Issue 2: March 2012

A HEALTH CONSTITUTIONAL CONUNDRUM ON MEDICINES?

By Lynda Gauld, Director, Baccus Consulting

 

2014 promises to be a busy and possibly auspicious year: the commonwealth games in Glasgow, the World Cup in Brazil, the Winter Olympics in Russia, a lunar eclipse and a solar eclipse, the second homecoming, the 700th anniversary of the battle of Bannockburn, a referendum on independence and the introduction of value based pricing (VBP) for new medicines in the UK as an alternative to the current PPRS arrangement.

Sorry, what do you mean you missed that last one? Well you and many others I suspect, but never mind, it’s not a biggie. Or is it? Perhaps not in the scheme of all else going on, but it does raise the question….what if?

questions remain about the possible future roles of NICE and SMC and in particular, how and when these agencies would be involved in assessing the impact of medicines and the corresponding price.

Let me try to explain this all in a nutshell. PPRS, or the Pharmaceutical Price Regulation Scheme to give it its Sunday name was first introduced in 1957 and is usually renewed every five years or so. The current Scheme runs for five years from January 2009 until…2014!

It’s a voluntary agreement between the Government and the pharmaceutical industry and according to the Department of Health the purpose of the current mechanism is “…to ensure that the NHS has access to good quality branded medicines at reasonable prices. The scheme seeks to achieve a balance between reasonable prices for the NHS and a fair return for the industry to enable it to research, develop and market new and improved medicines.”

The principles underpinning PPRS are twofold:

Profit control: government has applied caps sealing company profits (to a maximum of 29.4%)Price cuts: government and the industry negotiate price cuts, usually for older drugs.

And for Government, insert Westminster as to date, all PPRS agreements have been negotiated and reached with the Department of Health.

But now everything is set to change. The Office of Fair Trading has been looking into VBP as an alternative to PPRS since 2007 and following a recent consultation the current Coalition Government has now set out its proposals for VBP that will, in theory at least, apply across the UK by 2014. From January 2014 for all new medicines, the “Government” will set a maximum (reimbursed) price to reflect the ‘value’ of the drug.

OK, so what? Well, in 2010 a consultation paper on this was issued by Westminster which posed 20 or so questions. This exercise elicited 188 responses; 146 of which were from organisations and/or individuals taking a UK wide perspective and just 6 responses from organisations/individuals contributing from a Scottish perspective.

However, neither the consultation document nor the Government’s proposals have made clear how the devolved administrations in Scotland, Wales and Northern Ireland would be involved in VBP and how a ‘UK wide’ scheme would work in practice when health is a devolved matter. Therefore, questions remain about the possible future roles of NICE and SMC and in particular, how and when these agencies would be involved in assessing the impact of medicines and the corresponding price.

are we seeing a constitutional conundrum develop where already, pricing of medicines is currently reserved, but valuing is currently devolved

Now, given the scope and the role of the SMC in currently assessing the “value” of new drugs to NHS Scotland, are we seeing a constitutional conundrum develop where already, pricing of medicines is currently reserved, but valuing is currently devolved. However, the proposals on VBP are light on detail, particularly in relation to the devolved administrations. So…what if!?

What if we have an independent Scotland, or even some sort of Devo-max or Indy-lite package? What if Scotland, via its own VBP body determines a different value for a medicine to the NHS in Scotland compared to the English based body? What if the same cancer, high blood pressure, diabetes or cholesterol lowering drug is priced differently in different parts of the UK? Does it matter?

 

Lynda Gauld is Director of Baccus Consulting. She was Head of External Affairs at Pfizer with responsibility for Scotland and Northern Ireland. Lynda spent twenty years in the NHS as a nurse and a manager and three years as Regional Manager of the Institute of Health Services Managers.

 

By Lynda Gauld, Director, Baccus Consulting

Issue 2: March 2012

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