How would you contract for branded medicines?
Peter SharottChairman, Pharmaceutical Market Support Group
Subjects Covered
• The Commissioning Context for Medicines• NHS Medicines Expenditure Estimates &
Trends• Developing a National Strategic Approach
to Medicines Procurement• London Procurement Programme • Potential for National Branded Medicines
Contracts• Raising the Game
Commissioning Context for Medicines (1)
• National Specialised Commissioning Group– Enzyme deficiency disorders– Eculizumab – Pulmonary hypertension
• SHA Commissioning Groups – London:
• Managed entry of new drugs,• Exceptional treatments request procedures
• SHA Specialised Commissioning Groups – London:
• Bone Marrow Transplantation: high-cost antifungals• Haemophilia – blood clotting factors• HIV/AIDs – antiretrovirals • Intravenous Immunoglobulins
Commissioning Context for Medicines (2)
• PCT-Led Commissioning at sector/hub or pan-London level– London:
• Cancer – new high-cost chemotherapy• Hepatitis C – peginterferons and ribavirin• Ophthalmology – Age Related Macular Degeneration drugs• Renal – ESAs• Thalassaemia – iron-chelating agents
• PCTs– High-cost, PbR-excluded drugs– Exceptional treatment requests
• Practice Based Commissioning Groups
Drug Expenditure Estimates 2008/09• UK - primary & secondary care
= £8 billion
• England – secondary/tertiary care
– Branded £2.5 billion
• Homecare £500m +
– Generics £350m
• London – primary care
– All drugs £1 billion
• London – secondary/tertiary care
– All drugs £1 billionHospital Drug Expenditure is rising by about 12% p.a.
High-Cost PbR Excluded Drugs account for 50 - 60% of expenditure
London NHS Trusts - Annual Drug ExpenditureBasic NHS Prices ex. VAT
£0
£100,000,000
£200,000,000
£300,000,000
£400,000,000
£500,000,000
£600,000,000
£700,000,000
£800,000,000
£900,000,000
Mat-Sep. 2006 Mat-Sep. 2007 Mat-Sep. 2008
Excludes homecare expenditure not processed through pharmacy computer systems and FP10 (HP) expenditure
+10.5%
+13.9%
London NHS Trusts - High Cost Drug Exclusions (Basic NHS Prices ex VAT)
£169
£100
£75
£50
£24
£20
£17
£16
£11
£11
£11
£5
£3
£3
£3
£3
£2
£0 £20 £40 £60 £80 £100 £120 £140 £160 £180
Antiretrovirals
Cancer Chemotherapy
Haemophilia
Anti-TNFs
Immunosuppresants
Immunoglobulins
Antifungals
EPO
Hepatitis C
Anti-CMV
Growth Stimulating Factors
Pulmonary Hypertension
Hepatitis B
Iron Chelators
Botulinum Toxin
Age-Related Macular Disease
Somatostatin Analogues
£m
Excludes homecare expenditure not processed through pharmacy computer
systems and FP10 (HP) expenditure
Discounted Prices Achievable
London Cancer Drug Expenditure - Drugs Covered by NICE Chemotherapy Appraisals
£0
£10,000,000
£20,000,000
£30,000,000
£40,000,000
£50,000,000
£60,000,000
£70,000,000
Totals £11,006,527 £13,970,935 £23,732,375 £33,335,287 £42,838,036 £48,159,437 £55,573,718 £62,884,785
2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08
NB: Expenditure covers use in all indications, including those covered by NICE chemotherapy appraisals,
but excluding some homecare supply.
London HIV Providers - Antriretroviral Drug Expenditure Trends (Hospital prices ex VAT)
£0
£20
£40
£60
£80
£100
£120
£140
£160
£180
£200
£m
Actual Prices Paid (£m) £36 £43 £52 £59 £70 £78 £88 £107 £112 £123 £139 £157 £177
1998/99 1999/2000 2000/2001 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 Proj. 2009/10 Proj. 2010/11 Proj.
Pharmaceutical Procurement in England: Key Groups and
Players
PaSAChief Operating Officer
Pharmaceutical MarketSupport Group (PMSG)
Operational
National PharmaceuticalSupplies Group (NPSG)
Strategic
14 x Local Pharmacy Procurement Groups
Branded Medicines
6 x Regional SCEP Groups
Generic Medicines
Pharmacists(Procurement,
QA, Production, Medicines
Information,
and Clinical)
PaSAPharmaceutical
Team
Branded toGeneric Medicines
NHS Trust
PharmacyServices
andClinical
Services
PCTs
National Committees Specialists Procurement Groups Trusts
Patients: high quality, safe, clinically and cost-effective medicines, available when needed
Developing a National Strategic Approach to Medicines Procurement• Supply Chain Excellence Programme (SCEP) (2003)• A strategic framework to source pharmaceuticals for
the NHS in England (October 2005)
Developing a National Strategic Approach to Medicines Procurement
Organisational Roles and Responsibilities Defined for:
• National Pharmaceutical Supplies Group (NPSG)• Pharmaceutical Market Support Group (PMSG)• Collaborative Procurement Hubs & Procurement
Confederations• Pharmacy Purchasing Groups• NHS PASA• Specialist Procurement Pharmacists
Developing a National Strategic Approach to Medicines Procurement• Supply Chain Excellence Programme (SCEP) (2003)• A strategic framework to source pharmaceuticals for the
NHS in England (October 2005)• Joint Category Working Group (Pharmaceuticals)• Pharmaceutical Products and Services List
(November 2008)
Pharmaceutical Market Support Group (PMSG)
Pharmaceutical Products and Services
This document is intended to be used to support implementation of the Strategic Framework to Source Pharmaceuticals for the NHS in England, published in October 2005, and should be used by all NHS organisations and groups involved in the tendering and contracting for licensed medicines and other medicinal products and services. The table provides details on which organisations or groups may take responsibility for tendering for each of the listed categories of pharmaceutical products or services. Where specified in the final column, pharmacists and other clinicians must be consulted to ensure that all pharmaceutical and clinical considerations, including appropriate pharmacy quality assurance, have been taken into account in the tendering, contracting and adjudicating processes. Trust medicines management committees and procedures should be used to support this process. This has been agreed by the NPSG and the Joint Category Working Group for Pharmaceuticals, and will be revised on an annual basis.
Responsible for the tendering
Consultation/Involvement required by
Procurement Groups via
PaSA Tendering
Hubs/ Confederations
NHS Supply Chain
(note 7)
Trusts via local
tendering (note 6)
National Co-ordination
(PMSG)
Pharmacy Quality
Assurance
Clinical
1 Allergy Tests Pharmacy 2 Antiseptic solution e.g.
Povidone / Chlorhexidine
Pharmacy 3 Bone Cement/ Bone
Cement with Antibiotics
4 Branded Medicines (note 2) Pharmacy 5 CAPD Solutions Clinical
Pharmacy 6 Clotting Factors
(haematology centres)
7 Condoms 8 Contact Lens Solutions 9 Dental Cartridges Pharmacy 10 Diagnostic tests –
Blood/Urine
Pathology Pharmacy
11 Endoscopic Disinfectants Pharmacy Clinical
12 Enteral Feeds (note 5) Pharmacy Dietetics
13 Generic Pharmaceuticals (National Frameworks)
Pharmacy
14 Haemodialysis solutions Clinical Pharmacy
15 Haematology Products (misc, including Plasma Proteins)
Pharmaceutical Market Support Group (PMSG)
Pharmaceutical Products and Services
This document is intended to be used to support implementation of the Strategic Framework to Source Pharmaceuticals for the NHS in England, published in October 2005, and should be used by all NHS organisations and groups involved in the tendering and contracting for licensed medicines and other medicinal products and services. The table provides details on which organisations or groups may take responsibility for tendering for each of the listed categories of pharmaceutical products or services. Where specified in the final column, pharmacists and other clinicians must be consulted to ensure that all pharmaceutical and clinical considerations, including appropriate pharmacy quality assurance, have been taken into account in the tendering, contracting and adjudicating processes. Trust medicines management committees and procedures should be used to support this process. This has been agreed by the NPSG and the Joint Category Working Group for Pharmaceuticals, and will be revised on an annual basis.
Responsible for the tendering
Consultation/Involvement required by
Procurement Groups via
PaSA Tendering
Hubs/ Confederations
NHS Supply Chain
(note 7)
Trusts via local
tendering (note 6)
National Co-ordination
(PMSG)
Pharmacy Quality
Assurance
Clinical
1 Allergy Tests Pharmacy 2 Antiseptic solution e.g.
Povidone / Chlorhexidine
Pharmacy 3 Bone Cement/ Bone
Cement with Antibiotics
4 Branded Medicines (note 2) Pharmacy 5 CAPD Solutions Clinical
Pharmacy 6 Clotting Factors
(haematology centres)
7 Condoms 8 Contact Lens Solutions 9 Dental Cartridges Pharmacy 10 Diagnostic tests –
Blood/Urine
Pathology Pharmacy
11 Endoscopic Disinfectants Pharmacy Clinical
12 Enteral Feeds (note 5) Pharmacy Dietetics
13 Generic Pharmaceuticals (National Frameworks)
Pharmacy
14 Haemodialysis solutions Clinical Pharmacy
15 Haematology Products (misc, including Plasma Proteins)
Pharmaceutical Market Support Group (PMSG)
Pharmaceutical Products and Services
This document is intended to be used to support implementation of the Strategic Framework to Source Pharmaceuticals for the NHS in England, published in October 2005, and should be used by all NHS organisations and groups involved in the tendering and contracting for licensed medicines and other medicinal products and services. The table provides details on which organisations or groups may take responsibility for tendering for each of the listed categories of pharmaceutical products or services. Where specified in the final column, pharmacists and other clinicians must be consulted to ensure that all pharmaceutical and clinical considerations, including appropriate pharmacy quality assurance, have been taken into account in the tendering, contracting and adjudicating processes. Trust medicines management committees and procedures should be used to support this process. This has been agreed by the NPSG and the Joint Category Working Group for Pharmaceuticals, and will be revised on an annual basis.
Responsible for the tendering
Consultation/Involvement required by
Procurement Groups via
PaSA Tendering
Hubs/ Confederations
NHS Supply Chain
(note 7)
Trusts via local
tendering (note 6)
National Co-ordination
(PMSG)
Pharmacy Quality
Assurance
Clinical
1 Allergy Tests Pharmacy 2 Antiseptic solution e.g.
Povidone / Chlorhexidine
Pharmacy 3 Bone Cement/ Bone
Cement with Antibiotics
4 Branded Medicines (note 2) Pharmacy 5 CAPD Solutions Clinical
Pharmacy 6 Clotting Factors
(haematology centres)
7 Condoms 8 Contact Lens Solutions 9 Dental Cartridges Pharmacy 10 Diagnostic tests –
Blood/Urine
Pathology Pharmacy
11 Endoscopic Disinfectants Pharmacy Clinical
12 Enteral Feeds (note 5) Pharmacy Dietetics
13 Generic Pharmaceuticals (National Frameworks)
Pharmacy
14 Haemodialysis solutions Clinical Pharmacy
15 Haematology Products (misc, including Plasma Proteins)
Pharmaceutical Market Support Group (PMSG)
Pharmaceutical Products and Services
This document is intended to be used to support implementation of the Strategic Framework to Source Pharmaceuticals for the NHS in England, published in October 2005, and should be used by all NHS organisations and groups involved in the tendering and contracting for licensed medicines and other medicinal products and services. The table provides details on which organisations or groups may take responsibility for tendering for each of the listed categories of pharmaceutical products or services. Where specified in the final column, pharmacists and other clinicians must be consulted to ensure that all pharmaceutical and clinical considerations, including appropriate pharmacy quality assurance, have been taken into account in the tendering, contracting and adjudicating processes. Trust medicines management committees and procedures should be used to support this process. This has been agreed by the NPSG and the Joint Category Working Group for Pharmaceuticals, and will be revised on an annual basis.
Responsible for the tendering
Consultation/Involvement required by
Procurement Groups via
PaSA Tendering
Hubs/ Confederations
NHS Supply Chain
(note 7)
Trusts via local
tendering (note 6)
National Co-ordination
(PMSG)
Pharmacy Quality
Assurance
Clinical
1 Allergy Tests Pharmacy 2 Antiseptic solution e.g.
Povidone / Chlorhexidine
Pharmacy 3 Bone Cement/ Bone
Cement with Antibiotics
4 Branded Medicines (note 2) Pharmacy 5 CAPD Solutions Clinical
Pharmacy 6 Clotting Factors
(haematology centres)
7 Condoms 8 Contact Lens Solutions 9 Dental Cartridges Pharmacy 10 Diagnostic tests –
Blood/Urine
Pathology Pharmacy
11 Endoscopic Disinfectants Pharmacy Clinical
12 Enteral Feeds (note 5) Pharmacy Dietetics
13 Generic Pharmaceuticals (National Frameworks)
Pharmacy
14 Haemodialysis solutions Clinical Pharmacy
15 Haematology Products (misc, including Plasma Proteins)
Developing a National Strategic Approach to Medicines Procurement• Supply Chain Excellence Programme (SCEP) (2003)• A strategic framework to source pharmaceuticals for the
NHS in England (October 2005)• Joint Category Working Group (Pharmaceuticals)• Pharmaceutical Products and Services List (November
2008)• Next Steps: National Strategy for Managing Branded
Medicines (2009)– Led by Peter Sharott– PMSG and NPSG– SHA Senior Pharmacy Managers’ Networks– ABPI Supply Chain Group
Principles for Contracting Branded Medicines
• Collaborative approach, usually at SHA Pharmacy Procurement Group level, but may be more appropriate at sector or network level
• Contracting at individual NHS Trust level reduced to a minimum – must comply with EU procurement regulations
• Tendering and Contracting undertaken by NHS PASA• Full compliance with contract Terms and Conditions both
by the NHS and the suppliers• Contracting decisions need to take account of potential
impact on primary care prescribing and costs and may actually be driven by the needs of PCTs
• Close engagement and involvement of clinicians and commissioners
Contracting at NHS Trust LevelIssues to be considered
• NHS Foundation Trusts– Competitiveness with neighbouring trusts
• Pharmaceutical Companies– Preference for local rather than collaborative contracts
• Transparency of contract terms and conditions– Compliance with EU procurement regulations– Relationship between price and volume across organisations– Value added services
• Commissioning agenda– Collaborative commissioning at SHA and sector level– Equity of access to medicines – PCTs increasingly interested in relationship between prices paid
and charged by NHS Trusts– Visibility of value added services
Product Categorisation• Procurement-driven
– National Procurement – Generic medicines• oral products• hospital-only oral products• Injectables• Transitional, branded to generic medicines• Generic biosimilars?
– Pharmacy Group Procurement • Branded medicines• Branded biosimilars
• Clinically-driven– Pharmacy Group-led
• Therapeutic rationalisation and tendering• Framework agreements – market share
Identified advantages of therapeutic tendering
• Allows additional leverage to NHS in key branded markets
• Achieves higher levels of discount compared to ‘traditional tendering’ methodology
• Suppliers have a commitment from NHS to manage volumes and grow market shares
• Allows suppliers the opportunity to improve market share if they price incentivise.
• Regular contract reviews allows effective contract management for both parties
Features of Framework Agreements
• Prices directly linked to committed volumes• Lowest prices and maximum savings are not
automatically available• Direct involvement of clinicians in the decision-
making process• On-going dialogue with the participating
companies is essential• Expect protracted timescales both for
development and full implementation
Market Share Matrix
Market Share
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Drug A £20 £19 £18 £17 £16 £15 £14 £14 £14 £14
Drug B£22
£21 £20 £19 £18 £17 £16 £15 £14 £13
Drug C £24 £23 £23 £22 £22 £22 £22 £22 £22 £22
Aiming for a win/win for supplier who offers better price for increased market share.
Utilise existing strong pharmacy networks (inter and intra trust) and links with clinicians
= Demand Management
London NHS Trusts - Therapeutic Group Framework AgreementPrescribing Trends by Volume
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08
Drug A Drug B Drug C
London Procurement Programme (LPP) Formation & Structure
• London Procurement Programme set in April 2006 with the formation of the new London Strategic Health Authority (NHS London) as a short-term alternative to a pan-London Collaborative Procurement Hub or similar arrangement
• Identify savings opportunities across trusts within NHS London and evaluate and implement accelerated savings initiatives
• Deloitte responsible for project management• LPP Steering Board – strategic board chaired by Malcolm
Stamp, CEO, London Providers Agency– Peter Sharott represents P&MM
• LPP Operational Board – Project Director, Heads of Procurement, Directors of Finance, PaSA and Deloitte.– Phil Aubrey represents P&MM.
• Pharmacy & Medicines Management Steering Group
Structure for Pharmacy and Medicines Management Steering Group
NHS Trust & PCT Pharmacy NetworksClinical Networks
Pharmacy Procurement Consortia
Project Lead
Steering Group Regional Specialist Procurement Pharmacists
Pharmacy Procurement Consortia Chairs Primary Care Pharmacy Specialists
Primary Care Lead
Clinical LeadsAntifungalsAnti-TNFs
CancerCardiovascular
ESAsMental Health
Unlicensed Medicines &
Specials Lead
Homecare Lead
Enteral Feeds Lead
Dietitians
Stakeholder Engagement
Trust LPP Pharmacy
Leads
Commissioners
FormularyPharmacists
ProcurementPharmacists
ClinicalPharmacists
NHS PaSA
Hospital Clinicians
/GPs
PCT Pharmaceutical
Advisors
P&MM Steering
Group
LPP Pharmacy & Medicines Management Work Programme (1)
• Procurement– Branded medicines contracts
• Therapeutic Tendering/Rationalisation– Identify opportunities to rationalise branded drug use and
tender on a volume commitment basis either within sectors or on a pan-London basis
– Framework agreements with market share targets– Manage value added services
• Prescribing Policies – Identify opportunities to influence local prescribing
policies to achieve:• shift from branded to generic drugs in secondary and
primary care• shift between therapeutic groups (e.g. A2RAs to
ACEIs)• Antivirals prescribing guidance for shingles and genital
herpes
LPP Pharmacy & Medicines Management Work Programme (2)
• Others– Homecare supply arrangements– Enteral feeds – demand management of sip feeds/tube
feeds– Purchase and supply of unlicensed “specials” and
unlicensed medicines and dose-banded cytotoxic drugs
London-wide benchmarking, comparative data, targets and monitoring
Build on local initiatives and guidelinesPrimary, secondary and tertiary care coverage
Division of LPP Contracting Arrangements
• Anti-TNFs• Anti-fungals• Antivirals• Aromatase Inhibitors• Bisphosphonates• EPO• Growth Stimulating
Factors• Gonadorelin Analogues• Hepatitis C• Urological Solutions• X-Ray Contrast Media
• Anti-platelet drugs
• Anti-psychotics
• Antiretrovirals
• Botulinum Toxin
• Cancer Chemotherapy
• Carbopenem antibiotics
• Growth Hormone
• Hepatitis B
• Immunosuppressants
• Low Molecular Weight Heparins
Therapeutic Rationalisation Branded Medicines Contracts
Issues and Lessons from LPP Work (1)
• Geographical complexity – large number of NHS Trusts and PCTs – optimising the benefits
• Engagement with primary and secondary care clinicians and carry through to delivery
• Timescales for achieving commitment and change• Prioritisation of work for practicality and deliverability• Willingness of pharmaceutical companies to
participate• Potential for both NHS Trusts and the companies to
undermine the Terms and Conditions of framework agreements
• Partial success in unbundling homecare service charges from drug costs
Issues and Lessons from LPP Work (2)
• Savings/Cost Avoidance– All savings attributable to the trust– Realistic and achievable and not guarantee– Based on optimum rather than maximum outcomes– Some individual projects will over-achieve, while others will
under-achieve– Full impact will be over more than one financial year and may
depend on up-front infrastructure changes and investment
• Benefits tracking – monthly reporting– IMS and Pharmex for NHS Trusts– ePACT for PCTs– Homecare suppliers– Data analyst from Croydon PCT
£18m estimatednew savings in
NHS Trusts from2006 - 2009
Working more closely with Pharma
• LPP P&MM initiatives results in closer relationships with Industry
• Suppliers need to be engaged from the onset and processes and tendering methodology explained in detail
• Extended lead-in times needed for pharmaceutical companies to understand and respond to therapeutic tendering initiatives
• Regular contract reviews underpin closer supplier relationships and effective contract management
Should there be National Branded Medicines Contracts?
• Potential candidates– Products only available at Basic NHS Prices, although may be subject to
wholesaler discounts– Products only available at standard hospital discounted prices
• Potential benefits– Compliance with EU procurement regulations– Rationalisation of tendering and contracting workload– Stimulation of new discounts, available to all NHS Trusts
• Potential disadvantages– Difficult establish links between prices with committed volumes– Remote from local decision-makers and clinical influence– Lack of sensitivity to new opportunities for therapeutic rationalisation
through SHA Pharmacy Procurement Groups– Need to judge when national contracts should be discontinued in favour
SHA pharmacy Procurement Group contracts
Examples of Current National Contracts
• Vaccines
• Blood clotting factors for Haemophilia
• Immunoglobulins
Immunoglobulins – A model for the future? (1)
• Started with a global shortage due to increasing demand and insufficient fractionation capacity
• IVIg is a high-cost drug exclusion funded by PCTs, generally without restriction on use (i.e. budgets not capped)
• Branded generic market with restricted opportunities for switching patients• Manufacturers reluctant to sell into the UK because higher prices obtainable
elsewhere• National procurement strategy introduced to manage supplies (NHS
PASA/PMSG)– Suppliers wanted volume commitments from all NHS Trusts with expectation
that there would not be a shortfall or greater demand for the product– Suppliers expected to keep buffer stocks of around three months’ supply
• Demand strategy developed by DoH– Clinical guidelines introduced defining priorities for treatment and reducing
clinical indications for which immunoglobulins could be prescribed– NHS Trusts required to have a committee to manage compliance with
guidelines and to manage future shortages – National patient register introduced: all patients must be registered by April
2009– SHAs required to commission the service, usually through Specialised
Commissioning Groups
Immunoglobulins – A model for the future? (2)
• Outcomes– During the shortage - a significant reduction in
prescribing, followed by an increase as supply situation improved
– Recent introduction of clinical guidelines has halted growth and use now may be declining again
– Prices have risen and there is little variation between companies
– There is no current shortage of product– Commissioners will expect tight expenditure control
and will require justification for increased budgets• Future considerations
– Reduce the number of companies on the contract?– Stimulate greater price competition – Aim to cover increases in clinical activity within
existing budgets
London - Intravenous & Subcutaneous Intravenous Immunoglobulins - Moving Annual Usage (G)
400,000
420,000
440,000
460,000
480,000
500,000
520,000
540,000
560,000
580,000
600,000
G
Intravenous Products Subcutaneous Products
Excludes Homecare & Pathology Supplies not processed through
Pharmacy Computer Systems
The NHS needs to raise it’s game by…..
• Placing more emphasis on managing branded medicines through identifying opportunities for therapeutic rationalisation
• Prioritising clinical engagement and consultation, underpinned by tendering and contracting activity
• Generating savings to release funding for new drugs where the clinical evidence supports their use
• Obtaining more resources, including the establishment of full-time specialist procurement pharmacist posts in all SHAs, to emulate the work undertaken in London and other parts of the country
• Working collaboratively across primary and secondary care• Working with commissioners at different levels• Working more closely with the industry and recognising the
need for longer lead times for therapeutic rationalisation and establsihment of framework agreements
And, so does the industry by ….
• Recognising that the shifting emphasis towards branded medicines and the development of framework agreements
• Engaging with the tendering and contracting process and recognising the risks associated with non-participation
• Engaging more regularly with Pharmacy Procurement Groups and Specialist Procurement Pharmacists to generate an on-going dialogue and better understanding of each others needs
• Thinking more creatively about the opportunities for reducing prices as volumes increase (i.e. ensuring that price alone does not inhibit product uptake and limit the opportunity for treating more patients within capped budgets
A Win-Win for All?