Don’t pick on medicines in health service downturn, says ABPI’s Barker
pharmafile | June 18, 2009 | News story | Research and Development | ASCO, Cancer
The UK's health service is heading for a severe financial shortfall and will have to consider limiting spending, including on drugs, according to the NHS Confederation.
The director general of the ABPI Richard Barker has responded swiftly to the suggestion, saying the targeting of medicines budgets would be counterproductive. He has offered to hold talks with the NHS Confederation in order to head off moves which could undermine a new government-led drive to promote use of innovative medicines.
The NHS managers group claims the health service faces a devastating shortfall – a likely £15 billion real-terms cut in the five years from 2011 – and will not survive the financial crisis unscathed.
The group's report 'Dealing with the downturn: the NHS's greatest ever leadership challenge', called for urgent action to find any potential savings in the system and deal with the problem pro-actively.
Its author Nigel Edwards said: "The principles of the NHS still enjoy huge public support, but if they are going to remain the same a great deal will have to change and in doing this there is the opportunity to make the service better as a result."
The NHS has enjoyed huge spending increases under Labour, recently around 7% or £10bn annually in real-terms. But this will come to an end as the government is forced to make savings to offset the rising national debt and a stagnant economy.
The NHS Confederation warns the financial crisis could even threaten the underlying principle of the NHS to provide care free at the point of need.
It says the pressures of the ageing population and rising cost of medicines mean modest increases in the NHS budget will be cancelled out by mounting costs.
The squeeze will hit hardest in 2011, and for the five years afterwards the NHS will experience a £15bn gap in real-terms, between the projected costs of the system and its actual budget. The NHS budget for 2010-11 is forecast at just under £110bn, making the predicted gap between rising costs and the budget around 3%.
Drugs bill
In its report the Confederation made a raft of savings suggestions to bridge the gap, including a cap on the money available for new medicines by limiting what NICE can recommend to the NHS.
The drugs bill is often the target of NHS cutbacks, and even with the large budget increases of recent years, the government has aimed to cut its spend on medicines, enforcing a cut every time pricing is renegotiated.
As part of the government's drive to save £2.3bn from the NHS budget during 2010-11, it has already decided that £550 million will be cut from the prices of branded drugs as a result of the revised Pharmaceutical Price Regulation Scheme (PPRS). Generic substitution by pharmacists will also become mandatory from 2010, unless the prescriber has ticked a 'do not substitute' box.
But these savings will not be enough, according to the Confederation, which says its forecast had already accounted for them. Further enforced price cuts are not possible under the new PPRS, which is secure for five years, so the Confederation has suggested capping the value of medicines NICE could recommend for NHS use.
The ABPI's Dr Richard Barker said the Confederation's solution was the wrong approach. He agreed there was a huge financial challenge to be met, but said medicine was not an area in which to make savings. "Squeezing the industry further on price would be completely unjustified," he said.
Barker indicated that the industry has already contributed to savings. "We reduced prices by about 5% this year. We are going to reduce them by about 2% next year, and that leaves us 9th out of 12 in terms of price across the major European economies."
The Confederation's suggestion is "an anti-innovation proposal" in his view, and would be counter-productive at a time when there have been promising signals that NICE might take a less strict approach to cost effectiveness data – something the industry has been fighting for.
"If we were to cap what NICE could recommend that would in fact be counter-cultural, because in a sense what we are seeing is a pro-innovation stance across the NHS."
But Barker says he is willing to "get around the table" with people from the Confederation, from PCTs and SHA chief executives, to tackle the financial problems together, and "pick up the issue of disincentive".
He concluded: "I think we need to intensify our interaction with the senior players in the NHS. We're open for business and we know they're open for business. We need to get together."
Commenting on the reduction in spending, NHS and industry consultant Noel Staunton said: "It's a very significant cut. I think people in the NHS are just waking up to the fact that they are really going to have their own credit crunch from April 2011. And they've got to do something about it."
He said that after six or seven years where NHS budgets have risen at 5-6 % above inflation, a drop down to matching inflation would have a major impact on the service. He added: "We're still in the bad old world of 'if we need to save money, let's save money on drugs', rather than 'let's invest in drugs to save money on hospitals'."
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