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Savings for DHBs in medical equipment agreement

Savings for DHBs in medical equipment agreement

DHBs will save another $650,000 a year from lower priced wound care and surgery equipment through a new national PHARMAC agreement with a major medical device supplier.

From 1 September, DHBs can use a national contract to buy products from Covidien New Zealand Limited including wound dressings, casting bandages, medical tapes, surgical stitches (sutures) and items used in abdominal keyhole surgery.

The agreement follows others PHARMAC has reached with eight other suppliers of medical devices such as wound care, sutures and disposable laparoscopic equipment. Since February this year PHARMAC has listed almost 5000 individual medical device products on the Pharmaceutical Schedule.

So far, PHARMAC has achieved minimum national annual savings of almost $2 million for DHBs through its medical device procurement activity since the first listing earlier this year.

The new contract with Covidien covers products that account for DHB spending of about $4.6 million per year, with savings of over 14 percent.

Previously DHBs had to individually negotiate their own prices for these products and potentially ended up paying different prices for the same products.

PHARMAC is aiming to get nationally consistent lower prices, and reduce future pricing pressures, on items that many DHBs and primary care providers are already using.

Director of Operations Sarah Fitt says the deal is significant.

“Covidien is one of a number of major suppliers to DHBs and this agreement means all DHBs can get this equipment for the same price. Equal access across the country and transparent pricing is a key reason why PHARMAC is doing this work, but we also need to get savings for DHBs at the same time,” Sarah Fitt says.

“The contracts are also protection for DHBs against rising prices.”

“PHARMAC is now looking toward reaching agreements with suppliers of interventional cardiology equipment and orthopaedic implants and will be expanding into other categories of products over time.”

This national contracting activity is the first step towards PHARMAC assuming broader responsibility for hospital medical devices on behalf of DHBs– in the same way it manages new technology assessment, contracting and expenditure on hospital and community medicines, and vaccines.

Details about PHARMAC’s medical device activity and its work towards management, can be found on its website:


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