monitored in hospital settings.
27. From the competition perspective, the retail pharmaceutical industry would benefit from increased business. For market development, the use of private pharmacies would provide an alternative choice for consumers, but only if the issues mentioned in paragraph 26 above are addressed.. The Council does not therefore prefer this option.
28. Option (b) is inviting community pharmacies to operate in hospital premises. Under this option, there will be less check and balance on drug prices as it is highly likely that only large scale pharmacies would be able to get the bid. The successful bidder will be sitting on a gold mine with guaranteed flow of customers. There is concern whether the successful bidder would put consideration of affordability of drug prices to patients before profit making. The Council does not prefer this option either.
29. The Council considers that option (c), which relates to supplying non-standardized drugs prescribed by HA doctors at the hospital pharmacies, would provide the least disruption to patients as compared to options (a) and (b). There could be better control of quality and the availability of the drugs. This option also allows extension of clinical care through prescription.
30. Since HA has great cost advantage as a result of bulk purchase, the benefit should be passed on to patients who are paying more (compared to HA's $10 per prescribed drug). Such an arrangement will also serve as a stabilizing force to the price of drugs sold by outside pharmacies.
31. The Council is aware of the concern that option (c) may have manpower implications to hospital pharmacies. If there is a need to prioritize among the different types of non-standardized drugs to be included under option (c), the Council is of the view that drugs proven to be of significant benefits but expensive for the HA to include in the SDF (referred to in paragraph 13(a) of the consultation paper) should be made available for supply at the hospital pharmacies.
32. On the question of whether HA's pharmacies would be seen as engaging in unfair competition with private pharmacies under option (c), three factors are considered:

• Firstly, lower cost comes from economy of scale. Private hospitals and pharmacies can also group together and bulk purchase.
• Secondly, the lower cost of drugs dispensed through HA benefits patients directly and achieves a social objective.
• Thirdly, allowing private pharmacies to operate in HA hospitals may be construed as 'subsidizing' private business with guaranteed customers unless there is certain form of monitoring/control on the price of drugs sold through such private pharmacies.

33. However, if HA is considering charging patients slightly higher prices than cost, the Council is of the view that the margin needs to be justified. Also, the intended cross-subsidization using the surplus gathered from individual patients must be monitored to ensure fairness, cross-subsidization might also raise the question of obtaining money from drug sales in order to reduce support for operation of the public health care system from public fund.

CONCLUSION

34. The Council recognizes that professional inputs play an important part in the SDF and that staffing consideration and resource implications may affect how things are to operate. However, patients equally have the responsibility to look after their own health. The Council therefore urges that there should be adequate involvement of patients (whether in the form of getting informed, working with doctors on the most appropriate drug treatment, etc.) in the implementation process to ensure best outcome from the treatment process.