LCQ18: Expenditure on drugs of Hospital Authority

     Following is a question by the Hon Chan Hak-kan and a written reply by the Secretary for Food and Health, Dr York Chow, in the Legislative Council today (December 1):


     It has been reported that a deficit of $30 million in the expenditure on drugs was incurred by the New Territories East Cluster of the Hospital Authority (HA) in 2009-2010.  It has also been reported that similar deficits existed in other hospital clusters as well, giving rise to concern about the provision of drugs for patients in public hospitals.  In this connection, will the Government inform this Council:

(a)  whether it knows the expenditure on drugs incurred by various hospital clusters in the past three years and the percentage of such numbers in the block allocation for the cluster concerned for that year, as well as whether any deficit had been incurred; if so, how the shortfalls were met;

(b)  whether it knows if at present HA requires various hospital clusters to allocate a certain percentage of funding to buy drugs or sets a ceiling for the annual expenditure on drugs; if so, how the percentage or ceiling is determined, as well as what review mechanism is in place; if not, of the reasons for that;

(c)  how the authorities ensure that HA will not resort to buying drugs which are cheaper but may not have the same efficacy of the original brand name drugs so as to reduce the deficits, and how they ensure that HA will not include innovative drugs in the list of self-financed drugs, thereby increasing patients' expenses on drugs; and

(d)  given that it is expected that expenditure on drugs will continue to rise along with the ageing population, whether the authorities need to increase the total funding for HA; whether they will assess the financial implications of the ageing population on the Samaritan Fund, and how they ensure that the Fund can operate on a long-term basis to help more patients with financial difficulties?



(a) and (b)  Every year, clusters and hospitals under the Hospital Authority (HA) will, in light of HA's strategic planning and service development needs, draw up annual plans which specify the strategies, major initiatives and service targets to meet district demands.  When allocating resources to hospital clusters, HA will also take into consideration the size of population of districts, service priority areas, service demand of the community, the need for provision of primary healthcare and specialist services, new service programmes and initiatives, as well as the resource requirements for upgrading facilities, purchase of drugs and manpower training.  HA will provide a block allocation to various hospital clusters, and will not designate funding for drugs or set a ceiling for the annual expenditure on drug. Various hospital clusters may flexibly deploy the funding and adjust their expenditures, including the expenditure on drugs, having regard to actual service demands.  HA reviews the financial position of various clusters, including their expenditure on drugs, every three months through an established mechanism. In case of a possible deficit in the overall budget of individual cluster, HA will discuss with the cluster the measures to address the situation.

     The expenditure on drugs incurred by various hospital clusters and its percentage in the block allocation for the clusters in the past three years were shown in Annex.

(c)  The operation of HA is mainly supported by Government funding. HA has a well-established mechanism to closely monitor the utilisation of its finances, so as to ensure proper use of public money and to safeguard public health and patients' interests.

     Under the Pharmacy and Poisons Ordinance, all drugs in Hong Kong must be registered with the Pharmacy and Poisons Board before sale. In line with international practice, only products which are safe, efficacious and of good quality will be registered. Unless there are exceptional circumstances in the supply of drugs, HA will only purchase drugs registered with the Department of Health (DH). The HA Drug Formulary (the Formulary) has included drugs for the treatment of various diseases. Currently, the vast majority of drugs have been centrally procured, and hospitals cannot decide on their own to purchase drugs outside the Formulary. Hospitals will not buy cheaper but less efficacious drugs because of financial considerations.  

     HA has put in place an established mechanism on the procurement of pharmaceutical products. In compliance with the requirements of the World Trade Organisation, HA procures drug items of high volume or in large value with market alternatives through open tenders. All tenders of the suppliers must comply with all quality requirements, including registration with DH; accreditation of Good Manufacturing Practice of the manufacturing site; detailed product specific information, such as product master formula, method of assay, finished product specification and stability data, as well as bioavailability data of generic drugs, before the tender prices will be considered. In other words, the prices will only be considered after the quality of the products is confirmed in order to protect the safety of patients.

     HA has an established mechanism in place to assess regularly whether new drugs introduced in the market should be incorporated into the Formulary, and to review the prevailing drug classes in the Formulary (including general drugs, special drugs, self-financed drugs and self-financed drugs covered by the safety net) and guidelines of drug treatment through its expert committees, which comprise doctors, clinical pharmacologists and pharmacists. Changes to the Formulary will be made as appropriate. During the assessment and review process, the committees will take into account scientific evidence, safety of the drugs, cost-effectiveness, opportunity cost, technological advances in treatment options, actual experience in the use of the drugs, as well as the views of professionals and patient groups, etc. This is to ensure that public resources will be used in an equitable and effective manner for provision of appropriate treatment to patients.

     Drugs of proven safety, efficacy and cost-effectiveness are generally incorporated into the Formulary as standard drugs, including general drugs and special drugs. Under the existing mechanism, all general drugs and special drugs prescribed under specified clinical conditions are provided to patients at standard fees and charges by HA. For drugs which are proven to be of benefits but are not included in the Formulary as standard drugs having regard to the considerations of the overall cost-effectiveness, we provide a safety net through the Samaritan Fund to subsidise the drug expenses of patients whose clinical conditions meet the requirements for the use of these drugs but who have financial difficulties meeting the expenses. Currently, drugs not covered by the safety net only include (1) drugs which have preliminary medical evidence only; (2) drugs with marginal benefits over available alternatives but at significantly higher costs; and (3) life-style related drugs which are not medically necessary (e.g. weight-loss drugs).

     The expert committees will continue to consider the introduction of new drugs into the Formulary, and review the appropriate positioning of individual drugs in the Formulary, having regard to the latest development of medical technology and scientific evidence to ensure equitable access by patients to cost effective drugs of proven safety and efficacy.

(d)  Over the past few years, the Government has been providing additional resources to HA to meet the growth of drug expenses, including the extra expenses arising from the widening of the coverage of the Formulary and expansion of the clinical application of drugs.  Should there be any increase in the demand for pharmaceutical products arising from HA services in future, HA will conduct assessments through its annual plan mechanism and request additional funding from the Food and Health Bureau as appropriate. The Government will adjust the total amount of funding for HA as appropriate having regard to the development of and demand for healthcare services.

     The objective of the Samaritan Fund (the Fund) is to provide financial assistance to needy patients to meet expenses on designated Privately Purchased Medical Items or self-financed drugs required in the course of medical treatment which are not covered by hospital maintenance or outpatient consultation fees in public hospitals and clinics. The operation of the Fund mainly relies on private donations and Government subsidies. HA reviews annually the income and expenditure account of the Fund and estimate the overall expenditure of the Fund for the next few years, taking into account such factors as the ageing of population, technological advances, increase in demand for healthcare services and inclusion of more drugs under the Fund, etc. HA will seek additional funding from the Government if necessary. For instance, in 2008-09, the Government injected $1 billion into the Fund to meet the growth of expenses.

Ends/Wednesday, December 1, 2010
Issued at HKT 17:31