PiP 25-6-13. FINAL

Sales & Marketing Consulting Group©2013 SMCG All Rights Reserved except where attributed to third parties

The NHS as a Sample Model Payer

Steve Parrfor the Productivity in Pharma GroupEuropean Business SchoolWiesbaden25th June 2013


Contents

•Why look at the NHS?

• Structure of the NHS

• Key NHS Issues

• The threat to Pharma

• Where could we help the NHS?

• Questions


Why look at the NHS?


NHS as a model Payer

• Payers are becoming dominant in the global healthcare market• NHS is a model Payer and well respected globally• Used as benchmark by developed countries

... and by developing countries as an experienced and cost-effective national healthcare system

• NHS costs ~ 9% of GDP - in France it’s 12% - in the US ~ 18% • In 2011 US Commonwealth Fund ranked the UK with Switzerland as best

health systems amongst 11 high-income countries • UK health spending is ~ €1.2k/citizen less than Switzerland, and ~ €3k less

than the US • Many countries want to know how best to:-

• Meet the huge challenges of increasing non-communicable diseases and rapidly ageing populations

• Provide high quality care for the whole population at relatively low cost


Structure of the NHS


UK health environment

• NHS = National Health Service•


Intro to the NHS

• NHS (National Health Service) was founded in 1948• “Free at the point of use” for anyone who is resident in the UK• Employs more than 1.7m people - just under half clinically qualified incl.:

• 40k general practitioners • 370k nurses • 106k hospital and community staff

• Only the Chinese People’s Liberation Army, Wal-Mart and Indian Railways directly employ more people

• The NHS’s best feature is its size... The NHS’s worst feature is its size

• Annual drugs bill is around €12 billion (about 10% of NHS spend)• Nicholson Challenge: to find £20 billion in "efficiency savings" by 2015

• 2013: the new NHS !• New commissioning structure• New pricing scheme• Public Health England• Beginning of Value-based Pricing


“It’s like trying to dance with an octopus. 2 arms are hugging you, 2 arms are choking you, and you don’t have a clue what the other 4 arms are doing.”

- Lilly UK MD

Dealing with the NHS


The €112bn budget of NHS England (2013/14)

NHS England • Primary care • Military services • Offender services• Specialised services

Clinical Commissioning Groups

• Local services

Public Health• Public health research• Public awareness and

communications• Disease prevention

NHS England

Clinical CommissioningGroupsPublic Health

69%

Clinical Commissioning Groups (and Local Authorities)

28%

NHS England

Public Health

2%


Key NHS Issues


What does the new NHS need?

Improved health outcomes and health economics

Improved clinical pathways and services re-design

Outcomes / value-based engagement with Pharma

A strategic partnership with Pharma (e.g. ‘KAM’/SAM) - not the historical transactional approach

Pharma needs to fully understand all of these goals and align itself with them


The ‘Language Barrier’

Pharma / Sales NHS / SAM

“Products” “Clinical pathways”

“Features” “Health economics”

“Quarterly sales volume” “NHS best practice”

“Activity levels” “Patient outcomes”

“Medicines” “Service re-design”

“The patient journey”

“Saving money”


UK spends the least on medicines out of key developed countries*:• 0.87€ per head of population per day in UK• 1.30€ in Germany• 1.64€ in France • 2.59€ in the USA

UK also spends the least on new medicines launched during the past five years - 0.08€ per head of population per day*

The UK’s low monetary spend on medicines is due to high use of generics …. ~ 69% of medicines dispensed by the NHS are generics

ABPI’s industry view: - “By 2015 new medicines being launched now will make up just 2% of the entire medicines budget - and yet it is these treatments which are able to transform the way diseases are treated.”

- “Our healthcare system needs to focus much more on caring for patients in their own homes and much less on treatment in expensive hospitals. Investing in new, innovative medicines will be absolutely key to this.“

(* ABPI statement: 25.4.13)

Medicines pricing


Value-based Pricing Jan. 2014: New PPRS + a new element of VBP

Benefits of NHS model and a common pricing policy across the UK

Pharma v. Government ??

Nervousness ….? Major change to stable pricing model that began in 1957 What is value? Who will monitor it? ‘New’ Health Secretary …. perhaps it will just go away

Govt. and ABPI do at least agree that: Innovation should continue

New medicines should be available to patients who can benefit At a price that encourages the NHS to use them

… and rewards Pharma adequately


The threat to Pharma


What are the threats to (incumbent) Pharma?

Last year Stephen Whitehead Chief Executive of the ABPI said: “The pharmaceutical industry has long recognised its social contract with the NHS

.... This has been the deal for decades.... This contract has broken down

.... New medicines are not being adopted .... Patients are not getting the best treatments”

If Pharma doesn’t change it will lose control of the changing sector as patients, Govt, new players, and the NHS create new patient-centred models and drive the agenda

Stephen Whitehead, again, on the future of the industry:“In the future I don’t see us in big companies with our own R&D blocks ... I see us sitting in NHS hospital labs... with academics, with NHS statisticians, with other healthcare

organisations… a seamless provision of service, information and product…. This is about re-establishing the social contract we have with the NHS”


Where could we help the NHS?


A closer look at the NHS’s key challenges ... and where it might need help

Long-term conditions e.g. the Big D’s, COPD, CHD/CVD

Integrated service delivery e.g. on-time/on-budget project mgt. and patient-centred, X-silo, healthcare (esp. for chronic conditions)

Data management (info sharing, best practice)

D-healthcare and patient power (e.g. Twitter, Big White Wall)

The push to primary/community care:“Healthcare needs to focus on caring for patients in their

homes and much less on treatment in expensive hospitals.... Investing in new, innovative medicines will be absolutely key“*

* Stephen Whitehead , ABPI Chief Exec. 25.4.13, ABPI Annual Conference


Reaching out to the 80/90% of Payer budget that Pharma doesn’t usually engage

with Improving NHS productivity and leveraging the capabilities of their

staff

‘The Pill .... Around the Pill .... Beyond the Pill’:-1- Medicines Optimisation2- Synergistic offerings (e.g. diagnostics, like blood sugar meters alongside drugs & consumables)

3- Integrated clinics (multi-service, multi-pathway)

4- Fully outsourced services (e.g. Virgin Care) esp. for the long term challenges & chronic diseases

Beyond medicines ....


Medicines Optimisation

• Last month Royal Pharmaceutical Society published a major report: “Medicines Optimisation – Helping patients make the most of medicines”

• Shifts focus onto the patient• Why worry? The evidence:-

Only 16% of patients actually take a new medicine as it is prescribed 10 days after starting a new medicine almost 1/3 of patients are non-

compliant In primary care at least £300m of the medicines spend is wasted per

year (£150m avoidably) Hospitals show a 9% error rate in prescribing medicines In 2010 GPs made 1.7m serious prescribing errors

• 4 key principles of MO: Understand the patient experience; evidence-based medicines choice; ensure safety; make Medicines Optimisation routine practice

• This is not just Medicines Management!• Pharma can help and build up trust – e.g. with medicines usage data


Questions?


Thank You


For more information, please contact …

Steve ParrSR [email protected]+44 (0)7791 935204

Documents

PiP 25-6-13. FINAL