Pf Editor, Chris Ross, asks who pharma’s customers really are as the NHS reforms continue to progress.

The journey towards NHS reform was always likely to be a long and painful one for the coalition government – but, as opposition to the Health & Social Care Bill grows stronger by the day, it’s becoming increasingly difficult to predict where the journey will end. At present, Royal Assent seems many miles away.

But despite the fierce political and ideological objections to the proposals, in many parts of the country the NHS has already ventured some way along the roadmap to reorganisation. Embryonic Clinical Commissioning Groups are steadily establishing themselves across England, and the transfer of powers from PCTs to the new commissioning organisations is well underway. It is likely to prove costly for NHS productivity and patient care if the journey to reform finds itself at a dead end and the Kill the Bill movement finally succeeds.

Whatever happens in the coming weeks and months, the ramifications for the pharmaceutical industry have already been significant. Since the introduction of PCOs, PCGs, PCTs and, of course, NICE in the early 2000s, UK pharma companies have spent the best part of a decade trying to establish exactly who their customers are and realigning their sales and marketing efforts accordingly. During that time, it’s become increasingly clear that a one-size-fits-all solution to customer segmentation will not work, and that the identity of so-called ‘key accounts’ will vary from region to region, and disease area to disease area. In such a dynamic and fast-moving environment, the work of field-based medical sales professionals becomes ever more important. The role of the rep may have been redefined in the past ten years, but while numbers on the ground have dropped significantly, their value to UK pharma in a changing marketplace has only increased.

Chris Ross, Editor.

UK pharma companies are not doing enough to help medical sales professionals succeed in the modern environment, new qualitative research has shown.

The study, designed to understand the real world challenges of field-based executives, indicates that the working practices of UK pharma sales executives have changed dramatically in the past three years.

The combination of a maturing KAM model, the emergence of joint working and an increasing reliance on iPad technology, is driving a radical shift in the NHS/pharma relationship – and is forcing medical representatives to develop new skills to thrive in the new environment.

But many sales professionals claim that they have been given inadequate support to help them prosper in an evolving marketplace, and that some employers remain reliant upon traditional training methodologies to see them through, despite rhetoric to the contrary.

The findings are the result of the first phase of an ongoing research exercise by Pharmaceutical Field, and follow a series of one-to-one interviews and roundtable discussions with existing sales professionals in the first two months of 2012. “Early indications, from what will be a sustained research programme throughout 2012, are that, across the board, the role of the medical sales professional has evolved considerably,” says Chris Ross, Editor of Pharmaceutical Field. “In 2008, when we conducted a similar exercise, whilst the term Key Account Management was beginning to gain traction, the concept of joint working with the NHS barely merited a mention. But it would seem that both aspects are now playing a central role in the day-to-day work of the medical representative. The problem is, too many argue that the training they are given to manage relationships with their local health economies – and indeed the metrics upon which they are judged – mirrors that of the traditional drugs rep. And when it comes to joint working, the majority of respondents are describing confusion on both sides of the NHS/pharma equation. The industry clearly has work to do in this regard.”

The 2010 launch of the iPad, along with the subsequent introduction of similar mobile devices, has revolutionised customer communications for many industries – and it would appear that pharma is also beginning to enjoy the benefits of digital technologies, albeit slowly. It is estimated that around 25% of UK medical sales professionals are now using iPad or equivalent to detail their products to customers – and this is very much in line with Pf’s research. A fifth of those canvassed have been issued with mobile devices and are using them with customers. Feedback suggests that HCPs find multimedia presentations more engaging and memorable. One regional account manager, from a medium-sized UK pharma company, said: “Gaining time with customers remains one of our biggest challenges, and it’s not unusual to be given just a few minutes in a corridor or a hospital canteen. Making the most of that time is imperative. We’re finding that detailing our products via the iPad has a much greater impact than printed leave-pieces, and the customer experience is significantly improved.”

Despite this, representatives from some of the smaller pharmaceutical companies that have taken part in the study still appear to be using traditional detail aids – and believe that it will take some time before the use of tablet devices in the field reaches a critical mass.

The Pf study also indicated an increasing number of medical sales professionals are choosing to work on contract, rather than on headcount at mainstream pharmaceutical companies – with job security cited as one of the key factors.

UK medicines still represent good value for money for the NHS, a new report into the review of the Pharmaceutical Price Regulation Scheme (PPRS) says.

The 11^th report on the PPRS to Parliament endorses the existing voluntary agreement between the UK pharma industry and the Department of Health, and found the UK has lowest drug prices compared with a host of developed countries.

But Stephen Whitehead, Chief Executive of the ABPI, says that medicines should be considered as investments instead of a cost due to the money they help the NHS save in the long term.

The report found that the UK is in the bottom third of prices for medicines when average exchange rates over the last five years are taken into account.

The importance of providing treatments at an affordable cost to the NHS, whilst providing fair and balanced prices that reward pharmaceutical innovation, was recognised in the report.

There was also an acknowledgement of the higher use of generic medicines with more than 80% of prescriptions in primary care now favouring cheaper, off-patent branded alternatives.

The ABPI said this is among the highest prescribing rates across Europe and should allow funds to be used on “more innovative new medicines” for the NHS.

“Striking the balance between delivering value for money for the NHS and fair and reasonable prices for pharmaceutical companies is absolutely essential for the development of new innovative medicines,” said Stephen Whitehead.

“Without appropriate reward, companies would be unable to undertake the huge risks required to take a medicine to market which on average costs over £1bn and 12 – 15 years to develop. Despite the report demonstrating that the UK has particularly low prices, patients are still struggling to access medicines as easily or as quickly as our European counterparts. In fact, ABPI analysis shows that the use of new cancer medicines in the UK is 33 per cent lower here than in the rest of Europe.”

The Chief Executive added that Patient Access Schemes have improved since they were first introduced, but still require improvement to increase access to expensive cancer treatments.

“We appreciate the recognition given in the report to the importance of the pharmaceutical industry in driving economic growth in the UK,” he said. “Government initiatives to help industry are valuable but it is essential that if further progress is to be made, the uptake of new innovative medicines is supported further and the importance of the pricing environment is fully understood.”

The ABPI has played down any worries over the state of the UK pharmaceutical industry after AstraZeneca’s restructuring plans put jobs at risk at two plants in Cheshire.

Approximately 7,300 jobs will be axed by AZ in the next three years with the GMB Union predicting that 250-300 jobs will go from the company’s R&D site at Alderley Park, Cheshire.

However, the ABPI says the UK remains a “global leader in science and healthcare and huge levels of R&D investment continue to take place”, and insisted the job cuts were not a reflection of the UK market.

In a statement, the Association says that AZ has a “long history” of investment as a big employer and contributor to the economy and it expects this to continue.

It realises that the “industry has modernised in recent years” to a more integrated partnership model with companies of all sizes working together – along with an increase in joint working between pharma and the NHS.

The Government has supported the UK industry, the statement said, and continues to “encourage investment and growth in the life sciences sector”. But the ABPI has called on the Government to continue this approach and focus on promises previously made.

The Association says it needs to continue to “do all it can” to incentivise investment. Recent initiatives such as the patent box have been positive, the statement said, but the Government “must follow through on the promises made in the Autumn Package”.

“The Government will need to reward innovation by designing a pricing scheme that values innovation and encourages R&D to take place in the UK,” said the statement.

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.

Sometimes, reporting on the UK pharmaceutical industry feels a bit like Bill Murray’s Groundhog Day. In the late 1990s, when I edited my first title for UK pharma, all the talk was of the move from GP Fundholding and the imminent introduction of Primary Care Groups.

By 2000, New Labour’s NHS Plan promised a revolution in healthcare built around delivering improvements in ‘partnership, performance, patient care and prevention’. The politicians were about to ‘modernise the health service’.

Fast forward almost 12 years and we’re still being read the same script; new politicians, the same old lines. Four Ps – partnership, prevention, productivity and patient care – continue to dominate airtime, only this time, of course, it will be different.

Different? Some hope. This is Groundhog Day. So how is the UK pharmaceutical industry responding to change? Its customer-base, meticulously redrawn through 10 years of implementing the NHS plan, is yet again being reshaped. PCTs are on the way out. CCGs and Clinical Senates are on the way in. Keeping track of decision-makers and influencers is critical. Getting in front of them in the right volume, at the right time and with the right message is life and death.

The industry is currently pinning its hopes on Key Account Management (KAM), supported by a Customer Relationship Management (CRM) philosophy that promises to enable the field force to have a more detailed understanding of individual customer needs across a diverse and complex landscape.

The tools to support the CRM approach are impressive, established and evolving in time with the modern technological advancement. They also provide huge value to medical sales professionals, and the ability to enhance customer interactions.

But, as ever, this is Groundhog Day. Twelve months ago, Pf’s annual survey into field force attitudes revealed an apathy amongst some sales professionals towards the use of CRM. A year later and it appears that, despite its many advantages, the value message for CRM is still not being heard by all of those who can undoubtedly benefit from it.

This year, 90% of Pf’s survey respondents have access to a CRM system – but only 43% of these find time to use it in the field, and more than a fifth admit that they fail to record post-call reports accurately.

In a fast-moving, dynamic marketplace, generating, sharing and maximising real customer insight is one of the best ways for sales professionals to achieve competitive advantage. CRM tools provide the perfect mechanism for this. Only the foolish would pass up the opportunity.

I feel like I am repeating myself. But then again, this is healthcare Groundhog Day. Next month: more NHS reform.

Chris Ross
Editor