A new deal for UK pharma?

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 The Government’s new strategy to support growth in the life sciences and innovation in healthcare aims to have industry working ‘hand-in-glove’ with the NHS to change care pathways and transform service delivery. Is this the new deal that the pharma industry has been waiting for – or just a sweetener for the medicine of NHS spending cuts?

The Government’s new strategy for the UK life sciences was presented by Prime Minister David Cameron to an audience of leaders from pharma and other life science sectors. Cameron announced measures to support early-stage research, make more NHS patient data available for clinical trials and improve the implementation of NICE guidance. He stated: “The endgame is for the NHS to be working hand-in-glove with industry as the fastest adopter of new ideas in the world.”

The background to the new strategy is complex. It builds on the ‘blueprint’ published in 2009 by the Office for Life Sciences, a ‘virtual department’ launched by the previous Government. The dissolution of the OLS and the abolition of the Regional Development Agencies had left a gap in the life science innovation landscape which the new strategy aims to fill.

In addition, the strategy is a response to calls from the Work Foundation and other expert sources for more investment in the ‘knowledge-based industries’ – and to a growing recognition of the clinical and commercial potential of ‘stratified medicine’: personalised drugs and companion diagnostics based on the new technology of genetic profiling.

Finally, the strategy seeks to improve the confidence of life science companies in the UK market at a time of upheaval and hardship. NHS spending will be subject to unprecedented constraints, and the envisaged growth of private healthcare will not rapidly counter the impact of this on the market for medical products. By promising a better commercial environment for life science companies in the UK, the Government hopes to stop the industry taking its business elsewhere.

From research to market
In December 2011, the Government published two closely related strategy documents: Strategy for UK Life Sciences and Innovation Health and Wealth: Accelerating adoption and diffusion in the NHS. The two documents came from different departments (the BIS and the DH respectively) and will be implemented through separate arrangements, but are two sides of the same coin.

The Strategy document speaks of the need to place the UK at the forefront of global medical R&D. Key measures announced include:

  • In early 2012, MHRA will consult on proposals for a new Early Access Scheme to ease the route to market for ‘breakthrough therapies’.
  • The Government will invest £180m in a new Biomedical Catalyst Fund to support early-stage research and a further £130m specifically to support R&D in stratified medicine.
  • Pending consultation, the NHS constitution will be amended to allow companies conducting “approved research” to use anonymised NHS patient data, and to approach patients who may be eligible to participate in clinical trials.

The document notes that the UK life science industry (pharmaceuticals, biotechnology and medical technology) “is growing faster than the economy as a whole and is a key source of high-skill, high-tech jobs”. However, it comments that the time and cost of developing new treatments are increasing rapidly, and that the industry’s reliance on huge research establishments is not sustainable as products and their markets become more specialised.

Life science companies, the document promises, “will be able to operate in a streamlined regulatory framework, enabling quick entry to the market for new discoveries and innovations”. The Government will “nurture innovation through the translational funding gap,” and more generally will work to build “a life sciences ecosystem” that integrates the academic, industry and clinical sectors.  

Investments in clinical research infrastructure include the establishment of a new Cell Therapy Technology Innovation Centre in London; a new technical hub for bioinformatics in Cambridge; a number of academic health science networks across the country; and a national NIHR ‘Bioresource’ that builds on the existing facilities.

The £130m investment in stratified medicine by the Medical Research Council will consist of: £60m over three years to investigate disease mechanisms, particularly for chronic diseases; 60m over the next four years to support collaborations between academia, industry and clinicians to develop targeted treatments; and £10m to support work with AstraZeneca, who have made 22 compounds available to academic researchers.

The £180m Biomedical Catalyst Fund, invested by the MRC and the Technology Strategy Board, is intended to “nurture innovative technologies from the academic or commercial sector through to companies with products or technology platforms”. The document refers to the ‘open innovation’ model, whereby companies engage with partners in a wider R&D environment.

The Government will introduce a new Seed Enterprise Investment Scheme in 2012 offering 50% income tax relief on investments in small early-stage companies. In 2013, it will introduce an above the line R&D tax credit to attract large-scale investment in innovation.

The proposed new Early Access Scheme for ‘breakthrough’ drugs would typically be “available for drugs prior to authorisation but at the end of Phase III trials”, but could be extended to an earlier stage in some cases. The scheme would give patients access to drugs (and ensure reimbursement) where “there is a high unmet clinical need”, the likely benefits outweigh the known risks, the product is cost-effective for the NHS, and “the UK economy” will benefit.

In general, the measures outlined in the Strategy document shift the goalposts for the pharma industry only slightly, but could make a significant difference to some companies and R&D initiatives. They will promote the development of stratified and personalised medicine – and while the additional funding is very limited, the various measures could add up to a change in the innovation climate.

Changing patient pathways
The Strategy document argues that to facilitate innovation, the NHS needs to be “the ‘pull’ behind the industry ‘push’ for new therapeutic innovations”. The Innovation document expands on that statement, detailing measures to improve patient access to significant new therapies. It places more overt emphasis on medical devices than on drugs, but has major implications for the pharmaceutical sector.

The foreword by Sir David Nicholson, NHS Chief Executive, calls for a “commitment to innovation” in the NHS. He lists several opportunities open to the NHS to pioneer new treatments, including the “revolution in genome sequencing to monitor cancer and deliver personalised treatments; and to transform the detection, diagnosis and treatment of infectious diseases”.

The document states the economic case for innovation, both within healthcare (as a means of delivering care more cheaply and effectively) and in a wider context (by creating business growth and export opportunities). It emphasises the concept of the ‘value proposition’, whereby price is based on the value delivered by the product in use, including any changes it enables in the care pathway.

A number of priorities are identified for improving the climate for innovation in the NHS: reducing variation, compliance with NICE guidance, incentives, investment, procurement and adoption of ‘high impact innovations’. The document sums these up by saying: “We need an entirely new relationship with industry based on partnership, not just transactions.”

For the pharma industry, the most important changes outlined relate to NICE appraisals. The Government plans to:

  • Introduce a NICE Compliance Regime to ensure rapid and consistent implementation of NICE guidance.
  • Require that NICE technology appraisal recommendations are incorporated into relevant local NHS formularies in a planned way.
  • Establish a NICE Implementation Collaborative, including industry representatives, to support prompt implementation of NICE guidance by helping NHS organisations to develop solutions and helping companies to optimise their value proposition to the NHS.

The Government will develop the tariff further in the direction of payment for outcomes. It will double its investment in the Small Business Research Initiative, and improve the protection of intellectual property. The NHS Confederation will work with the ABPI and the ABHI to establish an Innovation Pipeline Project that will drive “the adoption and diffusion of proven technologies in areas of high clinical need”. Finally, the new Clinical Commissioning Groups (CCGs) will have “a legal duty to promote innovation”.
The document concludes that having “a single model for driving transformation and change” will “avoid the problems of fragmentation and duplication that have previously beset the system”. Despite the impressive measures that precede it, this statement may give industry pause for thought. In an increasingly fragmented and diverse NHS, with Foundation Trusts competing for business and CCGs facing severe budgetary pressures, how can a single model for the adoption of innovation be either defined or enforced?

Deal or no deal?
Much of the Government’s life science strategy is aimed at emerging SMEs in the biotech and medtech sectors, rather than pharma companies (which tend to be larger and better-established). However, as drugs become more specialised and targeted, the dividing lines will blur – and what benefits a small biotech firm may benefit a pharmaceutical partner or parent company. Open innovation is the key to personalised medicine, and expertise is increasingly transferable between sectors.

The measures outlined in the Strategy document have less for the pharma industry than might at first appear, but the reverse is true of the Innovation document. In combination, they represent a significant initiative for the industry. There are opportunities for pharma companies in the stimulus offered to stratified medicine; in the emphasis on the value proposition and the patient pathway; in the prospect of early patient access to certain drugs; and in the more effective implementation of NICE guidance. The sharing of NHS clinical data with companies, which dominated press coverage of the new strategy, will also be of value.

What neither document explains is how the strategy will play out in a health system where private health providers play an increasingly major role, both in providing NHS care and in providing alternatives to what the funding-starved NHS can afford. A few days after launching the life science strategy, the Government passed legislation allowing NHS hospitals to allocate 49% of their beds to private patients. The new health providers may be crucial in determining whether the strategy is truly a new deal for industry or just a bribe.