Kennedy and Drayson: parallel plans to boost UK’s innovation agenda

pharmafile | August 5, 2009 | Feature | Research and Development |  NICE, healthcare 

1: The Office of Life Science’s ‘Blueprint’

The first to be launched was the ‘Blueprint’ – a new strategic vision aiming to put innovation at the heart of the NHS and help support the UK life sciences sector. Launched in July, this could be the turning point the pharma industry has been waiting for.

Perhaps one of the key differences between this initiative and the many others that have preceeded it lies in its leader – Lord Drayson. Paul Drayson is very much a biotech/pharmaceutical insider – he set up vaccines company PowderJect in the 1990s and as such knows the industries’ needs and wants from personal experience. He is equally very much an insider in Gordon Brown’s government, and was brought in by the PM’s right hand man Peter Mandelson in January this year as Minister for Science and Innovation in a specially created Office of Life Sciences (OLS).

The action plan aims to inject new life into the UK life sciences sector, encompassing the pharma, biotech, medical devices and diagnostics industries.

The most notable proposal is for medicines and technologies that are judged to be innovative to bypass the NICE appraisal for a few years and be approved for NHS use immediately.

This ‘Innovation Pass’ would last for three years, after which time the drug would be referred to NICE, giving companies time to generate evidence of products’ value to patients and the health service.

The system is planned for launch with a one-year pilot phase starting in 2010/11, and will have a dedicated budget of £25 million. If it proves successful, the scheme would allow products two further years to prove themselves on the market as well as further dedicated funding to pay for their uptake.

Significantly, the Innovation Pass will not just apply to new medicines, but also new medical devices and diagnostics, which tend to have a lower priority in NICE’s current appraisal system. Lord Drayson said: “By placing innovation at the heart of healthcare delivery, we will help create a pioneering NHS, one that responds to patient expectations, and one where the adoption of new ideas and the diffusion of innovation is encouraged and supported.”

He added that establishing a “culture of innovation” in the NHS was a key component of the new Blueprint, and will undoubtedly be one of the greatest challenges. To help this, NHS chief executive David Nicholson will review the health service’s systems of levers and incentives, such as Payments by Results, to help accelerate uptake of new medical technologies. At the strategic health authority level, a new delivery group will be created to improve the uptake of new medicines and technologies and engagement between industry and the NHS.

The Innovation Pass idea will be put out to consultation shortly. This will help define some of the most important questions about how it will operate, including just how innovative a technology will have to be, to be considered for an Innovation Pass.

A limiting of NICE’s power

NICE welcomed the new initiative, and is likely to be involved in setting the criteria for the Innovation Pass, but will not oversee the initiative’s budget.

Nevertheless, the Innovation Pass is undoubtedly a radical challenge to the assumption that NICE has a remit in assessing medicines at launch. This twinned with the Kennedy report published just days later represents the first significant curbing of NICE’s powers since it was set up in 1999.

Richard Barker, director general of the ABPI, said: “In January we warned the prime minister that the life sciences industry in the UK needed a shot in the arm. Gordon Brown has clearly heeded that warning. The OLS blueprint charts a course of action which is both sound and welcome. Its delivery will require a full sail and steady and determined hand on the tiller. When the ship is steered safely home, it will deliver a truly transformational change for the life sciences industry in the UK.”

Lord Drayson concluded that the NHS needed to not just champion innovation, but to also help generate income for the UK. “We have got to have a strong economy. Taxes don’t just fall out of the sky, they have got to be earned.

“If we can get everybody in the NHS to see it as a generator of wealth as well as delivering the best quality of care, then we can have the best of both worlds.” He acknowledged this was a controversial concept: “I have already seen commentators popping up and saying it is a conflict of interest, but if we can’t do this we will be in serious trouble.”

Darzi’s last engagement

Also speaking at the event was Lord Darzi, health minister for quality and innovation. He said the Blueprint would help place innovation at the heart of healthcare delivery and create a pioneering NHS. Asked whether there was an explicit link between the aims of promoting innovation and promoting better health outcomes, Darzi said innovation was the means to this end. He also noted the US has seen rapid uptake of some new medical devices, but without the evidence base to support them, and indicated this would be avoided in the NHS.

By a strange coincidence, Lord Darzi chose to announce his stepping down from his post just hours after taking part in the Blueprint launch. From the industry perspective his departure could be a blow, as his medical expertise had made him a credible advocate of innovation going hand in hand with a focus on quality in healthcare.

2: The Kennedy report on NICE and Innovation

Just eight days after Lord Drayson unveiled his Blueprint, Prof Sir Ian Kennedy launched his own heavyweight report on NICE, and called for a major re-think in the body’s approach to innovation.

Among his most eye-catching recommendations was the suggestion that NICE should relax its QALY threshold for drugs deemed to be truly innovative. Kennedy said this needs to be done to properly to reward innovation, but that industry should be made to recompense the NHS if a drug failed to live up to its promise.

He criticised NICE for a lack of transparency and its poor relationship with the industry, after having been commissioned by NICE to undertake an independent review.

The leading academic called for a major shake-up to the way the cost-effectiveness body operates, though he included pharma in some of his criticism of the current problems.

He said of the relationship between NICE and the industry: “To this outsider, the impression is one of undeclared hostilities, if not war. Pharma sees NICE as a barrier to its ambitions to bring products to patients. NICE sees itself as the guardian of the public purse and of all patients.”

“It does not see itself as the guardian or advocate of particular groups of patients, nor of pharma’s aspirations, to the extent that they may be thought by NICE to be in conflict with NICE’s wider responsibility.”

Kennedy was handpicked by NICE chair Sir Michael Rawlins in February 2009 to undertake an independent study in response to the views expressed by Sir David Cooksey in his Review and Refresh of Bioscience 2015.

In his report of 25 recommendations for change, Kennedy criticises NICE for failing to communicate its job properly. “It does not seek energetically to communicate and explain what it does, particularly in high profile cases. So, it finds itself regarded as blocking patients’ access to drugs, rather than holding the ring between conflicting demands.”

His proposals call for NICE to better explain its role to both the public and the industry.

Kennedy supported NICE’s continued use of approaches such as the incremental cost effectiveness ratio (ICER) and quality adjusted life year (QALY), but said it should also include other health related benefits in its decision-making. He said to do this NICE should consult interested parties and research how to assess the social benefits of an intervention, such as whether it allows a patient to return to work.

Also recommended were efforts to understand PCT behaviour and spending, and the development of an active disinvestment by the NHS in products that do not offer value for money.

Industry criticised

Pharma came under attack for the way it “creates the abiding impression it does not engage with NICE processes” and the way it prices products to take account of the costs of research, development and marketing.

He said: “But the R&D costs are global, as are the costs of marketing.”

“It is not clear how, in fixing a price for the UK market, the costs of R&D and marketing incurred globally are distributed among the various markets.”

Kennedy also questioned the way pharma expects reward for just the promise of innovation, rather than when it is actually proven. He dismissed claims that a higher price should be charged to the NHS for a product that might later prove to be a major innovation.

He said: “It is not clear to me why pharma should be insulated from the normal winds of commerce.”

“The makers of the Betamax held out the promise of their machine as the future for video-recording. They got it wrong and lost out. There was no question of being able to charge a higher price as insurance against failure. The makers of VHS took the risk. They got it right and profited accordingly. Given that the market for medicines is much more stable and predictable, it seems to me that Pharma should bear this particular risk.”

He concluded that NICE should then only offer incentives for innovation when it is realised.

NICE’s Response

Rawlins was grateful to Sir Ian for his report on the value of innovation, and for broad confidence he expressed in NICE and its methods.

He said: “Since NICE was established we have regularly consulted on our approach to valuing the benefits of new technologies and we welcome the opportunity to focus on innovation. Sir Ian’s report raises a number of issues that NICE will need to consider.”

NICE’s board is to set out a formal response at its next public board meeting in September, which will then be the subject of a three-month consultation.

The ABPI also responded and welcomed Kennedy’s findings. It spokesperson said: “Patients in the UK are missing out on modern treatments. Professor Sir Ian Kennedy has recognised the need for NICE to change – for it to be more transparent, to foster innovation, and to take greater account of wider health benefits.”

Crossover with the Blueprint

The two reports have not been closely integrated, but Kennedy did comment on the Innovation Pass, recommending that NICE ensure that funding for the purchase of the products subject to the Innovation Pass comes from a specially created fund, and not the NHS.

However the timing of the two reports is in some respects unfortunate, presenting the government and others with two rival (although not entirely conflicting) models for how NICE and the industry’s relationship should evolve.

A TALE OF TWO REPORTS

Lord Drayson

Paul Drayson (49) has a PhD in Robotics and was co-founder of vaccines company Powderject in 1993. Drayson was chief executive of the company, which developed a revolutionary needle-free injection system, until 2003 when it was sold to Chiron for more than £500 million.

The multi-millonaire businessman is also known for his love of amateur racing car driving. He has brought a fast-moving, private-sector business style approach to the government department, holding weekly meetings with industry and Whitehall officials.

Remit

Drayson has been given a brief to increase the international competitiveness of the UK science and technology economy. In order to tackle this major task, Drayson is working across government departments to attract more private investment, harness existing British academic and business expertise and improve the country’s science and technology skills base.

Verdict

The scope of the Blueprint is ambitious, advancing the interests of UK life sciences on several fronts. But its proposal to allow some medicines to bypass NICE at launch via the ‘Innovation Pass’ could have the greatest and most immediate impact on the pharma industry.

Obstacles

Industry insiders have already observed that the £125 million fund ringfenced to pay for the Innovation Pass will not stretch far. Its impact will also depend on how strict its definition of ‘innovative’ is when applied to new products.

Finally, transforming the culture of the health service will require great persistence, patience and engagement with staff.

Prof Sir Ian Kennedy

An academic lawyer who has specialised in the law and ethics of health, Kennedy (68) is best known for heading the 2001 inquiry into the deaths of children at the Bristol Royal Infirmary. This inquiry established his reputation as one of the most respected reformers and independent critics of the health service.

Remit

Kennedy was personally invited by NICE’s chairman Prof Sir Michael Rawlins to head up the inquiry in response to the views expressed by Sir David Cooksey in his Review and Refresh of Bioscience 2015. The scope of his study was in “Appraising the value of innovation and other benefits” in regard to NICE, but his detailed report frequently examines the broader context of health economics and the limitations imposed on NICE.

Verdict

Kennedy says it is his ‘firm conviction’ that NICE’s approach is ‘fundamentally sound’ adding: “I would go further and describe the ICER/QALY approach as quite simply the best tool available to do the job which NICE has been set.”

But importantly, he says NICE is not beyond improvement, and that it has a “central role in encouraging indeed driving innovation”.

Kennedy is nevertheless strict on defining true innovation, and says the mere promise of useful innovation is not enough, and that pharma should bear the risk.

Obstacles

Coinciding as it does with the Blueprint, it is unclear which report will take precedence. Kennedy himself observes that if his recommendations are followed, the need for the ‘Innovation Pass’ will be less pressing.

THE LIFE SCIENCES BLUEPRINT

The action points fall into four separate categories: the NHS as an innovation champion; building a more integrated life sciences industry; providing greater access to finance and stimulating investment; and marketing UK life sciences.

Venture capital fund: In terms of access to finance, a new UK Innovation Investment Fund was launched on 29 June, with the aim of helping technology-based businesses grow, including biotech companies, many of which are currently struggling to raise funds. The government will put £150 million into the fund, with the aim of finding industry investment to create a £1 billion, 10-year venture capital fund.

Taxes: The government has also declared its ambition to help innovative businesses by creating further tax incentives. It says an announcement will be made ahead of the pre-budget report in the autumn.

Supporting clinical trials and science: The Government will reinforce the need for greater emphasis on research and clinical trials in the next NHS Operating Framework.

Other measures include:

* From 2010, the Society of Biology will begin to accredit undergraduate bioscience degrees to help ensure that graduates leave with the core mathematical and practical skills and competencies required by employers.

* The Government will support the formation of a UK Life Sciences Super Cluster to co-ordinate work across industry, higher education and the NHS, and to boost international recognition of UK life sciences.

* The Technology Strategy Board (TSB) will launch an £18 million “RegenMed” programme of investment to support commercial R&D, with additional funding from the MRC, the Engineering and Physical Sciences Research Council, and the Biotechnology and Biological Sciences Research Council. The TSB is also committed to improving its expertise in the life sciences.

To download the Office of Life Sciences’s Blueprint click here

KENNEDY RECOMMENDATIONS – HIGHLIGHTS

* NICE should be more active in explaining its role and decisions

* NICE should work with pharma and others on identifying how costs of R&D are distributed in the global market

* NICE should continue to use the ICER/QALY approach into which is incorporated explicit consideration of relevant benefits. A two stage approach should not be adopted

* NICE should collaborate on an active policy on disinvestment by the NHS in products which do not offer value for money

* NICE should formulate a definition of ‘innovation’; the health secretary should periodically make explicit NHS priorities on intervention and treatment

* NICE should consider incentives to pharma, agreeing a higher threshold in the case of ‘innovation’ and maintained for a fixed period or use of flexible pricing or patient access schemes

* NICE should establish a mechanism to compensate the NHS for financial loss if a product proves not to meet initial expectations

To read the report in full, click here