AGE-WELL process maps

Within the Canadian healthcare system, resource allocation decisions ultimately determine if a medical device will be reimbursed. The Medical Devices Bureau (MDB) of Health Canada's Therapeutic Products Directorate (TPD) regulates medical devices for human use in Canada. Devices that are approved by the MDB are then communicated to the provincial ministries. This information is then communicated to the Regional Health Authorities, who communicate with hospital administrators.

Health Canada is only directly responsible for reimbursement and purchasing decisions for specialized programs that it administers, such as for First Nations and Inuit populations. There are also other federal departments and programs responsible for reimbursement decisions in specialty populations. These include the Department of National Defence (Canadian Forces Health Services Group), Correctional Services Canada (Health Services), and Veterans Affairs Canada (Health Care Benefits).

The vast majority of reimbursement decisions for approved health technologies are made at the hospital level, by senior level management. As such, regional or national consensus by physicians through existing professional networks can have a strong influence on the decision to reimburse a technology. However, these decision makers are often exposed to pressures from industry and patients, impacting their final decisions. To counteract this, innovators can implement on-line framing strategies that highlight the cost-effectiveness of their innovation, and influence the decisions of purchasers.

The Canada Health Act (CHA) does not require provinces and territories to cover services that occur outside of acute care facilities, including dental care, vision care, physiotherapy, long-term care.

Since ministry-led programs do not cover medical technologies related to these services, the reimbursement of these devices will fall on private insurers, who fund about 12% of non-publically-insured-services. Third party payers also pay for a similar amount of health services, out-of-pocket.

In addition to funding medically necessary acute care services and devices, some provinces run additional reimbursement programs to assist people in paying for licensed medical devices and equipment that is necessary to maintain health and function. These programs fund assistive devices for people with long-term physical disabilities that enable them to increase their independence.

Once a device has obtained a regulatory license from MDB it is eligible for sale allowing reimbursement decisions to be made. These decisions allow for procurement of the device to take place.

The procurement of a device at a provincial and regional level often involves shared delivery or group purchasing arrangements. Group purchasing arrangements leverage buying power and are commonly utilized by hospitals, regions, and provinces. Shared service organizations (SSOs) are used by health regions to purchase devices in bulk and reduce costs by coordinating the required procurement, information technology and financial functions associated with buying these devices at a regional or provincial level. GPOs also consolidate these functions regionally or provincially to reduce costs. Three provinces, Alberta, British Columbia, and New Brunswick, have contracts with privately owned GPOs for shared purchasing activities. Additionally, Ontario, Quebec, British Columbia, and Alberta have adopted individual purchasing approaches using a shared service approach, as described in the table below.

All medical devices procured by regional health authorities are required to comply with the Food and Drugs Act and, if appropriate, have a licence issued by Health Canada. Additionally, each authority may have their own RFP or Purchase Order standards for proving appropriate authorization to manufacture, sell or advertise medical devices.

MEDEC and other medical device industry associations have identified procurement issues as a priority concern. The government of Ontario responded with the Ontario Ministry of Finance Open for Business Initiative, providing an alternative to hospital procurement. This method involves additional contracts, including “Alternative Proposals” and “Value Add Incentives”, which allow innovative companies to propose their product in lieu of a GPO’s requested product, and may add new innovations to a GPO’s proposed contracts.

Innovators can work in collaboration with research facilities that are aligned with particular government mandates, allowing potential adoption opportunities for smaller medical device innovators. These organizations may consider more niche innovations, receive additional tax breaks, accept alternative licencing (e.g. Investigational Testing) and could lead to wider adoption within the healthcare system.

When the medical device innovation has the potential to improve patient care and quality of life, marketing the device to providers can lead to better adoption. GPO’s are primarily cost-driven, but physicians and hospitals consider the innovation’s ability to improve patient care and often push for the adoption of these devices by requesting an HTA and presenting options for reimbursement.

As explained by the Institute for Health Economics (IHE) “Any procurement over $100,000 needs to follow an open competitive bid process that meets requirements of national legislation called the Agreement on Internal Trade (AIT), which dictates procurement must be open, fair, and transparent. Western provinces (British Columbia, Alberta, and Saskatchewan) must also comply with the New West Partnership Trade Agreement. There are three approaches to open competitive bidding: Request for Information (RFI), Request for Proposal (RFP), and Request for Quotation (RFQ/Tender)”.

The process of procurement for new innovations can be difficult to define. Ontario has launched a new approach to innovation procurement to address these difficulties. The approach focuses on outcome-based specifications (OBS) instead of the usual product specific specifications. The new OBS guidelines for innovation procurement:

• specify that procurement be outcome-based without describing how proponents should meet the desired outcomes;

• outline RFP bid requirements that specify how outcomes should be appropriate to the size and complexity of the innovative solution, and be accurately specified;

• clearly define all elements included in the evaluation criteria; and

• specify standards as needed.

The OBS procurement approach can be applied to new and old innovation procurement and can be used to consider alternative proposals in a routine procurement process.

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