Mike Sobanja, Chief Executive, NHS Alliance and Andy Etheridge, Commercial Director, Cegedim Dendrite, outline the challenges facing pharma in adapting to the recommendations of QIPP, the expected rationalisation of PCTs and the predicted emergence of GP consortia led Practice Based Commissioning.
Can pharmaceutical companies find any positive opportunities in a cash strapped NHS that is going to be torn between slash and burn tactics and the objectives of Quality, Innovation, Productivity and Prevention (QIPP) to meet challenging financial targets in 2010?
Political uncertainty notwithstanding, the NHS looks set for serious change in the coming years as senior managers wrestle the budgeting challenges that must be imposed in response to the global economic problems.
At a most basic, organisational level, there is little doubt that the number of Primary Care Trusts (PCT) will be cut over the next few years in a bid to reduce administrative costs and achieve greater consistency in policy making. The current number of 31 trusts in London looks set to be consolidated to eight, whilst smaller PCTs are also likely to disappear. Realistically, the number of PCTs is likely to reduce by up to one third.
There is also going to be a stronger divergence in health policy between England and the rest of the United Kingdom; with Wales and Scotland, in particular, following very different political agendas. While PCT consolidation has already occurred in Northern Ireland, where four Trusts have been replaced by one single body, policies for commissioning will be very different nationally, with politicians in Wales and Scotland extremely against any type of market exposure within the NHS.
In England, by contrast, if the Conservative Party gains power, it is likely to follow through on its pledge to make Practice Based Commissioning a reality. This will place budgetary control in the hands of increasingly powerful GP consortia, a move that will have very real implications for the pharmaceutical industry.
But this shift will also raise questions about the long term future of Strategic Health Authorities (SHA). With budgetary control shifted to the GP, the PCT will be left with the role of ensuring sound performance management and enforcing accountability. This will be a clear duplication of role with SHAs, a duplication that is unlikely to be tolerated in what must become an administratively leaner health service.
But for pharma companies, changes in the NHS will have far greater implications than the need to identify a new set of Key Opinion Leaders (KOLs). Politicians of every party are increasingly committed to a quality agenda and David Nicholson is taking personal responsibility in ensuring every PCT is defining its new budgetary planning with the recommendations of Quality, Innovation, Productivity and Prevention (QIPP) in mind.
For NHS senior management, QIPP is seen as the only way of achieving the real term budgetary cuts that must be put in place for the next few years, without drastically compromising the quality of patient care. No politician wants a repeat of the 1980s style of slash and burn, which saw beds, appointments and staff numbers radically reduced.
There will undoubtedly be another wave of pressure on spending, including pharma spending, across the NHS and pressure to increase the use of generics even further. But for pharma companies, QIPP represents a shift away from traditional prescribing decision making and must have a profound impact on the way medicines are presented to the NHS. Critically, companies will have to express the value propositions for each drug in line with the QIPP agenda; the messaging must include information about a drug’s ability to improve productivity by, for example, preventing hospital admissions and enabling patients to more effectively manage their conditions in the community.
In some ways, the huge emphasis on the QIPP recommendations is beneficial for pharma; organisations can focus on this one, critical challenge, as opposed to managing the multiple challenges and objectives that have characterised the NHS in the past.
But pharma will also have to deal with a far wider range of customers within the NHS and greater market fragmentation, especially if the Conservative Party policy of pushing budgets away from PCTs and towards clinical groups is adopted. Each PCT will have its own QIPP interpretation and implementation policies. Pharma companies will have to understand a far wider range of customers, assess their interpretation of QIPP and align the messaging accordingly.
Furthermore, the move to QIPP based messaging will be a challenge for many companies. Realistically, how many products can be described as having a real quality, efficiency and productivity outcome?
Speed of response
The pharmaceutical industry has been notoriously slow to respond to changes in the NHS. And although companies now admit that the traditional rep role has been dramatically changed by the shift towards a more team-focused approach, where key account management is the new aim, it has taken the industry 15 years to recognise the need for a new model.
Companies cannot wait another 15 years before adapting and introducing the skills that will be needed in this marketplace. Successful pharma operations now require individuals with competencies that include analytics, the ability to identify alignment opportunities, negotiating skills and partnership skills. These are very different from the traditional competencies and will require investment and training.
Organisations must also address the challenges posed by very different national NHS strategies. With pressures on cost and resources within each pharma company, the objective is to create national, even global marketing strategies but deliver them in a way that can be implemented successfully at a local level. In the politically fragmented UK marketplace, this will be achieved by creating the right competencies across the work force, but also restructuring around regional units and the reorganisation of company departments within these regional set ups.
The pressures posed by the NHS in 2010 and onwards will undoubtedly place even greater challenges on pharma companies, companies that are already struggling in an extremely tough global marketplace. Consolidation will continue, whilst many international companies are likely to retrench their UK operations.
But while NHS structural change and market fragmentation will be key issues to address, if pharma companies fail to express their value propositions in a way that reflects the QIPP agenda, the chances for success and market growth will be minimised.