1. PROCUREMENT & DISTRIBUTION INTEREST GROUP Autumn Symposium 2007 http://www.pdig.org.uk/

2. Performance Management of Branded Medicines PDIG Award Kirsteen Docherty, Procurement Services Manager, UCLH Trust

3. Medicines Procurement Free market Oligopoly Monopoly Potential for Purchase/Contracting Supplier Strategy GenericBranded National SCEP Trust or regional consortia Therapeutic P.I. tendering Economies in physical practice Trust or regional consortia P.I. tenders Economies in physical practice

4. Research Questionnaire Content (24 forms returned) 1.Consortia purchasing 2.Multiple consortia purchasing 3.Parallel Imports 4.Volume discounts 5.Benchmarking 6.Tender paperwork 7.Performance monitoring (inc savings and cost pressures) and barriers to this 8.Therapeutic switching 9.Horizon scanning 10.The future for branded medicines procurement

5. Consortia purchasing

7. Impact of size of purchasing organisation Single Hospital Trust Consortium Regional/ Division National/ Division Purchasing Power Size of Organisation Ease of Co-ordination

10. Multiple consortium purchasing together % of Trusts interested in becoming involved in multiple consortium purchasing. Yes – 86% No – 14%

11. Respondents perceptions on effectiveness of multiple consortia purchasing

13. Parallel Importing % of Trusts who tender for parallel imports? Yes – 83% No – 17%

14. Factors that may prevent the purchase of PI’s? Continuity of supply 54% Labelling/packaging54% Counterfeiting42% Reputation of supplier8% Sourcing4% Limited discounts available4%

15. Volume Discounts Ability to take advantage of large volume discounts? Yes – 79% No – 21% Approx 50% of those who can take advantage stated this was because of access to a regional store

16. Benchmarking prices

17. Reporting on procurement performance? 62% of respondents compile a yearly report on procurement performance. Information included in the report; Savings achieved 100% Tendering work undertaken80% Further savings opportunities80% Work plan for next year53% Other13%

18. Reporting on procurement performance? Who is interested in seeing the report? Senior pharmacy managers93% Finance director87% CEO33% Trust procurement mgr27% Procurement hub20% Other13%

19. Savings 83% of respondents measured contract savings 34% were given a savings target per annum from the medicines budget 31% had medicines savings removed from the medicines budget

20. Price increases 1.71% of respondents measured price increases 2.How often price increases are measured?

21. Cost pressure analysis Definition: Monitoring the medicines budget using price changes and volume changes. 43% of respondents use cost pressure analysis (30% of these use this for all branded medicines)

22. Who is cost pressure analysis work shared with? Finance director80% Senior pharmacy mgr70% Trust procurement mgr20% Other20% CEO10%

23. Other performance monitoring tools Compilation and review of high expenditure 96% branded products e.g. Top 100. Value, number or % of high expenditure branded 71% products without a contract The number/ % of branded lines tendered per annum 25% The average % discount for branded lines as a whole 13% The average % discount for branded lines per company 4% The average % discount per therapeutic group 0%

24. Suggested other performance measurements Supplier performance monitoring Price tracking in relation to patent expiry Impact of entry of competitor products Opportunities for therapeutic switching

25. Barriers to measuring branded medicines contracting performance

26. Therapeutic Switching 83% of Trusts are currently involved in therapeutic switching For 73% of those Trusts the pharmacy procurement team are involved

27. Therapeutic switching, easy or difficult?

28. Key problems with implementation of therapeutic switching Reluctance to change50% Clinical concerns42% Insufficient resources42% Industry funding (linked to product)13% Other13% Lack of clinical data8% Other priorities4% Insufficient savings4%

29. Horizon Scanning Products losing patent67% New discount offerings on branded 58% products New high cost branded products that 88% may impact on budgets

30. Respondents views on future structures for branded medicines procurement Involvement of NPSG & PMSG88% Collaboration between Trust procurement,83% consortium and PaSA Collaboration between Trusts in form of 67% consortium Multiple consortia purchasing67% CPH involvement21% NHS Supply Chain involvement17% Trusts supply dept involvement17%

31. What are the current trends in branded pharmaceuticals management? More collaboration between Trusts and Consortium e.g. LPP. Trust contracting likely to decrease further. Increased use of branded medicine tendering Companies increasingly offer volume based frameworks

32. What are the current trends in branded pharmaceuticals management? Introduction of payback schemes e.g. Velcade. Increase in treatment of patients within their home environment Increase in development of biotech drugs – decreased competition, limited tender/negotiation opps. Encouragement of therapeutic switching across multi-consortia e.g. LPP.

33. Why are we contracting for branded medicines? Current PPRS profit cap model is not effective at controlling prices? OFT proposal for value/ evidence based pricing by NICE. Takes branded medicine management work load from local and multi- consortia to national level. Reference pricing in New Zealand & Australia and cross product strategic agreements in New Zealand. Govt/PPRS and manufacturer price negotiations prior to product launch e.g. French model.