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All-Party Parliamentary Group on Access to Medicines and Medical Devices – Consultation Paper on Specials Procurement

All-Party Parliamentary Group on Access to Medicines and Medical Devices

Consultation Paper on Specials Procurement

This consultation document outlines the current system of procurement of specials in England and outlines possible scenarios for change.

It seeks written evidence from stakeholders. Please provide responses by Friday 3rd May 2019 to: emma.heywood@parliament.uk

  1. Background

For some patients and diseases there are very few suitable, safe and effective licensed medicines. Affected individuals include children, the elderly, those with life-shortening illnesses needing palliative care, those with oral and throat disease, eye disease, endocrine (hormone) problems, and especially those with skin disease. ‘Specials’ are medicines which have been specially manufactured or imported to the order of a doctor, dentist, nurse independent prescriber, pharmacist independent prescriber or supplementary prescriber for the treatment of individual patients. , Unlike licensed medicinal products, they have not been assessed by the Licensing Authority against the criteria of safety, quality and efficacy.

They are usually liquids, ointments, injections or eye drops. They are manufactured singly or in batches in the UK. In the last 10-15 years, individual pharmacies have largely stopped preparing these medicines. Instead they are produced by private manufacturers (often members of the Association of Pharmaceutical Specials Manufacturers (APSM)) or by NHS Specials Manufacturing Units (of which there are 22-23, often based in NHS Hospital Trusts and members of the NHS Pharmacy Production Committee).

  1. Problems with the procurement of specials

The following section provides a non-exhaustive list of the main issues with procurement for specials in England over the decade 2008-2018. The APPG on Access to Medicines is of the opinion that these issues will continue to present themselves unless new legislation and procedures are put in place.

  1. Price
  • Price-inflation

Attention was first drawn to this as an issue in 2008-2009. In that year the costs of specials prescribed in the community increased dramatically from £63 m. to £109 m. in one year (73%), due to an increase largely in unit price rather than in quantities prescribed. In a PCT in the North West of England in 2008-2009 there was a 122% rise in cost versus a 47% increase in quantities prescribed. Particular concerns were raised about wholesaler mark-ups and about secret ‘discounts’ or ‘professional fees’ to pharmacies from manufacturers (which do not show up in DH/PSNC discount surveys). Investigations about fraudulent practice by NHS Counter Fraud were carried out, without being able to identify prosecutable evidence, due to loopholes. Price inflation by manufacturers and wholesalers was highlighted. Direct sourcing of products from manufacturers was recommended rather than through third parties. A potential annual saving on Specials with known unit prices (a proportion of all specials) was identified as £12.7 m. or 34%, leading to a projected annual saving of £37.1 m. in 2009 if wholesalers were cut out and all specials purchased direct from the manufacturer.

  • Overly high prices

Production of medicines (‘Specials’) as one-offs or in small batches can be expensive. For example, £1,794.00 was quoted for 500g of a Dermatology Special by a community pharmacist in Wiltshire CCG in 2014 but it was possible to dispense the same item for £185 from the local hospital pharmacy. Concerns have been repeatedly raised in the media about commercial specials manufacturers (including members of the APSM) charging extremely high prices for specials which seem hard to justify (‘NHS forced to pay £1,500 for £2 pot of moisturiser. MPs demand action as Boots owner exploits loophole’. The Times 2nd February 2018; front page article[1]). Some commercial specials manufacturers (APSM members) have 2 price lists for the same items, with some items eight times the price for England versus Scotland (see Appendix for examples). Another APSM member was named in a newspaper article to have participated in fraudulent practice.[2] The British Association of Dermatologists (BAD) was provided with information that some commercial manufacturers/distributors had partnered with  community pharmacies to obtain Dundee Cream (a visible light blocker), sold by Tayside Pharmaceuticals (an NHS manufacturer) to the NHS for approximately £20, in order to sell it on for £450 in the community when prescribed for NHS patients.

  • Multiple fees

Community pharmacies in England and Wales have the right to obtain a medicine from any source they choose. Most are linked to particular wholesalers and will not obtain a non-tariff special from a far cheaper source than their usual wholesaler, as they have an incentive not to do so. The procurement system in England and Wales guarantees reimbursement of the price charged by the wholesaler for a non-tariff special- however high – plus a handling fee. Specials not listed on the Drugs Tariff Part VIIIB are dispensed at prices up to 10 times the manufacturing cost; this dispensing cost is reimbursed by the NHS in addition to a £20 handling fee.  This handling fee applies per item, for example, if it is dispensed in multiple small containers, multiple handling fees are paid for the same medicine. Items can legally be obtained by a community pharmacy from a parent or sister company, providing an incentive to seek a high price and a high profit for the parent or sister company. The Tariff-setting process that evolved from this system in England and Wales was derived from prices set by APSM members and led to very high prices in the English NHS Drugs Tariff Part VIIIB, even though the medicines could be sourced much more cheaply. A whole of market quote was not obtained. Hospital pharmacies have strict cost control and regional procurement structures and procure medicines including specials from the most cost-effective source, usually an NHS manufacturer in the case of specials.

  • Additional hidden costs

Failure to prescribe Specials has very significant costs. For example, in dermatology, the usual alternative treatments to specially prepared ointments applied by the patient are:

  1. Phototherapy (30 hospital visits) plus petrol and parking costs for the patient
  2. Immunosuppressive drugs such as ciclosporin (expensive:  £2000-4000 drug cost per patient per annum, plus 4-6 hospital appointments and numerous blood tests vaccines etc; also treatment costs for the drug side-effects of high blood pressure and kidney damage)
  3. Injected biologic drugs (£12,000-15,000 per patient per annum plus 4-6 hospital appointments plus numerous blood tests, delivery costs, treatment of side-effects such as cancer and infection etc).

Hidden costs of failure to prescribe specials occur in all specialities that require them: in palliative care, these might include uncontrolled pain or swallowing problems requiring hospital admission; in paediatrics uncontrolled abdominal pain or epilepsy requiring ambulance and hospital services; in patients with oral disease inability to eat requiring expensive parenteral nutrition; and there are many other examples of hidden costs where specials are not provided.

  • Inefficient use of NHS finance

According to OpenPrescribing, the spend on specials prescribed in the community (primary care) was £42.84 m. in 2017, but there was an easy potential saving of £23.3 m. if the 10th centile best value of price quotes had been used to source the items.[3]

Significant savings in secondary care could also be made – the spend on specials prescribed in secondary care in England in 2017 was £49.9 m.[4]

In 2013/2014 a senior NHS manufacturing pharmacist estimated the amount of money being wasted on dermatology specials: the top 12 dermatology specials dispensed in a 3-month period in England cost £845,000 but would have cost only £162,000 if obtained from an NHS manufacturing unit.

  • Other procurement systems are more cost-saving

NHS manufacturing units often produce specials identical to those produced by commercial manufacturers, at a lower cost, as they produce in larger batch sizes due to supply into Secondary Care  In Scotland, the Specials procurement system from 1st September 2015 allows dispensing without pre-authorisation if an NHS manufacturer is used. Prior to that, in Scotland, 3 quotes for non-Tariff specials including an NHS manufacturer’s quote were mandatory, and the cheapest quote of the 3 had to be used, leading to a culture of low prices for specials. This system translated into the Scottish Specials Tariff having vastly different prices to that in England. Many, but not all, of these prices are cheaper. Dermatology items are all much cheaper. If the national UK demand for specials were to be channelled to a few NHS manufacturing units, they could be batch-produced. This would make manufacturing more efficient and therefore more economic.

  1. Patient Access
  • Lack of access at primary care

Most patients requiring a special in England and Wales have been unable to obtain their medication from their GP, due to the dysfunctional primary care procurement system causing high prices, and local CCGs forbidding their GPs from prescribing them. For example, 13% of secondary care specials prescribing is on dermatology items, and 10% on ophthalmology items (compared to 2.8% and 1% respectively in primary care specials prescribing), suggesting that in the community patients are being denied their treatment if they have eye or skin problems.[5]

  • Inappropriately overburdening secondary care

Many patients have been trapped in secondary care purely to obtain a prescription for their medicine, or have been entirely denied it. In N Ireland most prescribing of medicines is in primary care, leading to many patients being denied their special by their GP and an inadequate and ineffective substitute offered. There are far fewer problems in Scotland due to the more effective procurement system.  Such prevention of prescribing is leading to deskilling of some doctors in their use and much hidden morbidity and knock-on costs. The DHSC has consistently suggested that patients denied their special should complain about their GP to NHS England and has not wished to hear about problems of patient access.

English patients in particular have become unable to obtain their treatment unless they continue to attend a hospital department for follow-up, causing pressure on outpatient appointments. Many hospital consultants have stopped prescribing Specials to patients who need them, because they are concerned that the patient will be denied treatment by their GP once they need a repeat prescription, or that the treatment will be overly costly due to the dispensing process.  In a 2013 survey by the BAD, 92% of UK consultant dermatologists used Specials; 86% of consultants had patients who had difficulty obtaining their Special in the community. A further BAD survey of UK consultants in September 2014 found that access to specials varied widely, being unlimited in Inverness; prescribed in hospital practice for a limited number of patients in Yeovil, Canterbury, Swindon and Bath but never in the community; very limited access for hospital patients in North London and non-existent in the community; no or virtually no access for patients in Norwich, Surrey, Swansea, Sheffield and Southampton. In N Ireland all prescribing was through the GP and similar access problems existed.

  1. Safety of specials
  • Lack of regulation

The use of specials in primary and secondary care has significant risks because their formulation and application has not had regulatory oversight. Specials are not tested and do not undergo clinical trials, therefore, the safety of a special cannot be guaranteed. The efficacy, quality and consistency of specials that are procured is also not controlled or regulated.

Within secondary care, NHS trusts have Unlicensed Medicines Policies which can help to control the quality assessment of unlicensed medicines, however, within primary care there is not the same level of oversight and products are often commissioned without meeting any specifications.

Even in secondary care, however, there are often products which are difficult to source and products which end up being procured are often made extemporaneously without any final product testing, and sometimes without any assurance that they will be stable and suitable for use throughout the assigned shelf-life.

Furthermore, there is a concern that patients that do receive suitable, quality safe and efficacious medicines in secondary care will not receive the same standard of medicines when they return to primary care for their supplies.

The APPG is aware that some NHS Trusts attempt to standardize the procurement of specials so that they are procured in batches across the region. Tenders focus on product quality, the shelf-life and supplying products with a Certificate of Analysis from the manufacturer.

In general, batch prepared and well controlled products tend to be cheaper to purchase than those ‘made to order’ where each time a supply is ordered the product has to be compounded specially to meet that order.

  • Aseptic service safety and costs

Aseptic pharmacy services involves the creation of medicines and treatments for patients in a sterilized environment.

The NHS relies upon commercial suppliers for at least a third of aseptic compounding. Trusts who have chosen to outsource did so for cost efficiency, investment, or capacity reasons.

NHS Improvement recently produced an interim report into ‘The Future of Pharmacy Aseptic Services in England’ and found that a majority of aseptic pharmacy facilities are near the end of their “design life”.[6] Phase two of the review is set to look at “fully costed options for a national aseptic service based on clinical networks or hubs” across sustainability and transformation partnership areas.

The interim report found significant recruitment and staff capacity difficulties issues. A lack of staff capacity is preventing c.60% Aseptic Facilities from offering desired services and, therefore, the report recommends a standard method is created to calculate capacity for national and local workforce requirements.

The report also found many points in the supply chain where waste can occur because of inconsistences and poor tracking. This wasted stock results in financial loses for Trusts.

A number of recommendations are included in the report including: ordering visibility, demand volatility, stock management, risk assessment, risk reduction, and contingency arrangements.

  1. Legislation
  • New legislation

In 2017, the Health Services Medical Supplies (Costs) Act 2017 amended the NHS Act 2006. The primary legislation was passed to provide the Government with the powers to control the spend on medicines – including specials – and prevent pharmaceutical companies from significantly overcharging on price.

The Act  had a subsection inserted in Section 1 of the Act (s.164 (8A) to (8E))[7] referring to specials, which includes pharmacy owners in the requirement to ensure that the level of remuneration for specials is reasonable. The Act also gives the Government the power to centrally procure specials or require several quotes to be sought.

Using powers delegated from the Health Services Medical Supplies (Costs) Act 2017, the Health Services Products (Disclosure and Information) Regulations 2018 were passed and came into force. As a result, the Department of Health and Social Care now receives statutory quarterly information from specials manufacturers with an NHS turnover of £5 million or more, only on items specified on the Drugs Tariff Part VIIIB (Specials). From 1.8.18, APSM members are no longer the only source of information for Tariff price determination of specials. The margin measurement system for community pharmacies in England in relation to specials has also been removed, as it was unable to estimate the profits being made on specials, and hence unfit for purpose.

  • Legislative concerns

The Act does not explicitly state that an NHS manufacturer’s quote must be included in Tariff setting for a particular item. If using an average of the price information provided through the new powers, it must be remembered that an average of a very high price (or a few very high prices) and one low price is still unnecessarily high.

The Health Services Products (Disclosure and Information) Regulations 2018 are intended to allow transparency on high profit margins on Specials, but have some key loopholes:

  • Smaller units, including most NHS Specials Production Units, are excluded from compulsorily submitting data due to their small turnover.
  • Information is not required to be submitted on non-tariff items, which, for example, includes most specials prescribed for skin disease.
  • A manufacturer may decline to produce data if this process is thought to be too onerous.
  • A manufacturer can submit data as an aggregate or estimate.

Since the Health Services Medical Supplies (Costs) Act came into force there has been no change in how specials are procured and money continues to be wasted. Although it gave the Secretary of State for Health and Social Care powers to reimburse community pharmacies differently or not at all for specials, secondary legislation has not been forthcoming.

In January 2019 the DHSC said that it was engaging informally with pharmacy and industry representatives about potential changes to the procurement and reimbursement arrangements for specials not listed with a price in the Drug Tariff.[8] However, DHSC had previously said in both July[9] and October[10] of last year that it was developing proposals and would consult relevant stakeholders before the end of 2018. Therefore, there has been a stalling of progress.

As per the Government’s statements a formal consultation is still expected.[11] However, the latest answer from DHSC (28th January[12]) makes no reference to this and instead emphasises their desire to “include more specials with a reimbursement price in the Drug Tariff” as a means to “incentivise community pharmacies to source the special at the lowest price possible”.

DHSC does acknowledge a desire to “seek alternative arrangements for specials that are not commonly prescribed and therefore cannot be listed with a reimbursement price”. Yet some stakeholders are concerned that this latest answer alludes to a desire to shift the focus onto increasing the number of drugs on the Drug Tariff rather than a complete overhaul of the reimbursement system for specials.

  1. Solutions

Very few patients receive specials in primary care; for the same annual spend, many more patients could receive treatment if the current procurement system were radically changed, to a central procurement ‘best value’ model, allowing batch production, or the Scottish model with strict price controls.

  • Increasing number of specials in the Drugs Tariff

If the Government includes more specials with a reimbursement price in the Drug Tariff then pharmacies will source these products at a controlled price.

However, this approach is limited as by their inherent nature many specials are bespoke and therefore unable to be listed. It is also not applying the powers granted to the Government via the 2017 Act, which was created in order to enable the Government to make more sweeping and cost-saving changes.

The APPG also believes that the selection of new Specials onto the Drug Tariff should happen in liaison with doctors’ specialty professional bodies, as it can’t be done through information-gathering under the new legislation (unless NHS Specials manufacturers are asked for invoices on all the Specials they dispense).

  • Central procurement

Previous dialogue in July 2018 between representatives of the APPG and the then Health Minister in charge of specials, Lord O’Shaughnessy, revealed that centrally procuring specials was the Government’s desired future approach.

Pharmacies would contact a centralised service that would procure specials on their behalf. The benefit of this system is that a centralised buyer has the advantage of a greater purchasing power so can negotiate and obtain cheaper prices than an individual pharmacy.

The exact form this system would take is unclear and therefore the specifications would have to be closely analysed if a future government proposal is created. For example, the trail of reimbursement and the place of NHS Manufacturing Units in this system would need to be detailed.

However, depending upon the details, this approach would be favourable to the APPG if it were carried out in close liaison with the body of non-profit NHS Specials Manufacturers to ensure best value, quality, transparency and batch manufacture.

  • Batch production

Coding for specials items must be unified to estimate demand. The British Association of Dermatologists (BAD) Medicines Working Group has worked hard to reduce the number of items recommended for skin disease to 39, to simplify demand and coding, and to have all items listed on the Dictionary of Medicines and Devices (DM & D). It has linked with other key specialty groups and the Royal Colleges of Physicians, Paediatrics and Child Health and Ophthalmologists to provide similar shortlists for other specialities.

By unifying prescribing, and channelling demand to a more limited number of specials, batch manufacture is facilitated. This reduces costs, while improving quality and availability.

  • Strict price control

The Government could mimic Scotland’s former method of requiring a certain amount of quotes, including an NHS one, when purchasing non-Tariff specials and for the cheapest to be used. However, the Government has previously indicated that this strict price control system is not favoured because manufacturers can still inflate quotes.

Since 2015, Scotland’s procurement system allows dispensing without pre-authorisation if an NHS manufacturer is used. Prices have been driven down since NHS manufacturing units produce specials at significantly lower prices to private suppliers. This is a result of NHS units batch-producing specials.

The APPG believes that the English procurement system would be significantly improved if it followed these processes.

  • Warning system

If there were a central reporting helpline for patients and doctors then the system could identify drug shortages and price hikes at an early stage. This would rectify some of the issues surrounding the largely unknown financial burden of certain specials on the NHS.

The APPG envisages this working alongside a new procurement system.

  1. Consultation Questions

1. 

Q. In what capacity are you responding to this consultation?

Q. Please briefly outline your experiences with the consumption, procurement, delivery or system design of specials.

Q. Has all the relevant evidence for this consultation document been taken into account? If ‘No’, please give details.

2.

Q. Please comment on the medical specialisms and disease areas that you are aware are affected most by the procurement of specials.

Q. Do you agree with the consultation document’s findings regarding price-inflation, multiple fees and additional hidden costs for specials in England?

Q. Do you believe a saving could be made to NHS England if a new procurement system were put in place?

Q. Do you agree with the statement that the current procurement of specials in England impacts patient access to medicines in primary care?

Q. What do you consider to be the major impacts of patients requiring secondary care services to obtain a prescription for their special medicine?

Q. Please provide any other comments you may have on the current system of procurement for specials in England.

3.

Q. Do you believe that there is an issue with regards to the safety of specials in England within (i) primary care and (ii) secondary care?

Q. What mechanisms do you think should be in place to ensure the safety, efficacy, quality and consistency of specials?

Q. Do you believe aseptic compounding pharmacies have a capacity issue and, if yes, what steps should be taken to relieve these capacity constraints?

Q. Is batch testing a viable solution to improve patient safety for specials?

4.

Q. Can you explain whether existing legislation ensures that the level of remuneration for specials is reasonable?

Q. Does the Health Services Medical Supplies (Costs) Act provide the necessary powers to alter the procurement practices for specials in a satisfactory manner?

Q. Do you believe that The Health Services Products (Disclosure and Information) Regulations 2018 have adequately improved the provision of information on the pricing of specials.

5.

Q. Please provide any comments that you may have about the potential merits and limitations of the solutions outlined in this document:

a. Increasing number of specials in the Drugs Tariff

b. Central procurement

c. Batch production

d. Strict price control

e. Warning system

Q. Are there any changes, additions or new procurement systems that you would like to propose?

Q. If you support a new procurement system, which do you favour and why?

Q. Please provide any additional comments on the consultation document.

 

Appendix:

Special Scottish Tariff Feb 2019 English Tariff Feb 2019

 

Price available from the cheapest commercial manufacturer  Price available from NHS

Manufacturer

Coal tar 5% in yellow soft paraffin 100g £29.68 £113.67 £29.68 £29.68
Ichthammol 1%/ Zinc Oxide 15% in yellow soft paraffin 200g £31.24 £293.55 £31.24 £31.24
Salicylic Acid 2% in aqueous cream 100g £37.64 £53.37 £37.64 £37.64
Salicylic Acid 5% in aqueous cream 100g £37.64 £68.04 £37.64 £37.64
Salicylic Acid 10% in aqueous cream 100g £37.64 £57.75 £37.64 £37.64
Eosin Solution 2% 100ml £31.03 £113.76 £31.03 £31.03

 


[3] Data from Richard Croker/ Ben Goldacre 2018 (OpenPrescribing, Oxford)

[4] Data from PresQUIPP 2018

[5] Estimate using DGH data from RUH Bath 2018

All-Party Parliamentary Group on Access to Medicines and Medical Devices – Consultation Paper on Specials Procurement

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