With the Government aiming to increase innovation within the NHS, pharma has been tasked with helping to meet the challenge. Omar Ali, in his Matrix Revolutions series, focuses on the means to help the industry find the next big thing.  

With so many documents to read – white papers, NHS initiatives and DH directives – keeping tabs on the direction of travel of the NHS, as well as the pace of change, makes life difficult; and that’s not including the latest clinical trials, review publications and NICE guidance. In this issue of the Matrix Revolutions, I want to review one of the most important and potentially game changing documents to have
crossed my desk: Innovation, Health and Wealth.

The document comes under ‘improvement and efficiency’ from the DH and has an impressive circulation list. However, if the cascade didn’t get past those at directorship level, the average GP and healthcare professional may not have received what is a very important document. It also goes hand-in-hand with a story from NICE in February – Improving access to NICE-approved drugs – which provided the NHS with a best-practice guide on the implementation of local formularies in accordance with national guidance.

Innovation, Health and Wealth calls for all NHS organisations to come to ‘action’ by starting planning processes for the implementation of innovative new treatments approved by NICE.

“…while the NHS is recognised as a world leader in invention, the spread of those inventions within the NHS has often been too slow, and sometimes even the best of them fail to achieve widespread use”

I think we would all recognise this symptom of the NHS and list numerous examples. The UK is well known in being conservative with its adoption and prescribing of new drugs. But when NICE makes deep probing evaluations of new treatments it may be disturbing to find such variation in the implementation of best practice and subsequent availability of new medicines for patients.

It’s well known that when HTA agencies reject drugs the NHS is very good at implementing rapid ‘decommissioned’ formularies, which make general prescribing and availability very limited. However, when NICE does approve a new treatment, the variable uptake observed within the NHS as a whole has resulted in this new initiative.

“The challenge both for the NHS and for its industry partners is to pursue innovations that genuinely add value but not cost”

This is interesting how it adds up… I’m supposed to work with you to find innovations that don’t add cost… The problem with documents is rhetoric and direction. In reality, implementation will come down to precise and specific details. There are not many new drugs that ‘don’t add cost’ – they all add cost! The modelling comes in finding those that may offset some of the costs (QIPP).

“This report has been developed as part of the Prime Minister’s UK Strategy for Health Innovation and Life Sciences. The aim of this strategy is to ensure that the UK maintains and builds on its world leading position for life sciences, that the potential of life sciences to contribute to UK growth is realised, and that the UK remains and grows as an attractive location for investment now and in the future”

The flavour of the document paints a clear picture of investment from pharma which will potentially deteriorate within the UK due to poor uptake/diffusion by the NHS. The difficulty lays in that ‘uptake’ criteria for the NHS doesn’t have ‘investment’ as part of the decision process. For example, if a company invests millions into UK R&D and produces a poor, non-innovative and non-cost effective drug, should we put it on formulary due to the fact they have invested in the UK economy? If the answer is ‘yes’, we all need to change the paradigm and throw QIPP out of the window. I guess the alternative is how long can pharma keep resourcing UK investment and see no return? Not long in this climate. Surely then the answer is as seen above: the challenge of making new, innovative drugs cost effective.

Having helped bring NHS payers, CCG commissioners and pharma together, it brings some common ground on market access. I have found that with all of the details, some dedicated quality time with stakeholders and some flexibility from pharma, we can always find some manner of value-added to the product and/or a financial/value proposition that changes the paradigm. The truth is we don’t spend enough quality time talking together about the real issues. We tend to spend poorly co-ordinated NHS/pharma interactions looking at insane cost-models and budget impacts that are largely irrelevant. Add to that ABPI/compliance and internal concordance issues, and the NHS and pharma are often dancing around the tables instead of having decent commercial business discussions that pave the way to a healthier, wealthier future for both.

Potential barriers
“Poor access to evidence, data and metrics”

I have been impressed with some of the data informatics I have seen that actually represent data handling with a view to Secondary Uses Service (SUS) information, hospital episodes and prescribing by the CCG sector or a PCT. Here, pharma is beginning to excel themselves and it does have an influence on working together. This approach is far better than those companies who have a black-box approach to health economics.

“Insufficient recognition and celebration of innovation and innovators”

It’s hard for NHS innovators to ‘step out’ and stick their heads above the parapets when those around them are stuck in the same old ways. Far from recognition or reward, one can expect pushing uphill and against the grain. The only way to succeed here is to believe in the cause of innovation and true improvement. My feeling is those ‘beacons of light’ are beginning to shine in healthcare – and love it or hate it – one of the strengths of the Health Bill is bringing those leaders to the forefront through sheer necessity. My observation is that the pharma culture celebrates innovation from the core – it’s what you do and what you believe in. Being an optimist, I believe pharma has a role on the ground in bringing some of that innovation to ‘rub-off’ on your NHS customers.

“Financial levers do not reward innovators and can act as a disincentive to adoption and diffusion”

You may have read my previous Matrix Revolutions ‘case’ on Prolia (denosumab) – it had a NICE TAG but saw variable uptake, even a year after its recommendation. This case clearly outlined how micro-economics and financial levers can stall the introduction of new innovative therapies. But getting the tariffs to match, commissioning to fund and finding the code to unlock prescribing took a long time… why? Partly because our own informatics is poor – an example of the NHS barrier – and partly because dealing with payer issues doesn’t come first-hand to most brand teams.
Other financial levers that will inhibit uptake include:

• Enhanced LES & DES warfarin payments to GPs which will be a threatened source of income with new oral anticoagulants.
• QoF cholesterol targets of 5mmol/l in the face of innovative agents which may achieve lower cholesterol targets and reduced outcomes.
• QIPP Indicators aiming for a percentage of metformin and sulphonylurea when newer agents for type 2 diabetes reduce incidence of hypoglycaemic episodes and save money on blood glucose testing strips.

In the next issue of Matrix Revolutions, Omar Ali continues to review the DH’s modernisation plans and also focuses on what makes the diffusion of innovation happen. 

Omar Ali is the Formulary Development Pharmacist for Surrey & Sussex Healthcare NHS Trust and sits on the External Reference Group for Cost Impact Modelling for NICE. He can be reached at omar.ali@sash.nhs.uk.

Discounts, rebates and patient access schemes are increasingly prevalent features of the NHS drug purchasing landscape. In the latest of his Matrix Revolutions articles, Omar Ali looks at the implications for pharma of the new cut-price culture.

The growth of discounts, rebates and patient access schemes beyond the familiar ‘hospital discounting’ principle has surpassed all expectations. Lately we have seen everything from local rebate schemes through to national patient access schemes. Why has there been an exponential growth in these schemes, do they work, and how will they evolve under the new CCGs?

In time for the Christmas break, I am writing what could be the most mind-bending article to date from Matrix Revolutions. Read on…

Hospital discounts
We are all familiar with hospital discounting and it is almost seen as a given. The NHS and pharma have come to expect this in the past, though the changing NHS landscape has altered the way discounts are used for leverage. So ‘loss leaders’ (where drugs are provided to hospitals for pennies when they cost significant £££ in the community) have slowly become politically incorrect as joint formularies have become the norm within health economies.

In fact, hospital prices are not considered for drugs that are routinely prescribed in primary care (though there will be a significant expectation of keeping margins and costs down retrospectively). This means that hospital discounts don’t work as a ‘driver’ for formulary inclusion of primary care drugs - but that once a product has been chosen for formulary, an NHS Hospital Trust will certainly want the best discount on price.

With hospital-only products it’s a different story. Here we have a flourishing and competitive market that drives formulary inclusion (e.g. LMW heparins, anaesthetics). We see cases where clinical drivers and hospital discounting generate significant D&T arguments based on which drug is best versus procurement savings on drug purchasing.

An interesting case is low molecular weight heparins. For some years this has been a relatively stable marketplace, with most Trusts ‘settled’ on one long-term LMW heparin - usually across the board. There was a feeling that it didn’t matter precisely which heparin you used (you could argue all kinds of  clinical data sets on which was best), but that you needed to ‘find a partner and stick with them’ – then you could carry out annual assessments at contract time and review the volume of usage and price, the differential use of varying dose bands and so on.

But now the game has changed considerably. For a start, the new oral anticoagulants have forced D&T Committees to review their thromboprophylaxis guidelines within the orthopaedic surgery directorate (with LMW heparins displaced as a result). Meanwhile, at the other end of the hospital, interventional cardiology is coming on by leaps and bounds, resulting in agents such as fondaparinux and bivalirudin being incorporated into treatment protocols (as per NICE and SMC, again displacing LMW heparins).

This has resulted in reduced volumes of heparins, reduced hospital discounts and a subsequent ‘review’ of contracts – effectively fracturing the heparins market and resulting in the sleeping pharma giants waking up, smelling the coffee and initiating a resurgence of marketing to fire up the heparins market across the UK. And although there are marketable USPs (e.g. some licences and perhaps renal dosing), the main driver has been cost savings from the wholesale switch – effectively delivering cash savings based on volume-based discounts.

Without that – and if it were left to pure ‘branding of USPs’ we wouldn’t see the unstable market we now have in the heparins domain – it’s game on, and cost is the driver.

PCT rebate schemes
What exactly is a PCT rebate scheme? It’s best considered as the primary care equivalent of hospital discounting. And whereas in hospitals the discount is given directly to the purchasing hospital, with rebate schemes (due to the fact that retail pharmacists are one step away from PCT budgets via the PPRS) there is a retrospective ‘cash back’ given directly to PCTs by the pharma company. To all intents and purposes the effect is the same: reducing the drugs bill while leaving the list price unchanged. It’s too difficult to change the list price, which is dependent on many factors around drug pricing, parent companies, the price referencing country and EU or global economic factors. It’s much easier to cut a local deal with hospitals and PCTs (or in the future, CCGs).

Are PCT rebate schemes unethical? I get asked that question quite frequently. It’s interesting that some pharma companies go as far as suggesting that these rebate schemes are ‘unethical’ or ‘an incentive to prescribe’. I’m uncertain whether they are any more an incentive to prescribe than a hospital discount – but as most companies seem happy with the concept of hospital discounting, this is all about mindsets.

PCT rebates are the reflection of hospital discounting in primary care: you are just holding up a mirror. You have to take issue with both or with neither: it doesn’t make sense to raise moral objections to rebates but to sleep soundly while your hospital discount kicks in.

Scheme or scam?
However, there are some critical issues to consider when thinking about the applicability of rebate schemes in primary care:

• While the NHS can’t afford to ignore rebate schemes, there is justified concern about how these are managed, especially where switching of patients is encouraged – hence the need for tight governance processes.
• Who benefits from the rebate – the PCT, the SHA or the CCG? This should be transparent in the process and agreement. A rebate used in conjunction with a hospital discount could achieve a serious ‘flagpost’ formulary position for a product – but that requires good payer coordination. Companies vary significantly with regard to who is authorised to approve these schemes in principle.
• Some rebates require a percentage increase from baseline with volume gearing, while others deliver automatically – and can result in a ‘cash windfall’ from doing nothing. Companies need to be precise as to which scheme is used – this issue is very disease-orientated, and NHS payers will vary from region to region in terms of what they are comfortable with.
• Most PCTs will have explicit governance, planning and tracking of prices to ensure that the NHS continues to get the best deal and patients get the most cost-effective solution. Value throughout the pathway – rather than simple ‘procurement’ savings – is important.

The leverage of rebate schemes should not be under-estimated. They can cut through the slickest of marketing messages around a brand like a knife through butter. If you’re up against a significant rebate scheme, I can assure you that your key USPs will fall on deaf ears. If you ignore the rebate schemes and continue with the ‘best in class’ or ‘7% less rash’ or ‘easier to swallow’ lines, you had better get used to the sound of your own voice.

Communication to your brand team is imperative: they don’t pay you just to sell, they also expect some landscape mapping information back at base camp. Get your NHS market access people on the case: have them evaluate what your competitors are doing and how you can swing the payers towards a different place.

Example 1: Rebate Diabetes, NW England
A pharma company offers a straight 10–15% rebate on a diabetes therapy, in a noisy marketplace with no generic comparators in class yet. No percentage increase in baseline is required – an altogether attractive deal if it weren’t dampened by the company trying to basket-deal or portfolio-ise with other brands from other disease areas (note: DON’T DO THIS).

One possibility (but no-one has done it yet) is a rebate risk-share. Say for instance, you have an oral agent for diabetes which causes fewer hypoglycaemic events – and there are now four or five rival brands at a similar price. If a brand comes to payers with a rebate scheme linked to the use of glucose test strips (hopefully you use fewer if you take this drug) then you have an intriguing risk share. Instead of the ‘promise’ of fewer hypos (which may or may not be realised, a risk for the PCT to take), you go to a fundable aspect that is on every PCT QIPP: restricting blood glucose test strips. These are very expensive: some PCTs spend more on testing blood sugars than on the drugs used to treat diabetes.

Get some payers around the table, produce the template, land the scheme in each health economy – and hey presto: it’s no longer about fixed-dose combinations, degrees of headache and arguing over 0.1% HbA1c…

Example 2: Rebate Rheumatology, SE coast
A pharma company offers each patient the first six months’ treatment with a monoclonal therapy for free. Consultants’ opinion is sought: they are not driven by ‘saving the PCT money’ and hence this rebate initially looks to fail – the classic situation where the PCT is paying but the hospital is prescribing.

Given that we ‘assess’ the success of monoclonals over three to four months (and maybe half the patients benefit and half don’t), we really don’t mind paying £1000 per month if the drug is working. But for the half of patients who don’t respond it’s an expensive way to find that out, so free treatment for six months is great: I can weed out the patients who don’t respond at four months and then only pay for those in whom it works.

So the PCT goes back to the consultants and changes the offering: if we move to the monoclonal drug with rebate scheme, we can increase the number of rheumatology patients who can access this drug.
Wow – the response is remarkable!

Learning point: a PCT rebate scheme (well, this is more of an access scheme) can drive consultants from their usual first-line ‘favourite brand’ even if they believe the rebate drug isn’t as good. Why? Because the ‘difference’ between the monoclonals is difficult to prove one way or the other (thanks to you guys doing placebo studies). So now we are discussing the difference to patients within two different paradigms:

• Brand A makes a difference to one patient versus Rebate Brand B – but what exactly is the difference qualitatively between the two brands?
• Rebate Brand B means I can treat MORE PATIENTS than Brand A – but what exactly is the difference quantitatively to the rheumatology population?

If there is one thing consultants love more than fighting for a brand, it’s fighting for more patients to access new treatments. So the consultants get this – and the PCT saves money as well.

Patient access schemes
The second case above is more a patient access scheme than a rebate scheme: the price hurdle is reduced to allow more patients to ‘jump on board’. There are local, regional and national schemes in place, and many successful cases can be sourced directly from the DH
website.

NICE comments: “Patient access schemes are special ways pharmaceutical companies can propose to enable patients to gain access to high cost drugs.

“The Pharmaceutical Price Regulation Scheme 2009 makes provisions for manufacturers and sponsors to submit proposals for patient access schemes to the Department of Health. These schemes involve innovative pricing agreements designed to improve cost effectiveness and facilitate patient access to specific drugs or other technologies.”

NICE has a whole list of pharmaceutical agents for which patient access schemes have been submitted for appraisal. Sometimes we have seen NICE dictate the equivalent of an enforced access scheme by stating that a drug can only be used if the cost does not exceed a certain level.

This really is the basis of value-based pricing, whereby the NHS is being lined up to enforce ‘restricted reimbursement thresholds’ that are lower than the listed UK drug price.

Given the rapidly changing environment, the commercialisation of healthcare and the movement of CCGs from ‘budgets’ to ‘cash flow’, I think we will be seeing even further growth in discounts, rebates and patient access schemes to bridge the gap created by flat-lined NHS funding, QIPP and the threat of European fiscal breakdown.

Remember: your home is at risk if you do not pay your mortgage.

Keep it real – and see you all in the New Year.

Omar Ali is the Formulary Development Pharmacist for Surrey & Sussex Healthcare NHS Trust and sits on the External Reference Group for Cost Impact Modelling for NICE. He can be reached at omar.ali@sash.nhs.uk.