Healthy Skepticism Library item: 18564

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Publication type: news

Adams B
A revolution for the NHS - an opportunity for pharma?
InPharm 2010 Aug 9
http://www.inpharm.com/news/revolution-nhs-opportunity-pharma

Full text:

Healthcare systems across western Europe are currently under renewed pressure and scrutiny, each government preoccupied with finding major cost-savings to contribute to austerity measures.

The UK government is no different in slashing public spending, however its National Health Service has been granted a special status. New health secretary Andrew Lansley has guaranteed that its budget will be protected, and in fact continue to grow over the next five years, albeit slowly.

But there is a catch – the NHS in England must undergo a root and branch reform, the scale of which is so formidable that some commentators say it will be the greatest reorganisation of the service since it was set up in 1948.

For the pharmaceutical industry, the reforms represent a more or less complete change in the market landscape. From an industry perspective there are three crucial changes: the scrapping of the PPRS profit-cap pricing system and the introduction of ‘value-based pricing’; an end to NICE as the gatekeeper to NHS market access; and finally, a realignment of pharma’s customers, with general practitioners set to displace health service managers as the key decision-makers.

All of these changes are contained in a White Paper, Equity and Excellence: Liberating the NHS, a bold but hurriedly assembled vision for the health service.

Simon Jose, president of the ABPI and head of pharmaceuticals for GSK UK told Pharmafocus: “This is no doubt a significant change. We have had a long-standing government in Labour that created stability for the industry, but the coalition’s plans represent a big change not just for the industry, but for the structure of the NHS as a whole.”

NICE just got nicer

Since it was set up in 1999, NICE has been seen as the ‘fourth hurdle’ to market access in the UK, but this will now be dismantled. The body will no longer have the power to recommend or not recommend medicines for NHS use.

The news has been announced not as a demotion for NICE, but rather a new career direction – the body will now focus on another of its existing roles, that of quality standards.

Nevertheless, the industry will be quietly delighted at the end of hostilities with NICE, but like the government, is careful not to acknowledge it as the end of an era.

Simon Jose comments only that NICE is “here to stay” and that it will benefit from its new role and switching away from having a “narrow focus as a binary arbiter for the NHS”.

The question of cancer patients not having access to new treatments because of NICE rulings is now clearly seen as a problem by the new government, and it has just confirmed a £50 million interim fund to open up access for patients. While there are obvious limitations to this approach, it does signal clearly that the Conservative-Liberal government wants to make the drugs access controversies a thing of the past (see below for more).

Value-Based Pricing

The removal of NICE’s power of approval or veto is closely linked to the planned introduction of value-based pricing system (VBP), which aims to price drugs according to their clinical value to patients.

Due for full implementation by 2014, the soon-to-be-established NHS Board will negotiate prices and market entry directly with pharma companies.

Asked for his views, Simon Jose says “the devil is in the detail” in terms of how the VBP system will function. However, noises from Lansley suggest an ex post system – which would mean companies could launch their drugs at whatever price they like and then face a review of prices some time after.

Similar schemes are being tried elsewhere in Europe. In Italy, its government will be adjusting cancer drug prices in the coming months based on two-year efficacy analyses.

The ABPI has been given assurances that this system is not reference pricing, a bête noire in the rest of Europe, where it is frequently used to cut prices.

This system would preserve a much-cherished aspect of the system – free pricing – but costs could of course be recouped by severe price cuts imposed by a review.

Simon Jose says the ABPI has held several meetings with Lansley and Lord Howe, the health minister with responsibility for the pharmaceutical industry to discuss the plans. Crucially, Jose says he doesn’t expect pilots for VBP to be launched this year. He said that the industry and the government have another three years to build on the momentum of these ideas and that the ABPI will be working with the government to achieve a balanced outcome.

“We understand at a conceptual level that the details are very challenging; for instance, how do you make the PPRS free-pricing system work with VBP? These are the sort of questions that the ABPI will need to work out with the coalition.”

Jose says he hopes VBP will create healthy price differences, and increase innovation via incentives, but warned that the VBP should not be used to “squeeze the medicines bill”.

Customers/payers

The final change will be the NHS decision-makers and opinion leaders. The removal of strategic health authorities and primary care trusts means GPs will be in the driving seat. They will head up the consortia which will take control of the NHS budget by April 2013. Ironically, after years of industry being told that GPs were no longer the sole customer, they have been restored to a central decision-making role.

The industry became accustomed to NHS structural reforms under the previous Labour government, and will undoubtedly face the same problems of paralysis in decision-making during the upheaval of this reorganisation.

Jose says the new control at the frontline will make things easier for the industry. For instance, by having one commissioning group, “We will be in position to interface with a single unit, instead of dealing with several different units in the SHAs and PCTs.”

This hope may prove to be overly optimistic, but Jose is clearly aiming to ensure the ABPI engages with the reform process, rather than stand on the sidelines.

Jose said: “We believe that with change comes opportunity to create something that is sustainable – we are aiming for a win-win situation and will be in negotiations with the coalition to achieve this.”