Not so NICE
NHS England’s muscle flexing could spell end for old regime.
The tectonic plates upon which the medicines system sits are shifting – in England at least – and the aftermath promises a reformed landscape fundamentally different to any that industry has looked out upon before.
The latest geographical change to which I refer is the establishment of the new Strategic Commercial Unit (SCU) in NHS England and the rapid realignment of control over medicines that is emerging as a result.
There are several aspects of the SCU’s evolution that you ought to be aware of, which will be explored here. Essentially, however, it signifies a single-minded and seemingly successful manoeuvre, from Simon Stevens, to wrestle authority over the medicines spend from those agencies outside of NHS England control.
Moving onto the specifics, your head would have needed to be in the sand over the last month, not to be aware of the announcement from NICE that it would be taking forward three major changes to its processes (which your faithful correspondent wrote about in Autumn last year).
Perhaps the most controversial aspect of the changes is the introduction of a new ‘budget impact test’ for medicines assessed by NICE – a measure that is determined to be cost-effective. Previously, when a medicine was concluded by NICE to be cost-effective, following a rigorous review of its evidence, it would need to receive mandatory funding from the NHS within 90 days. This rule, laid down in statute, meant NICE guidance overrode NHS budgeting decisions and ensured patients gained a ‘right’ (later enshrined in the NHS Constitution) to access NICE approved treatments.
The additional hurdle, that proven cost-effective medicines are negotiated under the control of NHS England, can be read as a signal that Stevens has successfully achieved a major land grab over his own budget. It is hard not to be impressed by the achievement. It also marks a fundamental erosion in the role of NICE as supreme arbiter of value and what the NHS should invest in when it comes to medicines.
Here’s where the story begins
The new budget impact test, now in action since 1 April 2017, removes NICE’s dominance. From now on, when it is forecast that a new medicine will cost the NHS £20 million or more in any one of three years, post-launch, the manufacturer will need to enter into a negotiation. The aim would be either reduce the price to bring it under the threshold, or agree to stagger the entry over a longer period of time, thus managing its cost to the NHS. And who do you think the manufacturer will be negotiating with? You guessed it, the new NHS England SCU.
Understandably you would be forgiven for concluding that £20 million per year is a considerable sum of money. It is, but one must consider that we are talking about the whole of the NHS in England and all eligible patients. A new Alzheimer’s treatment – much-needed we all agree – would easily fall subject to this process, even at a very modest price. As would many breakthrough treatments, such as the wave of hepatitis C therapies that have arrived in recent years. NICE itself has estimated that around 20% of new medicines per year might be subject to this negotiation. We’re not talking about exceptional circumstances here.
More importantly, however, is the trend being set. What is a £20 million threshold now, might well become a £10 million threshold tomorrow. Indeed, if one examines the details of the recommendations of the Government’s Accelerated Access Review (AAR), it becomes clear that NHS England sees the role of the SCU expanding considerably.
What this spells for the future is interesting. On 28 March, NHS England announced it would be leading a review of “low value prescription items” to deliver savings to the medicines budget in this area.
In total, 10 items have been highlighted so far. Gluten-free foods have garnered the most media coverage, but the list also includes travel vaccines, drugs such as Tadalafil and painkillers. Such ‘decommissioning’ is essential to deliver financial headroom for the NHS at a time of acute financial pressure. Nonetheless, it indicates another ambition
for SCU control – this time at the other end of the medicines life cycle.
There is also the proposed role for the SCU in negotiating new “commercial deals” with industry to consider, again proposed in the AAR. Stevens has indicated that these will include outcomes-based, annuity-based and volume-based pricing deals.
Should these plans go ahead, the SCU will take a lead in reaching previously unforeseen agreements with industry; trading off volumes and outcomes against price. There are significant opportunities here for pharma to deliver major prizes in terms of patient access to new treatments. Industry will need to be equipped to offer what the NHS expects and augurs point towards the SCU driving a hard bargain. Successfully navigating NICE will only be the start of the discussion.
Alex Ledger is Deputy Managing Director at Decideum – the views expressed here are entirely his own. Go to decideum.com