Since the White Paper’s release in July, there have been numerous discussions on its impact on pharma. Jean-Francois Delas, analyses the proposed reforms and how they’ll affect the industry.
Over recent years the UK has pioneered the evolution towards payer-driven healthcare. This has created significant business shifts in both primary and secondary care, provoking a fundamental rethink of pharmaceutical commercial operating and governance models.
Now, with its White Paper, Equity and Excellence: Liberating the NHS, the Government has signalled yet another revolution in the way healthcare is organised and delivered. Although the intent and underlying principles of the NHS reform set out in the White Paper may be laudable, the reality is likely to present major challenges both to healthcare professionals and to the pharmaceutical industry, with a high risk that the ‘new’ commercial models currently being developed and implemented will no longer be fit for purpose.
In response to an evolving healthcare environment involving larger numbers of stakeholders operating at a range of different levels, pharmaceutical companies in the UK have taken the lead in restructuring commercial operations to recognise the increasing influence of payers and patients in addition to traditional healthcare providers such as GPs. Most companies are introducing multi-layered account management structures to handle interactions with these different stakeholder groups, comprising of:
- National management responsible for relationships with the NHS and related bodies
- Regional organisation responsible for relationships with Strategic Health Authorities
- ‘Field forces’ responsible for relationships with Primary Care Trusts and practices.
With the increased focus on payers and other decision-makers, the perceived need for the role of the traditional GP-focused sales representative has diminished in recent years; and perhaps the most visible impact of pharmaceutical companies’ commercial restructuring activities has been the near-unilateral reduction in sales force headcount.
The new health service
The latest healthcare reform set out in the White Paper promises to further change the way care is funded, commissioned and delivered, and is being heralded as the biggest shake-up of the NHS since its creation in 1948.
Funding of care: The White Paper reinforces the commitment to value-based treatments – already exemplified by the move away from the PPRS scheme towards Value Based Pricing by 2014 – with the Government setting out the vision for the NHS to be held accountable for clinically credible and evidence-based outcomes measures. In addition to its current role as HTA, NICE will assume responsibility for the implementation of some 150 quality standards over the next five years which will directly determine healthcare payments. An independent NHS Commissioning Board will be set up to review progress in achieving health outcomes, and allocate NHS resources accordingly.
A new NHS outcomes framework will set out a batch of targets focusing on clinically relevant benefits, to include treatment safety and effectiveness and patient experience. The framework is expected to be in place later this year, ready for implementation from April 2011.
Commissioning of care: In perhaps the most highly-publicised departure from the current system, GPs will be at the core of commissioning with an estimated 300-500 consortia drawn from some 35,000 GPs assuming commissioning responsibility from the existing ten SHAs and 152 PCTs, which will ultimately be abolished. The roll-out of these consortia will be progressive, with shadow entities (to PCTs) established in 2011/12 before full transfer of responsibilities from April 2013. Although GP practices have previously had some responsibility in commissioning services through Practice Based Commissioning, this new responsibility – overseen by the NHS Commissioning Board – represents a key and major change.
At the local level, healthcare professionals and providers will be given more autonomy, albeit within the guidance provided by a commissioning outcomes framework – derived from the overarching NHS outcomes framework – and will have greater accountability for the results they deliver. On this basis, consortia and providers will have to agree on local priorities. NICE quality standards will be reflected in commissioning contracts and financial incentives, while the NHS commission board will calculate practice-level budgets and allocate these directly to consortia.
Following initial progress with payment by results, the NHS Commissioning Board will refine and accelerate the development of best-practice tariffs – starting in 2011/12. In parallel, a more comprehensive payment for performance schemes is being developed, in which payments will be conditional on achieving quality goals. The longer-term vision and ambition is the move to personal budgets which put patients in greater control of their own health. Pilots will be encouraged in discrete regions, although a more general roll-out is not expected in the immediate future.
Delivery of care: More than ever before, providers will be accountable for delivery of care. Payment will be made on the basis of performance, with Patient Reported Outcomes becoming a key measure and focus. Within the next three years, each NHS Trust will become – or be a part of – a foundation trust, with associated freedom and autonomy under the joint supervision of two independent regulators, Monitor and the Care Quality Commission. The Department of Health will also extend the scope and value of the Commissioning for Quality and Innovation payment framework to support local quality improvement goals. A similar model will be introduced in primary care with the establishment of a single contractual and funding model.
Patients will be given increasing choice in deciding their own care, including treatments and selection of providers. This will be supported by increasing amounts of information on safety, effectiveness and experience, and enabled by allowing individuals to exercise greater control over their health records.
What now for pharma?
To accommodate the future market environment brought about by the proposed NHS reform, two main changes are expected to impact pharmaceutical commercial operations:
1. The nature of the conversation: an acceleration towards value-based discussion
Demonstrating the economic value of treatment is rapidly becoming the common denominator for discussions with various stakeholder groups, and economic considerations are likely to become even more critical for securing market access:
The Value Based Pricing scheme will lay out the foundations looking at a broader definition of value across the whole patient care continuum including post-care and societal costs
The new NHS Commissioning Board is independent of political influence with various financial incentives to make the whole system more productive and effective
GPs consortia will have the freedom to commission with local contracts, funding and incentives designed to reward achievements against targets
There are opportunities for a higher degree of involvement of the private sector to support consortia and delivery of care, reinforcing the focus on financially sound provision of services.
2. The structure of the conversation: devolution of decision-making to the front-line
Compared to the current regional focus for the implementation of national guidelines via SHAs and PCTs, decision-making will now reside with GPs at the point of interactions with customers. In some ways this represents a return to the ‘old model’ with GPs enjoying greater freedom of prescribing decision-making. As well as assuming the responsibility for planning and commissioning of care, GPs consortia will also be expected to be involved in activities such as prioritisation of care, service (re)design and recommendation/evaluation of providers and outcomes.
These two key changes will have direct implications on the commercial operations for pharmaceutical companies. Some will be minor and a natural continuation or acceleration of current initiatives; some are likely to be more fundamental and structural.
Capabilities: In an article published earlier this year, Kinapse discussed the list of future commercial capabilities required by the pharmaceutical industry to accommodate the evolving healthcare environment. These included customer-facing capabilities – such as account management, lobbying, contracting, clinical education, KOL management and patient engagement; and enabling capabilities – including Health Economics Outcomes Research (HEOR) and epidemiology.
Indeed, these capabilities are perhaps even more relevant to sustain the new nature of the conversation as described above, and as such, their implementation should become an even greater priority. However, in order to support the new structure of the conversation, it is critical that the specific mix and content of these capabilities is tailored to address the requirements of the particular set of stakeholders identified in the NHS White Paper.
The mapping of these capabilities to commercial roles within the organisation is also likely to change as the customer landscape continues to evolve. For example, in order to be able to interact effectively with new GPs consortia, ‘field forces’ are likely to need greater training in technical disciplines such as HEOR and epidemiology.
Structure and size: This is perhaps where the proposed NHS reform will have the greatest impact. The proposal to phase out SHAs and devolve planning and commissioning power to an estimated 300-500 GPs consortia will require a comprehensive review of both the structure and the size of pharmaceutical companies’ current regional and field operations. In some cases there will be minimal impact. For instance, regional directors currently responsible for maintaining relationships with SHAs will see their roles slightly modified as they transition to interacting with groups of consortia and the overseeing NHS Commissioning Board. However, in other cases the impact will be more far reaching, with the biggest changes likely to involve field operations – which typically comprise of account managers currently responsible for relationships with PCTs, and representatives currently responsible for relationships with GPs. In order to achieve good coverage of each GP consortium as an independent and autonomous commissioning entity, there is likely to be a requirement for an increase in the size of field operations, primarily in the number of account managers. Although this may imply a welcome reversal of the downsizing trend seen over recent years it is likely to represent a significant challenge for companies to implement, since the skill sets of account managers and representatives are substantially different and there is a relatively limited available talent pool of the former. Faced with limited opportunities to recruit experienced account managers, companies might have to review internal career development tracks. For example, training representatives in the necessary account management skills to perform these roles. However, because of the different skill sets required, this process is likely to be highly time consuming at best, and in many cases may not be possible at all.
The way forward
Although implementation of the full scope of changes set out in the NHS White Paper will span the next few years, the Government is proposing rapid action in the near term – the first changes are proposed to commence later this year with a view to being operational by the beginning of the next fiscal year. In this context it is imperative that pharmaceutical companies begin to consider immediately if and how they need to adapt. A three-stage process is recommended:
Landscape analysis – detailed review of the future NHS
Companies must undertake a detailed review of the likely future stakeholder landscape to determine specifically how care will be funded, commissioned and delivered. The key decision-makers and influencers at each stage must be identified and used to define future commercial requirements.
Organisations will also need to understand the detailed timeframe of the proposed changes to the UK healthcare environment and be aware of key milestones and their implications. This understanding should form the basis of change plans that allow phased implementation of relevant components of the commercial models in response to specific trigger points in the evolving healthcare environment.
Commercial capabilities implications – competencies and roles
The landscape analysis and understanding of future commercial requirements should be utilised to inform an audit of commercial abilities that profiles the requisite capabilities against those which currently exist in order to identify those which need reinforcing/development and those which need to be acquired. Capabilities will be specific to the interaction with particular stakeholder groups.
Requisite capabilities should then be mapped against roles in order to determine which will house the new capabilities. This stage is likely to present opportunities for changes to existing role descriptions and/or for new roles to be created.
Commercial organisation adaptation – structure and size
The final stage of the process is to shape new capabilities and roles into an organisational model and to define the appropriate structure and size. Sizing will ultimately be dictated by workload considerations, based on the number of customers, their relative importance and the degree of planned activities.
In summary, it is clear that the NHS reform set out in the recent White Paper will bring disruption to current pharmaceutical commercial models that are themselves in their infancy. Good and early analysis and planning around the proposed changes and their operational and organisational implications is critical for proactive and effective management of what promises to be a radical shake-up of healthcare provision in the UK.
Jean-Francois Delas is Vice President at Kinapse Ltd. and leads the Marketing & Sales Consulting Practice. Kinapse provide consulting and outsourcing services to the life sciences industries across the world. To download the Kinapse White Paper: New commercial realities, please visit www.kinapse.com.