HDA UK Media And Political Bulletin – 29 August 2017

The rise and fall of PPRS payments

Pharmaphorum, Leela Barham, 25 August 2017

 

The Department of Health (DH) released its latest formal accounts on 19 July 2017. Pharmaphorum reviews how the DH has managed its money and how payments under the 2014 Pharmaceutical Price Regulation Scheme (PPRS) have contributed to its funds. According to the media outlet, the Department’s accounts tell a story of the unpredictability of the PPRS.

 

Pharmacies spending 11 hours each week on home deliveries

P3 Pharmacy, 24 August 2017

 

Managing home deliveries can take up to 13 hours of staff time, and demand is increasing, research carried out by Censuswide on behalf of CitySprint Healthcare in June 2017 found out. Interviewing 350 pharmacists working across independent, multiple and hospital pharmacies in the UK, the increased demand for home delivery of medication in the last year was reported by 84% of the pharmacists surveyed.

 

How do you turn world-leading British science into medicines?

The Telegraph, Iain Withers, 26 August 2017  

 

The Telegraph discusses barriers in the UK that industry and Government have to overcome to make the UK a medicines manufacturing powerhouse once again. In fact, the UK often fails to translate medical breakthroughs into blockbusters made in Britain with the country becoming a net importer of pharmaceutical product and medical devices for the first time on record in 2014, according to UN trade data. Industry experts note policy has been moving in the right direction, with corporation tax falling and initiatives like the patent box scheme – offering a reduced tax rate on UK and European patented products – providing incentives. Nonetheless, these considerations ignore the Brexit elephant in the room.

 

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The rise and fall of PPRS payments

Pharmaphorum, Leela Barham, 25 August 2017

 

Leela Barham delves into the Department of Health’s accounts to see how contributions from the updated Pharmaceutical Price Regulation Scheme (PPRS) have affected its budget for the NHS since such payments began in 2014.

 

The Department of Health (DH) released its latest formal accounts on 19 July 2017. This provides a chance not only to review how the DH has managed its money, but also to see how payments under the 2014 Pharmaceutical Price Regulation Scheme (PPRS) have contributed to its funds.

 

The numbers

 

The DH annual report and accounts make it clear that PPRS payments are income for the DH, worth £456 million in the 2016/17 financial year. That adds to the income brought in over the years that the 2014 PPRS payments have been in place (Figure 1). Based on these figures, payments up the end of the 2016/17 financial year were more than £1.7 billion.

 

For the first time, though, the DH accounts also clearly identify the scale of the shortfall when PPRS payments were less than expected by including a variance explicitly in the annual accounts. For 2016/17 the DH expected £584 million but received £456 million, leaving a gap of £128 million.

 

The narrative

 

Over time, the DH annual reports and accounts also tell a story of the unpredictability of the PPRS.

 

The 2014/15 DH annual report and accounts, published in July 2015, represented the first full financial year that included the new-style PPRS payments after the scheme was revamped. Instead of headline price cuts, member companies made PPRS payments to the DH. This report showed the upside of the unpredictability for the DH. The report said, ‘growth in 2014-15 has been higher than initially anticipated, which has resulted in greater voluntary payments being received’.

 

However, by the time of the 2015/16 DH annual report and accounts there was evidence of the downside. That report pointed out that the DH had given more to NHS England (NHSE) in advance, for the 2015/16 financial year, than it had actually received in PPRS payments. HM Treasury granted the DH £0.2 billion to cover the gap.

 

Another year on, in the 2016/17 annual report and accounts, the DH recorded lower-than-expected PPRS payments as part of ‘unforeseen pressures of c£0.3 billion [that] emerged during the year, mostly relating to the Prescription Pricing Regulation Scheme (PPRS) and European Economic Area Medical Costs (EEA) budgets’.

 

The variability of PPRS payments

 

At the heart of the 2014 PPRS was a move away from headline price cuts to payments that depended on how much higher the spend on branded medicines covered by the 2014 PPRS was going to be, in comparison to that permitted under the allowable growth rate.

 

In order for everyone to plan ahead, though, forecasts were made. The DH wanted to know how much it would get and then be able to allocate out to the wider NHS. For companies, forecasting would help them set aside payments that would become due. UK affiliates probably used forecasts to help them manage expectations when their HQ might be in the US and far away from the realities of the UK market place.

 

The trouble with forecasts is just that; they are forecasts. Things have changed quite a lot over time, with spend on branded medicines not following the growth expected. The original forecast of measured spend – published in November 2013 – with the benefit of hindsight now seems over-optimistic, as the figures have been downgraded every year since (Figure 2).

 

The 2014 PPRS measures spend including new products, but the payments from companies exclude spend on new products. Here, too, things have changed over time, with the forecast share of new products in measured spend rising (Figure 3).

 

In turn, in light of both actual spend and as forecasts have been updated, this has changed the payment percentages expected from companies. Actual payment percentages can only be known incrementally as data on real spend becomes available.

 

The drivers of unpredictable PPRS payments

 

The 2015/16 report suggested that the PPRS falling short of expectations was a result of ‘spend not controlled by the PPRS cap … growing at a faster level than controlled spend’. The PPRS doesn’t cover everything. For example, certain tenders are excluded. The PPRS is voluntary and not all companies selling branded medicines are members. The DH noted, too, that parallel imports were growing and that products switched from the PPRS to the alternative statutory scheme for branded medicines. By May 2016 five companies had left the PPRS. Under the statutory scheme, companies didn’t make payments, but took a price cut instead. Since then the legislation has changed.

 

On top of dynamics in the market that resulted in less-than-expected PPRS payments, was an adjustment related to how to deal with the Cancer Drugs Fund (CDF). The DH and the Association of the British Pharmaceutical Industry (ABPI) reached an agreement that some spend under the CDF could be exempt from PPRS payments in order to resolve a dispute; in operational terms that meant adding an amount to the allowed spend. The CDF adjustment added £91 million in 2014, and £107 million in 2015, to allowed spend (calendar years).

 

The future

 

The final payment percentages will fall between 2.3% and 7.8% under the current PPRS, which is due to end on 31 December 2018. These payment percentages, in turn, will generate between £320 million and £439 million in PPRS payments.

 

However, a bigger question than how much PPRS companies will pay is what will replace the 2014 PPRS?

 

Pharmacies spending 11 hours each week on home deliveries

P3 Pharmacy, 24 August 2017

 

Managing home deliveries, a service for which community pharmacies do not receive funding or payment for, can take up to 13 hours of staff time, and demand is increasing, a survey has found.

 

Research carried out by survey specialists Censuswide in June 2017 on behalf of CitySprint Healthcare, interviewed 350 pharmacists working across independent, multiple and hospital pharmacies in the UK.

 

Increased demand for home delivery of medication in the last year was reported by 84 per cent of the pharmacists surveyed.

More than three-quarters of the pharmacies (rising to 91 per cent for those in independent pharmacies) offered home deliveries.

 

On average, pharmacy staff spend 11 hours a week involved with deliveries, with some independent pharmacies investing even more – around 13 hours – of their time. One-third said it is pharmacists, rather than staff, who spend their time on logistics management, despite there being many other pressures on their workload.

 

While most pharmacies (72 per cent) employ their own delivery drivers, one-third (32 per cent) use existing staff to undertake deliveries.

 

Surprisingly, the research found that six per cent of respondents use taxis or local minicabs when necessary, and 17 per cent said they have concerns about medication going missing during home delivery.

 

Over half (57 per cent) of pharmacists surveyed said they were either unclear about legislation surrounding the delivery of medicines to a patient’s home, or are not aware of whether there is legislation at all.

 

The majority of pharmacies surveyed (89 per cent) rely on paperwork or verbal confirmation to monitor the chain of custody and proof of delivery for prescriptions.

 

Almost half (45 per cent) of those not currently offering home delivery are worried that cost to the business would be too high, while 41 per cent said they were concerned about the impact on staff time.

 

A quarter of respondents, those in England, said they are troubled about government funding cuts and are aiming to keep costs down as a result.

 

Darren Taylor, chief development director at CitySprint Healthcare, commented on the survey findings: “Pharmacies are under unprecedented funding and regulatory pressures – and the growing demand for home delivery can be an increasing drain on resources if not managed effectively. Although pharmacists should have oversight of home delivery services, managing all aspects of the offering is not sustainable for expert staff members that could be adding value elsewhere in the business.”

 

CitySprint Healthcare will be making 150,000 pharmacy-to-home deliveries in 2017, says the company, through a network of 41 service centres and a fleet of over 3,500 vehicles.

 

Speaking to P3, he suggested that clearer guidance is needed for the sector on aspects of home delivery, particularly around pharmacy’s responsibility for security of medicines during delivery to patients and customers.

 

“It is evident from our research that the legal obligations around pharmacy-to-home deliveries are far from clear cut for pharmacists. It is vital the security of the medicine supply chain extends to home delivery and, as this responsibility remains with the pharmacist, we are calling on the industry to work together to provide clearer guidance in this area,” he said.

 

How do you turn world-leading British science into medicines?

The Telegraph, Iain Withers, 26 August 2017  

 

It may not be glamorous, but Stevenage is set to become a world-leading centre for gene therapies, the new wave of pioneering treatments that hold great promise for tackling illnesses such as cancer and rare diseases.

 

On the outskirts of the somewhat drab Hertfordshire town, a Government-backed drug development factory is springing up that covers an area the size of the pitch at Wembley Stadium. It will house start-ups dedicated to the fast-growing branch of gene medicine, which fights illnesses by modifying genetic code.

 

It’s an approach that is in its earliest stages, boasting only a handful of approved treatments globally, but in clinical trials has made breakthroughs in tackling conditions as varied as leukaemia and inherited blindness. The £55m facility, first announced in George Osborne’s 2014 Budget, is a Government play for a slice of this developing market.  Building work will complete within weeks and two biotech companies – Autolus and Cell Medica – have signed up for space, with several other firms in discussions.

 

It is exactly the kind of high-skill manufacturing the Government is desperate to promote and export, particularly ahead of Brexit. It is also likely to feature prominently when the Government’s industrial strategy is rebooted on Wednesday, with Sir John Bell, the immunologist and geneticist, set to launch the first report on how to boost the £60bn life sciences sector.

 

Ministers will have their work cut out as the UK has too often failed to translate medical breakthroughs into blockbusters made in Britain. An example is monoclonal antibodies, a common component of biological drugs discovered at Cambridge University in the Seventies.

 

It led to a Nobel Prize for the scientists involved and has since exploded into a field worth around £70bn globally today. Yet just 3,000 of the 100,000 people working in this area are in Britain. Over the past eight years the UK’s historic status as a major net exporter of medicines has been gradually dwindling.

 

Since 2009, every year bar one has seen a lowering of net exports of pharmaceutical products and medical devices, with the UK even becoming a net importer for the first time on record in 2014, according to UN trade data. So what barriers will industry and the Government have to overcome to make the UK a medicines manufacturing powerhouse once again?

 

Britain’s drug makers outlined a blueprint this week for doing just that, in a report entitled Manufacturing Vision for UK Pharma. In it they called on government to invest up to £140m to build a further three drug manufacturing “centres of excellence”, like the one in Stevenage. They also urged pharmaceutical firms to learn from their counterparts in the automotive and aerospace industries on how to partner with government and pool research and development efforts.

 

“It’s about trying to grow the medicine footprint in the UK,” says Andy Evans, chairman of the organisation behind the report, the Medicine Manufacturing Industry Partnership, and head of FTSE 100 giant AstraZeneca’s 3,500-strong Macclesfield drugs manufacturing site.

 

“These facilities will act as a bridge between the science and getting products to market,” Evans adds. He says public sector contribution is essential to “share risk” and to enable SMEs to access facilities.

 

Both the Government and industry will be hoping to replicate the UK’s early wins in gene therapy, a field now boasting 60 firms with £1bn investment behind them. Among them is Oxford BioMedica, a company that has developed a novel lentiviral delivery mechanism for modifying genes.

 

The AIM-listed firm’s market value has jumped by almost three quarters since June thanks to its partnership with Swiss conglomerate Novartis, which got provisional approval for a landmark gene therapy for leukaemia.  All of Oxford BioMedica’s operations remain in Oxford.

 

“We have looked extensively at other countries,” John Dawson, its chief executive, says. “But we are happy with what we’ve got. We’ve had a very good run of being supported by government.” That support has included millions of pounds of research grants.

 

Keith Thompson, chief executive of the Cell & Gene Therapy Catapult, the Government body behind the Stevenage facility, says: “We’re hoping that when companies grow out of using the facility and need a bigger place, they’ll simply build it down the road.”

 

Sceptics point out that a broader package of policies will be needed to compete with rival countries.

 

Dr Tobias Silberzahn, a partner at consultancy McKinsey & Company, said: “What’s the skill level, salary level, unrest potential, how do salaries develop, how is the tech scene, and what special incentives are offered from government?”

 

He adds: “If the UK wants to attract more drug manufacturing they need to look at their tax breaks and other financial incentives.”

 

Industry experts note policy has been moving in the right direction, with corporation tax falling and initiatives like the patent box scheme – offering a reduced tax rate on UK and European patented products – providing incentives. But all these considerations ignore the Brexit elephant in the room.

 

Last month, Pascal Soriot, AstraZeneca’s chief executive, said all its new capital investment was on hold due to the current uncertainty, although it is expected to commit to a “mid-size” project in Macclesfield. John Rountree, a consultant at Novasecta, which advises both UK and European firms, says his clients are generally putting capital spending on hold.

 

“With supply chains across different countries, if there are extra barriers and paperwork clearly that will be a deterrent.”

 

One company that remains a firm believer in UK drugmaking is GW Pharma. The company – which develops treatments derived from the cannabis plant to alleviate the symptoms of MS and epilepsy – grows, processes and purifies all its cannabis in the UK.

 

While the firm moved its listing from London to New York last year for funding reasons, Adam George, managing director, says: “We are proud to be a UK company, and we’re scaling up. We plan to create 70 jobs next year and to invest £50m in capital over the next three years.”

 

This bullishness is something the Government is hoping to foster more of.

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