EXECUTIVE SUMMARY

4. This paper raises policy issues related to the development of the future statutory form of the NZBS and PHARMAC for the information and agreement of the Ad Hoc Ministerial Committee on Health Sector Change. The paper reflects work by Officials in developing drafting instructions, now substantially completed, relating to the future statutory form of the two entities. The main issues raised are as follows:
   1. No change in functions: the functions of the NZBS and PHARMAC will remain unchanged under the new arrangements.

   New Zealand Blood Service

   2. Annual plans: it is proposed that the NZBS (following a similar requirement for DHBs) prepare an annual plan which will underpin the NZBS's Statement of Intent.

   3. Terms and conditions of blood supply: DHBs should not have the power to impose terms and conditions in relation to dealings with the NZBS (ie S51 arrangements).

   4. Protection of donor and recipient privacy: It has been suggested that a provision (concerning information release) be included in the legislation maintaining donor and recipient privacy. Officials indicate there will be difficulties in developing a provision in time for inclusion in the legislation but will examine the issue and report back by December 2000.

   5. Board size and Board meetings: it is proposed that the size of the new Board be up to seven members, including the Chairperson, and that meetings are not open to the public.

   6. Powers of the Minister to direct: the powers of the Minister to direct should be limited to those necessary to direct should be limited to the NZBS over its Statement of Intent and Annual Plans, to protect the supply of blood, and to withdraw contaminated blood.

   7. Commerce Act exemption extension to other agencies: it is proposed that recommendation q) of Cabinet decision CAB (00) M 2/4, confirming that the Commerce Act 1986 will not apply to dealings between DHBs, be extended to the NZBS, PHARMAC and Health Benefits Limited.

   PHARMAC

   8. Annual plans: PHARMAC will produce an annual plan.

   9. Derivates transactions: PHARMAC wishes to include within the new Corporation's powers the right to enter into derivative transactions for the purpose of reducing expenditure from exposure to exchange rate fluctuations. Officials recommend that PHARMAC, or another body if it was so decided, may make such investments with the approval of the Minister of Finance.

   10. Powers of the Minister to direct: it is argued that while the Minister of Health has the power to direct PHARMAC that a particular drug be subsidised or purchased it would be inappropriate that the Minister give any direction that requires PHARMAC to purchase a pharmaceutical from a particular source or at a particular price, or to provide a subsidy for an identified person.

   11. Board size, Board meetings and composition: it is proposed that: the size of the new Board is up to six members including the Chairperson; meetings are not open to the public; there should be strong DHB representation on the Board, and that there be a balance of others on the Board with appropriate skills.

   12. National Pharmaceutical schedule: PHARMAC's functions will require that it operate a nationally consistent Pharmaceutical Schedule, which DHBs will be required to follow. Officials recommend that the legislation be sufficiently flexible to accommodate an "exceptional circumstances policy" allowing for limited departures from the terms of the Pharmaceutical Schedule, where appropriate.

   13. Commerce Act exemption: the Ad Hoc Ministerial Committee on Health Sector Change has noted that further legislative changes will be necessary to preserve PHARMAC's partial exemption from the Commerce Act. Officials recommend that the Commerce Act exemption in the Finance Act 1994 be modified to reflect the new health system and be transferred to the New Zealand Public Health and Disability Bill and that the exemption cover the Crown, PHARMAC and the DHBs in relation to pharmaceuticals activities with PHARMAC or DHBs.

CURRENT ROLES AND RESPONSIBILITIES OF THE NZBS AND PHARMAC

The NZBS

5. The NZBS currently undertakes the following responsibilities:
   1. Sets operational policy for the provision of blood and blood services.
   2. Is responsive to situations such as emergencies, potential infection risks that threaten the safety of blood, and fluctuations in the supply of, or demand for, blood and blood products.
   3. Minimises and manages the risks to recipients of blood and blood products and to the Crown.
   4. Through supply contracts with HHSs and other providers, imposes safety standards for provision and collection of blood, and sends appropriate cost signals to hospitals and their decision-makers.
   5. Manufactures a range of blood components and plasma products, and manages the fractionation of plasma by contract.
   6. Addresses a variety of issue-based risks including widely varying standards, poor national inventory management, inefficiencies, difficult communication, limited customer focus, scarcity of key skills, and lack of sector-wide planning.
   7. Protects the gift status of blood through a stewardship role.
   8. Meets its statutory responsibilities under the Health Act as an appointed entity relating to i) to vii) above.

Footnote(s):

1

Health Sector Development Officials' Group paper to the Ad Hoc Ministerial Committee on Health Sector Change, dated 7 April 2000. Other Agencies: appropriate corporate form and functions of: NZ Blood Service; PHARMAC; Health Benefits Ltd; National Health Committee; Residual Health Management Unit.