Presentation on theme: "How would you contract for branded medicines?"— Presentation transcript:
1How would you contract for branded medicines? Peter SharottChairman, Pharmaceutical Market Support GroupThank 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 medicinesWe 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.
2Subjects Covered The Commissioning Context for Medicines NHS Medicines Expenditure Estimates & TrendsDeveloping a National Strategic Approach to Medicines ProcurementLondon Procurement ProgrammePotential for National Branded Medicines ContractsRaising the GameNeed to emphasise that some of the things I’m going to say are based on my personal opinion and not necessarily represent current policyThese 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.
3Commissioning Context for Medicines (1) National Specialised Commissioning GroupEnzyme deficiency disordersEculizumabPulmonary hypertensionSHA Commissioning GroupsLondon:Managed entry of new drugs,Exceptional treatments request proceduresSHA Specialised Commissioning GroupsBone Marrow Transplantation: high-cost antifungalsHaemophilia – blood clotting factorsHIV/AIDs – antiretroviralsIntravenous ImmunoglobulinsWorld class commissioning all the rage.Conducted at different levels within the NHS with increasing complexity
4Commissioning Context for Medicines (2) PCT-Led Commissioning at sector/hub or pan-London levelLondon:Cancer – new high-cost chemotherapyHepatitis C – peginterferons and ribavirinOphthalmology – Age Related Macular Degeneration drugsRenal – ESAsThalassaemia – iron-chelating agentsPCTsHigh-cost, PbR-excluded drugsExceptional treatment requestsPractice Based Commissioning Groups
5Drug Expenditure Estimates 2008/09 UK - primary & secondary care= £8 billionEngland – secondary/tertiary careBranded £2.5 billionHomecare £500m +Generics £350mLondon – primary careAll drugs £1 billionLondon – secondary/tertiary careTotal London medicines expenditure in order of £ billionIn 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 marketsPCT 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
8Example 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.
9Growth 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.
10Pharmaceutical Procurement in England: Key Groups and Players National CommitteesSpecialistsProcurement GroupsTrustsNHSTrustPharmacyServicesandClinicalPCTsPaSAChief Operating Officer6 x RegionalSCEP GroupsGeneric MedicinesPaSAPharmaceuticalTeamNational PharmaceuticalSupplies Group (NPSG)StrategicBranded toGeneric MedicinesSimplified 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 ProgrammePrice 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,MedicinesInformation,and Clinical)Pharmaceutical MarketSupport Group (PMSG)Operational14 x Local PharmacyProcurement GroupsBranded MedicinesPatients: high quality, safe, clinically and cost-effective medicines, available when needed
11Developing 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)
12Developing 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 ConfederationsPharmacy Purchasing GroupsNHS PASASpecialist Procurement PharmacistsStrategy 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.
13Developing 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)
18Developing 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 SharottPMSG and NPSGSHA Senior Pharmacy Managers’ NetworksABPI Supply Chain Group
19Principles for Contracting Branded Medicines Collaborative approach, usually at SHA Pharmacy Procurement Group level, but may be more appropriate at sector or network levelContracting at individual NHS Trust level reduced to a minimum – must comply with EU procurement regulationsTendering and Contracting undertaken by NHS PASAFull compliance with contract Terms and Conditions both by the NHS and the suppliersContracting decisions need to take account of potential impact on primary care prescribing and costs and may actually be driven by the needs of PCTsClose engagement and involvement of clinicians and commissioners
20Contracting at NHS Trust Level Issues to be considered NHS Foundation TrustsCompetitiveness with neighbouring trustsPharmaceutical CompaniesPreference for local rather than collaborative contractsTransparency of contract terms and conditionsCompliance with EU procurement regulationsRelationship between price and volume across organisationsValue added servicesCommissioning agendaCollaborative commissioning at SHA and sector levelEquity of access to medicinesPCTs increasingly interested in relationship between prices paid and charged by NHS TrustsVisibility of value added services
21Product Categorisation Procurement-drivenNational Procurement – Generic medicinesoral productshospital-only oral productsInjectablesTransitional, branded to generic medicinesGeneric biosimilars?Pharmacy Group ProcurementBranded medicinesBranded biosimilarsClinically-drivenPharmacy Group-ledTherapeutic rationalisation and tenderingFramework agreements – market shareBreakdown of products by category, showing the differences in approach at national and local level.
22Identified advantages of therapeutic tendering Allows additional leverage to NHS in key branded marketsAchieves higher levels of discount compared to ‘traditional tendering’ methodologySuppliers have a commitment from NHS to manage volumes and grow market sharesAllows suppliers the opportunity to improve market share if they price incentivise.Regular contract reviews allows effective contract management for both parties
23Features of Framework Agreements Prices directly linked to committed volumesLowest prices and maximum savings are not automatically availableDirect involvement of clinicians in the decision-making processOn-going dialogue with the participating companies is essentialExpect protracted timescales both for development and full implementation
24Market 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£14Drug B£22£21£13Drug C£24£23The 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
25Example of achieving shift in market share; lower two bars.
26London 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 arrangementIdentify savings opportunities across trusts within NHS London and evaluate and implement accelerated savings initiativesDeloitte responsible for project managementLPP Steering Board – strategic board chaired by Malcolm Stamp, CEO, London Providers AgencyPeter Sharott represents P&MMLPP Operational Board – Project Director, Heads of Procurement, Directors of Finance, PaSA and Deloitte.Phil Aubrey represents P&MM.Pharmacy & Medicines Management Steering Group
27Structure for Pharmacy and Medicines Management Steering Group Project LeadThis is an inclusive arrangement based on a multi-disciplinary team approach.NHS Trust & PCT Pharmacy NetworksClinical NetworksPharmacy Procurement Consortia
28Stakeholder Engagement Stakeholder engagement is the key to success.It’s a “hearts and minds” approach which takes time to develop.
29LPP Pharmacy & Medicines Management Work Programme (1) ProcurementBranded medicines contractsTherapeutic Tendering/RationalisationIdentify opportunities to rationalise branded drug use and tender on a volume commitment basis either within sectors or on a pan-London basisFramework agreements with market share targetsManage value added servicesPrescribing PoliciesIdentify opportunities to influence local prescribing policies to achieve:shift from branded to generic drugs in secondary and primary careshift between therapeutic groups (e.g. A2RAs to ACEIs)Antivirals prescribing guidance for shingles and genital herpes
30LPP Pharmacy & Medicines Management Work Programme (2) OthersHomecare supply arrangementsEnteral feeds – demand management of sip feeds/tube feedsPurchase and supply of unlicensed “specials” and unlicensed medicines and dose-banded cytotoxic drugsLondon-wide benchmarking, comparative data,targets and monitoringBuild on local initiatives and guidelinesPrimary, secondary and tertiary care coverage30
32Issues and Lessons from LPP Work (1) Geographical complexity – large number of NHS Trusts and PCTs – optimising the benefitsEngagement with primary and secondary care clinicians and carry through to deliveryTimescales for achieving commitment and changePrioritisation of work for practicality and deliverabilityWillingness of pharmaceutical companies to participatePotential for both NHS Trusts and the companies to undermine the Terms and Conditions of framework agreementsPartial success in unbundling homecare service charges from drug costsBefore 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.
33Issues and Lessons from LPP Work (2) Savings/Cost AvoidanceAll savings attributable to the trustRealistic and achievable and not guaranteeBased on optimum rather than maximum outcomesSome individual projects will over-achieve, while others will under-achieveFull impact will be over more than one financial year and may depend on up-front infrastructure changes and investmentBenefits tracking – monthly reportingIMS and Pharmex for NHS TrustsePACT for PCTsHomecare suppliersData analyst from Croydon PCTBefore 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 estimatednew savings inNHS Trusts from33
34Working more closely with Pharma LPP P&MM initiatives results in closer relationships with IndustrySuppliers need to be engaged from the onset and processes and tendering methodology explained in detailExtended lead-in times needed for pharmaceutical companies to understand and respond to therapeutic tendering initiativesRegular contract reviews underpin closer supplier relationships and effective contract managementWorking 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.
35Should there be National Branded Medicines Contracts? Potential candidatesProducts only available at Basic NHS Prices, although may be subject to wholesaler discountsProducts only available at standard hospital discounted pricesPotential benefitsCompliance with EU procurement regulationsRationalisation of tendering and contracting workloadStimulation of new discounts, available to all NHS TrustsPotential disadvantagesDifficult establish links between prices with committed volumesRemote from local decision-makers and clinical influenceLack of sensitivity to new opportunities for therapeutic rationalisation through SHA Pharmacy Procurement GroupsNeed to judge when national contracts should be discontinued in favour SHA pharmacy Procurement Group contracts
36Examples of Current National Contracts VaccinesBlood clotting factors for HaemophiliaImmunoglobulins
37Immunoglobulins – A model for the future? (1) Started with a global shortage due to increasing demand and insufficient fractionation capacityIVIg 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 patientsManufacturers reluctant to sell into the UK because higher prices obtainable elsewhereNational 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 productSuppliers expected to keep buffer stocks of around three months’ supplyDemand strategy developed by DoHClinical guidelines introduced defining priorities for treatment and reducing clinical indications for which immunoglobulins could be prescribedNHS Trusts required to have a committee to manage compliance with guidelines and to manage future shortagesNational patient register introduced: all patients must be registered by April 2009SHAs required to commission the service, usually through Specialised Commissioning Groups
38Immunoglobulins – A model for the future? (2) OutcomesDuring the shortage - a significant reduction in prescribing, followed by an increase as supply situation improvedRecent introduction of clinical guidelines has halted growth and use now may be declining againPrices have risen and there is little variation between companiesThere is no current shortage of productCommissioners will expect tight expenditure control and will require justification for increased budgetsFuture considerationsReduce the number of companies on the contract?Stimulate greater price competitionAim to cover increases in clinical activity within existing budgets
40The NHS needs to raise it’s game by….. Placing more emphasis on managing branded medicines through identifying opportunities for therapeutic rationalisationPrioritising clinical engagement and consultation, underpinned by tendering and contracting activityGenerating savings to release funding for new drugs where the clinical evidence supports their useObtaining 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 countryWorking collaboratively across primary and secondary careWorking with commissioners at different levelsWorking more closely with the industry and recognising the need for longer lead times for therapeutic rationalisation and establsihment of framework agreements
41And, so does the industry by …. Recognising that the shifting emphasis towards branded medicines and the development of framework agreementsEngaging with the tendering and contracting process and recognising the risks associated with non-participationEngaging more regularly with Pharmacy Procurement Groups and Specialist Procurement Pharmacists to generate an on-going dialogue and better understanding of each others needsThinking 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 budgetsA Win-Win for All?