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Stanford University School of Medicine

To reduce the costs of medications, Stanford fellows flew to New Zealand

While hunting for examples of health systems that provide high-quality care while keeping costs low, three fellows from Stanford's Clinical Excellence Research Center became intrigued by the success of PHARMAC – New Zealand’s national pharmaceutical management agency. Established in 1993, the government-run group decides which pharmaceuticals to publicly fund and subsidize – determining the entire country’s budget for cancer treatments, vaccines and other medications.

The post-doctoral design fellows  — Stephanie Peters, PysD, Scooter Plowman, MD, MBA; and Brian Brady, MD — were investigating strategies for managing medications that could lower the cost of health-care spending in the United States.

They didn't expect to find some of their answers in New Zealand. The countries' health-care systems are quite different, with sharply distinct strategies to implementation, access and cost of care. But the fellows found themselves wondering if New Zealand’s’ system could provide some useful lessons that could apply in the U.S.

“We recognized that this government-driven approach to value may not apply broadly to the U.S., as we lack a single payer system," Brady explained in a recent Department of Medicine article. "But we wondered what might happen if we brought some of the ideas from New Zealand and applied them to an incentivized health system in the U.S. – one that bears financial risk for all aspects of patient care – with the explicit goal of improving quality and reducing cost.”

The CERC team quickly connected with the economists and designers at PHARMAC. Conversations ensued, and an invitation for a visit soon followed. So, in early November, the team boarded the 12.5-hour-long flight to New Zealand.

The trip was an absolute whirlwind, the fellows said. Over the course of a week, they met with PHARMAC leaders, visited community clinics and spoke with patients and physicians. “Patients were pleased with how easily available medications were,” Brady recalled. “We found it remarkable how patients’ overall attitudes towards health, while understandably focused on their individual stories, acknowledged the importance of the public’s health at large and respected the policy decisions for their intent to achieve good health for all New Zealanders.”

Back in the states, Peters, Plowman and Brady turned their observations into a delivery model that they hope can be implemented in a U.S. health system. The team completed their first prototype in December and presented a refined iteration to health delivery leaders in April. “Once a health system asks to trial our model, CERC’s implementation teams work with our partners to carry out proof-of-concept studies over subsequent years,” Brady said.

The final step for the team is publication. Brady said they plan to submit a summary of their discovery and an estimate of national savings to a scientific journal in June.

Previously: How Campaign for Stanford Medicine dollars are supporting research on clinical excellence and A glimpse inside Stanford Coordinated Care, an innovative model of health care
Photo courtesy of PHARMAC

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