I recently joined DRG as a Market Research Analyst and had my first report hand-off just a couple of weeks ago. Which report, you ask? Canadian Interventional Cardiology! I guess it’s fitting, then, that I was asked to write the Canada Day blog post this year.
As far as interventional cardiology (IC) goes, we’re fortunate in Canada to not have to consider whether a specific device is reimbursed before deciding on a therapy option. For IC devices, each device is not judged for reimbursement on an individual basis, as is the case for drugs, for example. Rather, hospitals are provided with a global operating budget and each IC procedure is typically allocated a certain amount from that budget. Therefore, hospitals have to ensure that they are purchasing medical devices at the lowest possible cost, since the lower the cost of each device, the more devices are available as a treatment option. So, what are the strategies employed to purchase devices at the most affordable prices?
In the United States
and several European
countries, manufacturers negotiate purchasing agreements by bundling products – providing certain devices at very low cost in exchange for the commitment to purchase the “big-ticket” items from that company. In Canada, the preferred strategies are tenders and group purchasing organizations (GPOs). Tenders are typically multi-year contracts in which the hospital will commit to buying a set quantity of products in exchange for more affordable prices. GPOs, on the other hand, negotiate on behalf of multiple health care facilities, hospital groups, and even provinces to obtain the best prices. In exchange, the company secures a huge purchasing contract.
In 2010, the Pan-Canadian Pricing (or Purchasing) Alliance (PCPA
) formed and took group purchasing in Canada to the next level. By bringing together multiple provinces across Canada, the PCPA has gained the ultimate level of purchasing power. When initially announced
, it seemed that the PCPA would negotiate prices for drugs, medical supplies and equipment. However, in the last few years, the program has solely focused on drugs. It is unclear whether this is a permanent decision or just a simplification of the program during its early stages. However, it is my hope that PCPA eventually extends its reach to medical devices, making them even more affordable, and therefore accessible, to Canadians.