The plan to introduce value-based pricing (VBP) for NHS drugs was “flawed from the start” and should be scrapped, according to a healthcare think tank.

A report from 2020health argues that VBP could reduce patient access to expensive drugs by replacing the existing patient access schemes.

It also argues that VBP will “politicise” drug pricing by exposing it to lobbyists and media campaigns.

Under the current Pharmaceutical Price Regulation Scheme (PPRS), companies’ total income from the NHS is restricted but individual drug prices are not.

VBP, currently being negotiated between the Government and the ABPI and due to be introduced in 2014, aims to relate drug pricing to value in a broad sense – i.e. to apply NICE’s current decision-making process to drug prices.

The report states: “Value-based pricing sounds like an excellent idea with a well-researched methodology. On further examination the cracks begin to appear... The real concerns of patients, doctors, and carers are only hidden from view.”

One problem, it says, is that the drug access schemes negotiated by the industry and the Department of Health will disappear, potentially reducing patient access to much-needed drugs at a time of NHS austerity.

Another is that “patients could become political pawns” if the availability of a particular drug is focused on by “the press, a political party or an MP”.

Julia Manning, Chief Executive of 2020health, said: “The Government’s new plans for pricing will politicise a formerly non-contentious issue. Despite the intensive negotiations and new promises to include patients further in deliberations, this is an idea it seems was flawed from the start.”

The report urges the Government to improve the existing drug pricing system by further encouragement of patient access schemes, and by tightening controls on any one company’s revenue from the NHS.

Novo Nordisk, the world’s leading supplier of medicines for diabetes care, has joined the ABPI for the first time.

The decision reflects the Danish company’s growing involvement in the UK health market, where the importance of diabetes care is growing rapidly.

It also reflects the increased profile of the ABPI in negotiations affecting the UK pharmaceutical industry, including the adoption of value-based pricing for drugs.

Novo Nordisk recently launched a new basal insulin, Tresiba, in the UK and celebrated 90 years in the diabetes care market.

Peter Meeus, UK General Manager of Novo Nordisk, commented: “As a growing player in the UK pharmaceutical market, we felt the time was right to join the ABPI. The ABPI has undergone real transformation in recent years and we are confident that as our business continues to grow in the UK, ABPI engagement will complement what we are doing to ensure we are better positioned to face the challenges and the opportunities in an increasingly dynamic business setting.”

“Novo Nordisk is a very welcome and important addition to our membership and will further strengthen the ABPI as the voice of the pharmaceutical industry,” said Stephen Whitehead, ABPI Chief Executive.

“We will be looking to support them and our wider membership to ensure that once a medicine has been approved for use in the UK, the NHS is able to adopt it and patients can fully realise its benefits.”

NICE will be responsible for assessing the value of medicines in the new value-based pricing (VBP) system to be implemented in 2014.

The Government’s decision to make NICE central to VBP follows recommendations by the Health Select Committee (HSC).

It also follows a report by the European Commission stating that NICE’s QALY metric, the basis of its current value appraisals, is unfit for purpose.

The new role in VBP assessment will enable NICE to broaden the scope of its appraisals of the costs and benefits of drugs.

This will simplify the current routine of NICE declaring a drug too expensive in draft guidelines and then revising its verdict when the company offers a confidential patient access scheme.

Health Minister Lord Howe said: “We are delighted to announce the central role NICE will take in assessing the value of new medicines. This will allow us to draw on NICE’s world-leading expertise as we develop the Value-Based Pricing scheme.”

From April, NICE will be led by new Chairman David Haslam (pictured). It will have responsibility for social care as well as the NHS and public health, enabling it to play a major role in the integration of care.

The Government approved three other HSC recommendations: NICE should develop healthcare quality standards for patients with long-term conditions, co-morbidities or complex needs; NICE should promote better-integrated commissioning and care; and industry should be more transparent as regards clinical trial data.

Stephen Whitehead, Chief Executive of the ABPI, commented: “What will determine whether value-based pricing works for the pharmaceutical industry, the NHS and most importantly patients is not who does the assessment, but how it is done and what goes into it.

“NICE has an important role in supporting growth, which is often overlooked. NICE needs to be an enabler of innovation by the NHS and this is lacking from the Government’s response.

“We urge the Government to keep its foot on the pedal in spreading innovation through the NHS and ensuring that NICE helps to deliver its part of the growth agenda.”

The termination of the Cancer Drug Fund this year leaves doctors and patients uncertain of drug provision in the future, MPs have said.

The Health Select Committee has asked the Government to clarify its ‘nebulous’ proposals for a value-based pricing (VBP) system for NHS drugs by March.

However, the Government has replied that it is still negotiating with the ABPI to agree the terms for value-based pricing.

The Cancer Drug Fund, which helps trusts to purchase cancer drugs that are licensed but not currently approved by NICE, has given more than 25,000 patients access to innovative cancer drugs since its introduction in 2011.

The Fund ends this year, and its replacement through VBP in 2014 does not guarantee continued patient access to those drugs.

Stephen Dorrell (pictured), chair of the Health Select Committee, commented: “What we were told during our inquiry indicates that the move to value-based pricing of drugs will be a more modest change than has been suggested, but there is a lack of clarity around the whole issue which has persisted too long.

“Where an individual patient is on a course of treatment it is important there isn't a cliff edge, that the patient has continuity of care.”

The Department of Health has promised to “ensure arrangements are in place to protect individual patients who are receiving treatment with drugs funded by the Cancer Drugs Fund as the end of the fund approaches.”

The statement did not imply that new patients would have access to the drugs covered by the Cancer Drug Fund beyond 2013.

The DH spokesman added: “As negotiations between the Department of Health and the Association of the British Pharmaceutical Industry are under way, it would be inappropriate to comment further at this stage.”

Blogging elf Maxine Vaccine pays tribute to the ABPI, looks forward to the office party, and asks Pf readers a crucial question about the future.

Maxine’s attitude got her in trouble again. It must be Thursday.

A mildly snarky comment about the ABPI and its ‘the honeymoon is over’ stance on value-based pricing, and look what happens – Pf gets an e-mail from Stephen Whitehead, Chief Executive of the pharma industry’s trade association. Most shaming of all, it wasn’t a snarky response. It was a reasonable and sensible response explaining that the ABPI has always regarded the VBP concept as complex and has tried to ensure that, if it becomes the UK pharma sector’s currency, it is not devalued.

Which left your humble correspondent looking immature and shamed. Which hasn’t happened since the morning after the last office Xmas party. More about that later.

Meanwhile, I wanted to tell Stephen Whitehead – whose role as the industry’s voice I praised a few months back – that I apologise for any offence caused. It’s part of my role to voice objections that might arise in the mind of the average pharmaceutical sales professional and require an answer. And as my manager will tell you, ‘average’ is very much the word – indeed, she commented at the last staff Xmas party (of which more later) that ‘average’ was more aspirational than descriptive – in my case.

By way of reparation, and to show that I do read the ABPI press releases, here’s a short verse celebrating the Association’s hard-working and boat-rocking leadership:

Stephen Whitehead, the industry’s voice,
Said patients should have far more choice –
But the strictures of QIPP
Were a hole in the ship
Though the DH was chanting ‘Rejoice!’

Remember, this is meant to be an interactive blog. We’re keen to read your feedback on the issues raised here. Please send your comments to the Pf editor, John Pinching, at john.pinching@healthpublishing.co.uk with the subject heading ‘WTF is that Maxine talking about?’ It’s already a substantial file, as my line manager at Munchkin Pharma can attest.

In particular, we want your feedback on one of the key questions that any pharmaceutical sales professional will need to consider in 2013 as we emerge from winter into spring: Would you date a colleague?

To address the tangled theme of office romance in the issue of Pf that will be in your otherwise empty hands on Valentine’s Day, the journal called on its most creative and insightful journalist. But she was not available and the second choice was busy with NHS reform and the third choice was drunk, so they tried a few other options (including the caretaker) and finally, in desperation, called me.

So: assuming you had some time on your hands and were free (or could arrange to be on a timeshare basis), would you engage in a ‘special project partnership’ with someone from your industry, your company, and your team? Would that be the perfect prescription or a formula for disaster? Would you sell each other a vision of happiness or down the river?

Please give it some thought while munching mince pies and imbibing sweet sherry like the diabetes crisis was still a century away. Then e-mail the Pf editor (see above) with your verdict and the reason why. Thank you!

(If you work with me, there’s no need to reply. I know the answer, and I know why. It has to do with the office Xmas party. But I’m on a word limit here and there’s no space to explain.)

Have a restful Yuletide break – and look after your elf.

Value-based pricing (VBP) is a more fair and balanced way of supplying life-saving drugs for patients than the Government’s Cancer Drugs Fund, a new study shows.

Research by the University of Bangor found that out of more than 4,000 people across Britain 64% agreed that the NHS should not pay more for cancer drugs compared to medicines for other threatening conditions.

Professor Dyfrig Hughes, study author, said “singling out cancer seems to be unfair, but is something which will hopefully be addressed in the value-based pricing system, which has public support.”

The Cancer Drugs Fund was introduced two years ago for the NHS to treat patients with oncology treatments not currently recommended by NICE. It supplies £200m a year until 2013 to pay for drugs.

VBP is the Government’s alternative to the existing 2009 PPRS pricing scheme – set to expire in 2013. It will allow government to set prices for new medicines as they enter the UK market – and set new definitions of value.

Although it has gained support from the general public, the ABPI has raised a number of concerns about the new system and is in negotiations with the Government to create an amended version.

“The funding of high cost cancer treatments is clearly an emotive issue, and it is for politicians to determine the parameters by which the NHS pays for them, however, there are equally distressing conditions affecting patients who are equally deserving, but they have no access to ring-fenced budgets,” said Professor Hughes.

The Rarer Cancers Foundation (RCF) has called for action to ensure that when the Cancer Drugs Fund ends, access to drugs for rare cancers continues.

Over 16,000 NHS patients per year may lose access to life-extending drugs when the fund ceases in March, the charity warns.

It suggests that a “transitional” continuation of the Cancer Drugs Fund (CDF) may be needed while steps are taken to ensure that new pricing and prescribing arrangements maintain these treatments.

The CDF provides £200m per year for trusts to purchase cancer drugs that do not have NICE approval.

According to the RCF’s new report on the fund’s impact, it has enabled over 3,600 patients with rarer cancers to access treatments in the last year.

The report points out that the fund has enabled NICE to increase its cancer drug rejection rate from 40% to 60% by making cost a higher priority.

It recommends that NHS authorities examine variations in access to cancer drugs according to location and age, leading to “an urgent review” by the NHS CB of “population cohort policies for funding cancer treatments”.

The RCF also calls for “national protocols” for off-label cancer treatments to be established, allowing their efficacy and safety to be assessed.

Looking forward, it says the DH “should clarify as a matter of urgency how it intends to ensure access to treatments currently reimbursed through the Cancer Drugs Fund in 2014 and beyond.”

The review proposes two measures:

• a mechanism to include these treatments in the new value-based pricing framework, with the CDF being extended as a “transitional” system if necessary

• a national system for off-label prescribing of rare cancer drugs that cannot be covered by VBP.

The DH and the ABPI aim to achieve a new pricing system for branded medicines that reduces bureaucracy whilst being affordable, sustaining and responsive to the future needs of the NHS.

A joint statement from the two said that negotiations to replace the existing Pharmaceutical Price Regulation Scheme (PPRS) will begin next month and will include value-based pricing (VBP).

The two insist they are “committed” to reaching a new agreement that gives “patients better access to the most effective medicines”.

The new pricing scheme will cover the majority of branded drugs which will enter the market before 2014. It will operate under a similar but “evolved framework” to the existing PPRS.

However, the Government and the ABPI believe it is “important” for the new arrangement to provide “stability and predictability in the new framework” to ensure the NHS and the pharmaceutical industry manage financial and investment plans.

The statement said it is “vitally important” to continue the supply of innovative treatments to NHS patients and the ABPI “welcomes” value-based pricing alongside a renewed PPRS to “support this goal”.

Therefore, the statement said, VBP will be introduced in a “planned and progressive way” to focus on new medicines entering the market from 1 January 2014.

The Government aims to ensure the assessment of new medication is conducted as fully and early as possible for pharmaceutical companies to “predict well in advance” how products will “fare”.

The updated PPRS will also include a “statutory scheme” for companies that choose not to participate in the voluntary agreement.

The NHS is a key “national asset” for life science innovation, Prime Minister David Cameron has said.

Speaking at the inaugural Global Health Policy Summit in London, Cameron emphasised the relationship between NHS reform and the Government’s innovation strategy.

Developments such as value-based pricing and making anonymised NHS patient data available to researchers would “bring breakthroughs in long-neglected areas like dementia”, he claimed.

Cameron stated that his goal in healthcare was to make the NHS “diverse, flexible and tailored to individual needs”, thereby adapting it as a research base to the challenge of developing personalised medicine.

Global healthcare was undergoing a “fundamental shift” towards “individually-tailored” medicine, he said, driven by the growing prevalence of non-communicable diseases and the progress of genetic research.

To achieve that required “open innovation, more collaboration with universities and start-ups, and a greater emphasis on data analytics and genomics”.

The unique patient data resources and purchasing power of the NHS made it a natural partner for life science innovation, he argued.

To develop that relationship, the Government had given the NHS a legal duty to promote research, was planning to introduce value-based pricing, and was consulting on an early access scheme for new medicines.

Crucially, it planned to change the NHS constitution so that patient data could be used for research unless the patient opted out.

Stephen Whitehead, Chief Executive of the ABPI, commented that the trade association valued the Government’s “continued support for industry” and agreed that the NHS offered the life science industry a “great opportunity”.

However, he said, “we are not convinced that value-based pricing will encourage innovation or reward the most effective medicines,” as it would not reflect the incremental nature of innovation or reward the industry enough for its R&D.

The ABPI has questioned the amount of money the NHS spends on new and innovative medicines.

A new forecast from the Office of Health Economics shows spending on innovative branded medicines is set to shrink over the next three years.

Stephen Whitehead, Chief Executive of the ABPI, said the decline is “bad news” for the discovery of future life saving drugs and “ultimately the health and wellbeing of UK patients.”

Research found that the total amount spent on the NHS is actually set to rise by 2.5% annually until 2015. However, expenditure during that time on new branded medicines will rise by just 1.3%.

There will be a very slight increase in the growth of the total amount spent on medicines each year by the NHS from 3.5% to 3.7% per year until 2015 – driven mainly by an increase in the amount of generics purchased.

But, research found, spending on medication launched between 2012 and 2015 will account for less than 2% of overall spending on medicines.

“This report spells out the very good value for money that the NHS derives from our medicines and shows the system is achieving huge savings from medicines coming off patent,” said Stephen Whitehead.

“But I am deeply concerned that these savings are not being reinvested back into the system because these figures show our spending on the newest and most advanced medicines is declining in real terms.”

The ABPI CEO also called for a change in thinking by the NHS around medication where drugs are seen as an investment and not expenditure.

“Looking ahead, as we start to prepare for negotiations with Government on the next medicines pricing scheme, we need to see our medicines rewarded for the high risk and cost of research and development,” he said. “And once medicines are ready for use by patients, we want them available on the NHS as quickly as possible so as many patients as possible can reap the health benefits.”