Pharmaceutical Industry Today: NHS trusts fight health secretary over ‘value-added’ drug pricing

NHS trusts fight health secretary over ‘value-added’ drug pricing

Plans by the health secretary, Andrew Lansley, to change the way the NHS agrees drug prices with pharmaceutical companies could leave the health service footing a large bill with no real benefit to patients, the government has been warned.

The NHS Confederation, which represents NHS trusts, says the government is right to pursue pricing based on “value”, but says the scheme risks pouring money into new drugs at the expense of preventing disease or providing palliative care.

“The current process is not perfect and pricing based on value is good in principle. But this is a case of a good idea that has turned into poor policy,” said Nigel Edwards, acting chief executive. “We simply don’t see that the process suggested will achieve what the government wants. These proposals could push up costs without increasing effectiveness, damage public confidence in the decision-making process and fail to spark greater innovation.”

Lansley has said he intends to stop the National Institute for Health and Clinical Excellence (Nice), from banning ineffective and expensive new medicines from use in the NHS.

Until now, Nice has based its decisions on cost-effectiveness and has ruled that some drugs offer too little benefit to the patient to justify the high price. This has proved controversial where the treatment is for a terminal disease, such as cancer, and offers a few more weeks of life, albeit for tens of thousands of pounds.

Nice does not set prices but, where companies’ drugs have been turned down, they have increasingly offered to reduce the cost to the NHS through special-access schemes, where the manufacturer may pay after a patient has received a certain number of treatments.

Companies at present set the price of their drugs but the amount of money they can earn in a year from the NHS is capped under the pharmaceutical price regulation scheme. Lansley wants to replace this with value-added pricing, which would see Nice give guidance on cost-effectiveness, but then allow the price to be negotiated between the company and the Department of Health, making allowance for the innovative nature of the drug and the research and development the company has put in, as well as any social benefit, for instance in relieving the burden on carers.

But in its response to the government’s consultation on value-based pricing, the confederation says this process may not be transparent and risks becoming political. It also does not believe that it will act as an incentive to companies to be innovative – designing the drugs that are needed rather than copying the blockbusters of their rivals.

The amount of money the NHS spends on pharmaceuticals, it says, is not “of a sufficient scale to affect the behaviour of a sector populated by multinational organisations with annual turnovers of tens of billions of dollars”. It questions whether innovation should justify paying a higher premium for drugs and suggests that Nice be asked to design a new pricing scheme.

One patient group, Myeloma UK, said it had reservations about the scheme. “It may seem a good idea to pay a higher price for drugs that provide wider societal benefits – for example, getting people back to work – but this will undoubtedly benefit some groups of patients more than others. We have to recognise all the likely consequences of a reward system and be absolutely sure that it reflects what society wants the NHS to pay more for,” said chief executive Eric Low.

The Association of the British Pharmaceutical Industry broadly welcomes the scheme but says much of the detail has yet to be worked out.

Drug pricing: govt hopes for “free dialogue,” says Minister

As the government consultation closes today (March 17) on its plans to introduce a new value-based system of pricing for branded medicines, “we now have three years in which to work through what a value-based pricing (VBP) system will look like,” Health Minister Earl Howe has told Pharma Times.

Ministers will be conducting, over the next three months, what he hopes will be a “free dialogue” with the industry, medical professions and patient groups around such issues as what value looks like, how to assess value and who should do so, and how to ascribe a price. “Once we’ve reached a general understanding, this will lead to detailed negotiations with the pharmaceutical industry,” he said.

A major benefit which will accrue to drugmakers from the move to VBP will be much greater predictability and confidence that drugs representing major therapeutic value will be appropriately rewarded, Earl Howe told Pharma Times.

Health Secretary Andrew Lansley “has absolutely no difficulty with the NHS paying a high price for genuine breakthroughs, but now price is often unrelated to therapeutic value,” he said, and one problem is that value assessments currently do not take account of “things which we think they should,” such as wider societal values. Doing so would be “a major step forward,” he added.

The National Institute for Health and Clinical Excellence (NICE) has done “a really fine job over the last few years,” but it has “struggled with this concept, and we need to wrestle some more with this in redefining value,” said Earl Howe.

The price initially set for a drug under the proposed new system would not be fixed – it could be reviewed at a later date to reflect experience gained over time, and could then go up as well as down. However, problems could arise where there are different indications for the same drug, said the Minister. And, he added, while “we shouldn’t close our eyes” to the use of patient access schemes in the early stages of a drug’s life when evidence is lacking, the government would want to minimise the use of such initiatives where it can.

Late last year, the government identified healthcare and life sciences as one of the first sectors for consideration under its Growth Review programme, and policy announcements are expected alongside the Budget on March 23. Earl Howe, who was speaking to Pharma Times at the NHS Innovation Expo held in London last week, added that the life sciences industry “can expect the spotlight to continue to fall on it for as long as this government in office.”

While a great deal has already been done to make the UK an attractive location for the pharmaceutical industry globally, “that is no reason to say that we shouldn’t punch above our weigh at attracting R&D here,” said the Minister. The UK has everything going for it – skills base, infrastructure, talent, fiscal incentives – and the NHS, which he described as “a unique test bed for new inventions.”

In his address to the conference, Earl Howe emphasised that the UK has to innovate to way out of the current economic situation – it cannot afford not to, but also warned against “confusing the cost of something with its value.”

The NHS is the world’s largest integrated health care system, he said, and called for its services to be opened up to overseas customers. “So long as UK patients are protected, why should the NHS not market itself to overseas patients?” he asked. “Why shouldn’t our hospitals be competing with the Harvard Medicals and the Sloane Ketterings?”

Moreover, as a stronghold of innovation, the NHS should be selling more of its ideas and innovations in the global health care market, which is now worth $4.5 trillion a year, he added. NICE is a big success here, he said – the Institute is now “the partner of choice for many health economies,” providing advice on replicating its model to governments in Europe and the Middle East worth £200 million a year.

Taskforce set up to check spurious drugs

NEW DELHI: The Union health ministry has formed a taskforce to tackle the problem of spurious drugs.

A 12-member committee headed by the Indian Council of Medical Research ( ICMR) director-general V M Katoch has been constituted to asses the quantity of spurious drugs floating in the market using anti-counterfeit technologies and recommend measures to address the issue.

The drug taskforce will be looking into step needed to promote indigenous production of bulk drugs and preventing the take over of Indian pharma industry by multi-national companies.

The taskforce has representatives from National Pharmaceutical Pricing Authority, Department of Industry Policy and Promotion, Indian Drug Manufacturers Association, Mumbai, Indian Pharmaceutical Alliance, Mumbai, Organisation of Pharmaceutical Producers of India, Mumbai, among others.

“The taskforce will submit its report within a time period of three months. It will recommend measures to tackle the problem of spurious drugs — use of anti counterfeit technologies as well as consider and advice on any other issue incidental to the above,” said a health ministry official. The constitution of the taskforce comes close on the heels of Union health minister Ghulam Nabi Azad recently meeting with the drug manufacturers.

According to health ministry’s estimates, 5.6% of drugs in the country don’t adhere to standard quality.

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