After the goldrush

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The UK pharmaceutical industry spent two years preparing for the NHS reform – but was it ready for what has happened since, and is it ready for what is happening now?

Is the pharma industry ready for NHS reform? is a question whose meaning has changed in the last six months. The industry may well have adjusted to the idea of local clinical commissioning, focusing on GPs as commissioners and looking to work with CCGs to redesign services at a local level. That’s what the national newspapers told us to expect.

But that’s not quite what the industry has got. With the unveiling of the new NHS structure in April 2013 came new competition legislation that not only moved the goalposts, but broke up the field and renamed the game. The new NHS is neither clinically led nor really locally determined.

The new NHS is a brand, the segments of which are being franchised out to private healthcare providers great and small. Even Monitor admits that the providers are calling the shots because they have more expertise in the arena of contract law – and better lawyers. The decisions about service redesign are being made by private companies, the CCGs are doing what the new laws tell them, and any sense of a consistent national framework exists only in the rhetoric of politicians.

Brave new world

What is emerging is a mixed healthcare system with elements of state-provided care, private but state-reimbursed care, and fully-fledged private healthcare coexisting in each location. The most consistent feature of the new NHS is rapid and continual change. The new NHS is not a structure: it’s an engine that generates further transformation with every turn of the motor. The NHS is set to go on reforming itself every day, and the main feature of that reform is the partitioning of services into franchises.

This ‘endless revolution’ was predicted by careful readers of the Health and Social Care Bill and, especially, the plan outlines by Malcolm Grant as Chair of the NHS Commissioning Board (now NHS England).

But the politicians downplayed it, speaking of ‘GP-led’ commissioning and how doctors would be ‘empowered’. When most doctors said it wasn’t going to be like that, Andrew Lansley accused them of being “politically motivated”.

When Lansley – and Jeremy Hunt after him – promised that the Government would not sell off the NHS, that was not strictly untrue. The new competition legislation is making the NHS privatise itself. Meanwhile, to accompany the process of breakneck franchising, the Government has adopted the message of condemning the ‘old’ NHS as bureaucratic, corrupt and dangerous, a state monolith run by overpaid managers who covered up for neglectful and incompetent staff . The new NHS, the message states, will be run to the highest standards – because it will be run as a business.

For the pharmaceutical industry, which needs to engage commercially with the new healthcare system, the political issues are less crucial than the operational and commercial realities. Whether or not you ‘agree with’ the new NHS, you have to understand its dynamics and be ready to deal with the challenges it presents as a customer base. What you need, in this unstable environment, is the ability to catch a different train each morning – going to a different place, and barely slowing down as its doors briefly open.

Providers run the game

 The outgoing NHS Chief Executive, Sir David Nicholson, recently told MPs that the new NHS is “bogged down in a morass of competition law” that is blocking service redesign and raising the costs of commissioning, since “competition lawyers” have to be involved in every decision.

The idea of using provider competition to facilitate access to the best solutions had gone wrong, he said: instead of choosing to put services out to tender, commissioners now find that they cannot do otherwise, and the outcome is not up to them.

Commissioning itself is facing private sector invasion: according to the Financial Times, private equity companies have been approached by NHS England to discuss possible mergers with, or takeovers of, 19 commissioning support units (CSUs) that provide services such as procurement advice and contract management to CCGs.

Companies such as Atos, Serco and Capita are already working, and competing, with the CSUs.A report by Monitor in October 2013 noted that NHS commissioners lack the necessary data and legal experience for local contracting, and that as a result providers – whether public or private sector – are setting the agenda. The regulator noted that providers “have far better data than commissioners about the work they do and the costs of doing it”, but they keep their cards close to their chest. As a result, it can be “difficult for commissioners to negotiate and agree contract terms that deliver the best outcomes for patients”.

All of this was clearly signalled by a Department of Health consultation document in August 2012, which stated: “We will not be able to enforce non-statutory, administrative rules in the reformed system, where commissioners and other organisations have greater autonomy.We need to put the rules on a statutory footing so that they are binding on the new commissioning organisations.”

The document explained that in the past, NHS commissioners had used “inappropriate criteria” – so they needed legislation to make them “carry out an objective assessment of different options” according to Government-defined standards of “quality and efficiency”. According to the new rules, which became law in April 2013, it is a criminal offence for CCGs to “prevent, restrict or distort competition” by making decisions for themselves.

The new ‘clinical commissioning’ takes place in a framework of company law, with lawyers and financial managers in charge, and with private healthcare corporations poised to pull the strings. This is what Mark Britnell, former NHS Director-General for Commissioning and System Management, meant when he told a conference of private healthcare providers in 2010: “The NHS will be shown no mercy, and the best time to take advantage of this will be in the next couple of years.”

Here comes the flood

Since April 2013,NHS services worth more than £2bn have been contracted out to independent providers. The largest contract so far put out to tender is worth £800m over five years: to provide an integrated package of acute and community services for older people in Cambridgeshire. Serco, UnitedHealth UK and Virgin Care are among the potential sole providers listed, while Care UK, Capita, Circle and Interserve are shortlisted in joint bids with other providers. Circle recently took on a £120m five-year contract to run a newly integrated musculoskeletal service in Bedfordshire.

Meanwhile, core NHS services are in increasingly desperate financial straits. An NHS hospital trust in Cambridgeshire has been taken over by a private provider (Circle), and a second in Nuneaton is currently being franchised. South London NHS Trust, which contains some world-famous hospitals, is also being carved up. A CIPD survey found that 43% of UK hospital staff through their hospital could be the next Stafford General. The pain is not confined to secondary care: a recent RCGP survey found that 40% of GP practices had recently cut staff, while 80% of GPs said they now lacked the resources to meet their own standards of care.

Seize the day

For many in the pharmaceutical industry, dealing with the post-NHS customer landscape will be like coming home. US companies never did get used to the idea of state-provided healthcare, while companies based in continental Europe are often more used to a mixed healthcare system. An NHS run as a business – or rather, as a constellation of interlocking businesses within a common brand – holds few terrors for industry.

It does, however, pose immediate challenges. If this is not the version of ‘NHS reform’ that sales teams expected – and, let’s be honest, it mostly is not – then how can companies get to grips with it in time to ensure their market share doesn’t fade like a chalk mark in a rainstorm? How can they also launch new products and services into an NHS where commissioners, providers and services are constantly in flux?

There are two answers. First, pharmaceutical sales teams need up to date information on what their customer base is, with a firm grasp of how things are changing both nationally and locally. They need facts, figures and analytics that help to bring key accounts and care pathways into clear focus. A service such as Pf Discovery could be a lifeline for sales professionals adrift in the rough seas of the continuing NHS transformation.

Secondly, they need to update their skills and strategies – perhaps with the help of colleagues or consultants who have experience of selling into other health systems. Training needs should be identified and addressed proactively, rather in reaction to a year of fail. The emerging post-NHS health system represents a historic opportunity for pharma – so make sure you have the contacts and capabilities to ensure market penetration across a range of new providers and service delivery models.

 

The future is now