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How would you contract for branded medicines?

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Presentation on theme: "How would you contract for branded medicines?"— Presentation transcript:

1 How would you contract for branded medicines?
Peter Sharott Chairman, Pharmaceutical Market Support Group Thank you for the opportunity to speak to you today. I’m going to talk to you about how I see medicines procurement in the NHS developing over the next few years, especially with regard to branded medicines We are seeking to work much more closely with all pharma companies to achieve win-win situations. Our relationships with companies vary enormously from those that work vary closely with us on a regular basis, and those that never show any willingness to meet.

2 Subjects Covered The Commissioning Context for Medicines
NHS Medicines Expenditure Estimates & Trends Developing a National Strategic Approach to Medicines Procurement London Procurement Programme Potential for National Branded Medicines Contracts Raising the Game Need to emphasise that some of the things I’m going to say are based on my personal opinion and not necessarily represent current policy These are the main topics I should like to discuss. Probably trying to cover more ground than is feasible in the time allocated to me. Some of the more detailed information on the slides, particularly relating to the national medicines procurement structures and the London Procurement Programme is intended for you to refer to after this event if you are interested in understanding more about what is happening in medicines procurement.

3 Commissioning Context for Medicines (1)
National Specialised Commissioning Group Enzyme deficiency disorders Eculizumab Pulmonary hypertension SHA Commissioning Groups London: Managed entry of new drugs, Exceptional treatments request procedures SHA Specialised Commissioning Groups Bone Marrow Transplantation: high-cost antifungals Haemophilia – blood clotting factors HIV/AIDs – antiretrovirals Intravenous Immunoglobulins World class commissioning all the rage. Conducted at different levels within the NHS with increasing complexity

4 Commissioning Context for Medicines (2)
PCT-Led Commissioning at sector/hub or pan-London level London: Cancer – new high-cost chemotherapy Hepatitis C – peginterferons and ribavirin Ophthalmology – Age Related Macular Degeneration drugs Renal – ESAs Thalassaemia – iron-chelating agents PCTs High-cost, PbR-excluded drugs Exceptional treatment requests Practice Based Commissioning Groups

5 Drug Expenditure Estimates 2008/09
UK - primary & secondary care = £8 billion England – secondary/tertiary care Branded £2.5 billion Homecare £500m + Generics £350m London – primary care All drugs £1 billion London – secondary/tertiary care Total London medicines expenditure in order of £ billion In NHS Trusts, PbR excluded high cost drugs can now account for 50-60% of total drug expenditure. Increasing burden to keep records of all dispensed drugs in order to secure re-imbursement through PCT arrangements. Hospital drug expenditure rising at least 10% year – branded medicines in developing markets PCT expenditure not rising as fast, but it is important to recognise the need to gain continuing investment in new medicines in the hospital sector. Joined up working between primary and secondary care is becoming increasingly important. Hospital Drug Expenditure is rising by about 12% p.a. High-Cost PbR Excluded Drugs account for % of expenditure



8 Example of rapid growth in cancer chemotherapy, driven by NICE guidance.
Not everything that NICE does has a negative impact on medicines usage. Medicines procurement needs to be underpinned, by good quality, evidence-based prescribing.

9 Growth in antiretroviral drug expenditure: in London currently arround 12% p.a.
New patient growth – 8-10% per year. Early treatment for patients – 72% increasing to 85 to 90% New drugs produce undetectable viral loads, have fewer side effects, are available in combination formulations, are safer, cause fewer adverse effects – but are up to three times more expensive than the older drugs.

10 Pharmaceutical Procurement in England: Key Groups and Players
National Committees Specialists Procurement Groups Trusts NHS Trust Pharmacy Services and Clinical PCTs PaSA Chief Operating Officer 6 x Regional SCEP Groups Generic Medicines PaSA Pharmaceutical Team National Pharmaceutical Supplies Group (NPSG) Strategic Branded to Generic Medicines Simplified diagram of how Medicines Procurement is currently managed in England. Scotland, Wales and Northern Ireland have their own arrangements but we work very closely with them. SCEP – Supply Chain Excellence Programme Price is not necessarily the main driver. Generic medicines account for only about £300m of actual hospital drug expenditure. The approach for to generic medicines is very well structured and refined and works on a national basis. Branded medicines (and homecare supply) represent a much greater challenge and where current and future effort will be concentrated. Pharmacists (Procurement, QA, Production, Medicines Information, and Clinical) Pharmaceutical Market Support Group (PMSG) Operational 14 x Local Pharmacy Procurement Groups Branded Medicines Patients: high quality, safe, clinically and cost-effective medicines, available when needed

11 Developing a National Strategic Approach to Medicines Procurement
Supply Chain Excellence Programme (SCEP) (2003) A strategic framework to source pharmaceuticals for the NHS in England (October 2005)

12 Developing a National Strategic Approach to Medicines Procurement
Organisational Roles and Responsibilities Defined for: National Pharmaceutical Supplies Group (NPSG) Pharmaceutical Market Support Group (PMSG) Collaborative Procurement Hubs & Procurement Confederations Pharmacy Purchasing Groups NHS PASA Specialist Procurement Pharmacists Strategy launched in October 2005 following consultation with the DH Commercial Directorate, PaSA and the recently-formed Collaborative Procurement Hubs. Although the CPHs are responsible for all non-pay expenditure on behalf of their trust members ,at an early stage they began to take an interest in medicines, believing they would be a rich source for meeting their savings targets. There was a need to ensure that the existing groups and structures continued to operate effectively, particularly at a clinical level. 8 out 10 SHAs now have a CPH, the exceptions are London and the South West, which have less formalised arrangements. The LPP has been set up as a short-term substitute and more about this later.

13 Developing a National Strategic Approach to Medicines Procurement
Supply Chain Excellence Programme (SCEP) (2003) A strategic framework to source pharmaceuticals for the NHS in England (October 2005) Joint Category Working Group (Pharmaceuticals) Pharmaceutical Products and Services List (November 2008)


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18 Developing a National Strategic Approach to Medicines Procurement
Supply Chain Excellence Programme (SCEP) (2003) A strategic framework to source pharmaceuticals for the NHS in England (October 2005) Joint Category Working Group (Pharmaceuticals) Pharmaceutical Products and Services List (November 2008) Next Steps: National Strategy for Managing Branded Medicines (2009) Led by Peter Sharott PMSG and NPSG SHA Senior Pharmacy Managers’ Networks ABPI Supply Chain Group

19 Principles for Contracting Branded Medicines
Collaborative approach, usually at SHA Pharmacy Procurement Group level, but may be more appropriate at sector or network level Contracting at individual NHS Trust level reduced to a minimum – must comply with EU procurement regulations Tendering and Contracting undertaken by NHS PASA Full compliance with contract Terms and Conditions both by the NHS and the suppliers Contracting decisions need to take account of potential impact on primary care prescribing and costs and may actually be driven by the needs of PCTs Close engagement and involvement of clinicians and commissioners

20 Contracting at NHS Trust Level Issues to be considered
NHS Foundation Trusts Competitiveness with neighbouring trusts Pharmaceutical Companies Preference for local rather than collaborative contracts Transparency of contract terms and conditions Compliance with EU procurement regulations Relationship between price and volume across organisations Value added services Commissioning agenda Collaborative commissioning at SHA and sector level Equity of access to medicines PCTs increasingly interested in relationship between prices paid and charged by NHS Trusts Visibility of value added services

21 Product Categorisation
Procurement-driven National Procurement – Generic medicines oral products hospital-only oral products Injectables Transitional, branded to generic medicines Generic biosimilars? Pharmacy Group Procurement Branded medicines Branded biosimilars Clinically-driven Pharmacy Group-led Therapeutic rationalisation and tendering Framework agreements – market share Breakdown of products by category, showing the differences in approach at national and local level.

22 Identified advantages of therapeutic tendering
Allows additional leverage to NHS in key branded markets Achieves higher levels of discount compared to ‘traditional tendering’ methodology Suppliers have a commitment from NHS to manage volumes and grow market shares Allows suppliers the opportunity to improve market share if they price incentivise. Regular contract reviews allows effective contract management for both parties

23 Features of Framework Agreements
Prices directly linked to committed volumes Lowest prices and maximum savings are not automatically available Direct involvement of clinicians in the decision-making process On-going dialogue with the participating companies is essential Expect protracted timescales both for development and full implementation

24 Market Share Matrix = Demand Management Market Share Drug A £20 £19
10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Drug A £20 £19 £18 £17 £16 £15 £14 Drug B £22 £21 £13 Drug C £24 £23 The market share matrix is a framework agreement which places the onus on the NHS to determine which drug or drugs within a therapeutic group it wishes to use. The aggregated volume commitment for each drug determines the price that will be paid. Prices paid will vary with time and the lowest price for some drugs may not be achieved. There should be an overall saving to the NHS without completely restrict clinician choice and patient need. Aiming for a win/win for supplier who offers better price for increased market share. Utilise existing strong pharmacy networks (inter and intra trust) and links with clinicians = Demand Management

25 Example of achieving shift in market share; lower two bars.

26 London Procurement Programme (LPP) Formation & Structure
London Procurement Programme set in April 2006 with the formation of the new London Strategic Health Authority (NHS London) as a short-term alternative to a pan-London Collaborative Procurement Hub or similar arrangement Identify savings opportunities across trusts within NHS London and evaluate and implement accelerated savings initiatives Deloitte responsible for project management LPP Steering Board – strategic board chaired by Malcolm Stamp, CEO, London Providers Agency Peter Sharott represents P&MM LPP Operational Board – Project Director, Heads of Procurement, Directors of Finance, PaSA and Deloitte. Phil Aubrey represents P&MM. Pharmacy & Medicines Management Steering Group

27 Structure for Pharmacy and Medicines Management Steering Group
Project Lead This is an inclusive arrangement based on a multi-disciplinary team approach. NHS Trust & PCT Pharmacy Networks Clinical Networks Pharmacy Procurement Consortia

28 Stakeholder Engagement
Stakeholder engagement is the key to success. It’s a “hearts and minds” approach which takes time to develop.

29 LPP Pharmacy & Medicines Management Work Programme (1)
Procurement Branded medicines contracts Therapeutic Tendering/Rationalisation Identify opportunities to rationalise branded drug use and tender on a volume commitment basis either within sectors or on a pan-London basis Framework agreements with market share targets Manage value added services Prescribing Policies Identify opportunities to influence local prescribing policies to achieve: shift from branded to generic drugs in secondary and primary care shift between therapeutic groups (e.g. A2RAs to ACEIs) Antivirals prescribing guidance for shingles and genital herpes

30 LPP Pharmacy & Medicines Management Work Programme (2)
Others Homecare supply arrangements Enteral feeds – demand management of sip feeds/tube feeds Purchase and supply of unlicensed “specials” and unlicensed medicines and dose-banded cytotoxic drugs London-wide benchmarking, comparative data, targets and monitoring Build on local initiatives and guidelines Primary, secondary and tertiary care coverage 30

31 Division of LPP Contracting Arrangements
Therapeutic Rationalisation Branded Medicines Contracts Anti-TNFs Anti-fungals Antivirals Aromatase Inhibitors Bisphosphonates EPO Growth Stimulating Factors Gonadorelin Analogues Hepatitis C Urological Solutions X-Ray Contrast Media Anti-platelet drugs Anti-psychotics Antiretrovirals Botulinum Toxin Cancer Chemotherapy Carbopenem antibiotics Growth Hormone Hepatitis B Immunosuppressants Low Molecular Weight Heparins

32 Issues and Lessons from LPP Work (1)
Geographical complexity – large number of NHS Trusts and PCTs – optimising the benefits Engagement with primary and secondary care clinicians and carry through to delivery Timescales for achieving commitment and change Prioritisation of work for practicality and deliverability Willingness of pharmaceutical companies to participate Potential for both NHS Trusts and the companies to undermine the Terms and Conditions of framework agreements Partial success in unbundling homecare service charges from drug costs Before going on to talk specifically about the LPP, it’s worth just reflecting on the underlying principles which distinguish generic medicines procurement from branded medicines procurement.

33 Issues and Lessons from LPP Work (2)
Savings/Cost Avoidance All savings attributable to the trust Realistic and achievable and not guarantee Based on optimum rather than maximum outcomes Some individual projects will over-achieve, while others will under-achieve Full impact will be over more than one financial year and may depend on up-front infrastructure changes and investment Benefits tracking – monthly reporting IMS and Pharmex for NHS Trusts ePACT for PCTs Homecare suppliers Data analyst from Croydon PCT Before going on to talk specifically about the LPP, it’s worth just reflecting on the underlying principles which distinguish generic medicines procurement from branded medicines procurement. £18m estimated new savings in NHS Trusts from 33

34 Working more closely with Pharma
LPP P&MM initiatives results in closer relationships with Industry Suppliers need to be engaged from the onset and processes and tendering methodology explained in detail Extended lead-in times needed for pharmaceutical companies to understand and respond to therapeutic tendering initiatives Regular contract reviews underpin closer supplier relationships and effective contract management Working with pharma has its challenges. Silo working in some companies sometimes makes it reach the right people. Need to meet with senior accounts mangers, who may or may not be the decision-makers. We know that some companies almost have an aversion to meeting with us and to tendering for contracts. This may be very short-sighted. As we get more experienced and sophistocated in our approaches, there is will risk that some companies will be left out of contracts and will see their business diminish.

35 Should there be National Branded Medicines Contracts?
Potential candidates Products only available at Basic NHS Prices, although may be subject to wholesaler discounts Products only available at standard hospital discounted prices Potential benefits Compliance with EU procurement regulations Rationalisation of tendering and contracting workload Stimulation of new discounts, available to all NHS Trusts Potential disadvantages Difficult establish links between prices with committed volumes Remote from local decision-makers and clinical influence Lack of sensitivity to new opportunities for therapeutic rationalisation through SHA Pharmacy Procurement Groups Need to judge when national contracts should be discontinued in favour SHA pharmacy Procurement Group contracts

36 Examples of Current National Contracts
Vaccines Blood clotting factors for Haemophilia Immunoglobulins

37 Immunoglobulins – A model for the future? (1)
Started with a global shortage due to increasing demand and insufficient fractionation capacity IVIg is a high-cost drug exclusion funded by PCTs, generally without restriction on use (i.e. budgets not capped) Branded generic market with restricted opportunities for switching patients Manufacturers reluctant to sell into the UK because higher prices obtainable elsewhere National procurement strategy introduced to manage supplies (NHS PASA/PMSG) Suppliers wanted volume commitments from all NHS Trusts with expectation that there would not be a shortfall or greater demand for the product Suppliers expected to keep buffer stocks of around three months’ supply Demand strategy developed by DoH Clinical guidelines introduced defining priorities for treatment and reducing clinical indications for which immunoglobulins could be prescribed NHS Trusts required to have a committee to manage compliance with guidelines and to manage future shortages National patient register introduced: all patients must be registered by April 2009 SHAs required to commission the service, usually through Specialised Commissioning Groups

38 Immunoglobulins – A model for the future? (2)
Outcomes During the shortage - a significant reduction in prescribing, followed by an increase as supply situation improved Recent introduction of clinical guidelines has halted growth and use now may be declining again Prices have risen and there is little variation between companies There is no current shortage of product Commissioners will expect tight expenditure control and will require justification for increased budgets Future considerations Reduce the number of companies on the contract? Stimulate greater price competition Aim to cover increases in clinical activity within existing budgets


40 The NHS needs to raise it’s game by…..
Placing more emphasis on managing branded medicines through identifying opportunities for therapeutic rationalisation Prioritising clinical engagement and consultation, underpinned by tendering and contracting activity Generating savings to release funding for new drugs where the clinical evidence supports their use Obtaining more resources, including the establishment of full-time specialist procurement pharmacist posts in all SHAs, to emulate the work undertaken in London and other parts of the country Working collaboratively across primary and secondary care Working with commissioners at different levels Working more closely with the industry and recognising the need for longer lead times for therapeutic rationalisation and establsihment of framework agreements

41 And, so does the industry by ….
Recognising that the shifting emphasis towards branded medicines and the development of framework agreements Engaging with the tendering and contracting process and recognising the risks associated with non-participation Engaging more regularly with Pharmacy Procurement Groups and Specialist Procurement Pharmacists to generate an on-going dialogue and better understanding of each others needs Thinking more creatively about the opportunities for reducing prices as volumes increase (i.e. ensuring that price alone does not inhibit product uptake and limit the opportunity for treating more patients within capped budgets A Win-Win for All?

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