HDA Media And Political Bulletin – 10 November 2016
|Trump elected president: what now for pharma?
09 November 2016, Pharmaphorum, Richard Staines
The American President Elect, Donald Trump, released a health policy document during his campaign although it contained little information about his future policy on drug pricing. Trump has previously said he wanted to allow cheaper drugs to be imported into the U.S. to reduce medicine costs. He has also made a pledge to repeal the Affordable Care Act in the first days of his administration. In his primary campaign Donal Trump said he would work to introduce legislation that enables Medicare to negotiate lower prescription prices with pharmaceutical companies. Dan DiMicco, Donald Trump’s Trade Advisor has said that the UK will be offered a tree trade deal with the U.S. ahead of the EU.
The PPRS medicines pricing scheme: is it working for both sides?
The Pharmaceutical Price Regulation Scheme (PPRS) is the result of an agreement between the UK Government and the Pharmaceutical Industry for the pricing of branded medicines. The updated agreement was launched on 1 January 2014 to implement ta new mechanism top cap the growth of NHS spending per year. Under the scheme when the NHS exceeds the agreed level PPRS members have to make repayments to the Government. The PPRS agreement does not say where this money is spent, although it is split across the devolved nations. It is as yet unknown how the PPRS will evolve after December 2018 as several pharmaceutical companies have expressed disappointment that the promise of a greater uptake of new medicines in the agreement has not been occurred.
NPA lawyer: ‘Serious flaws’ justify legal challenge to cuts
A lawyer acting on behalf of the National Pharmacy Association (NPA) has said the legal challenge against the Government’s plans to cut community pharmacy funding is justified. She has said that the flaws in the Government’s justification for the pharmacy cuts is cause for legal action. The NPA has already successfully challenged the Government’s claim that expanding hub-and-spoke dispensing will improve patient safety which resulted in a delayed implementation date. The NPA said last week that it had no option but to challenge the Government’s pharmacy funding cuts in court.
|House of Commons Questions, UK Trade with EU, 09 November 2016
Jonathan Edwards: What estimate he made of the potential cost to the public purse of subsidising tariffs for access to the single market for the (a) financial services, (b) insurance, (c) professional services, (d) food, beverages and tobacco, (e) machinery, electrical and transport, (f) chemical and pharmaceuticals, (g) metal, plastic and non-metal mineral products, (h) aerospace and (i) automotive sectors.
Mr David Gauke:
The Government continues to undertake a range of analyses to inform the UK’s position for the upcoming EU exit negotiations, to ensure the best possible deal for the UK. However, this does not extend to assessing the impact on the public purse of tariff subsidisation that would be illegal under international law.
|Trump elected president: what now for pharma?
09 November 2016, Pharmaphorum, Richard Staines
The world has woken up to a new era, with Donald Trump elected as US president – a huge victory for a political outsider and the ‘silent majority’ who felt sidelined by the status quo.
While a small majority of US voters is celebrating, the country has been badly divided by a bitter election campaign. Many who voted for Hillary Clinton are fearful that Trump will deliver on his many populist promises, including a ban on all Muslims entering the country, trade wars with China and Mexico, the repeal Obamacare.
Like many in big business, the pharma industry had given more backing to Clinton, despite her anti-pharma policies – and now wait to see how the political upheaval will affect them.
Hillary Clinton had been making waves with her sharp criticism of drug pricing, and strong campaigning against price gouging by pharma – but the industry may not get an easy ride from Trump, either.
In a health policy document, Trump said surprisingly little about drug pricing, although he did say he wanted to allow cheaper drugs to be imported to reduce medicine costs.
But Trump did make a clear pledge to repeal the Affordable Care Act, the expansion of health insurance coverage which was one of President Obama’s proudest achievements.
However many middle-class citizens had suffered an increase in premiums caused by Obamacare, and Trump has promised to repeal the legislation “on day one” of his administration.
But in his primary campaign, Trump said that he would renegotiate prices that the Medicare social insurance programme for older people pays for drugs.
Medicare is legally unable to negotiate lower prescription prices with pharma companies, and Trump will likely need a new law to introduce this policy.
Trump also highlighted the lobbying powers of drug companies, which is ironic given that the industry traditionally relies on sympathetic politicians from Trump’s Republican party to influence the political process.
The Republicans have retained control of both the House of Representatives and the Senate, meaning Trump could have more freedom to implement his policies – if he and the Republican party can stay on friendly terms.
The election result could also have ramifications this side of the Atlantic, as the UK prepares for Brexit.
Yesterday Donald Trump’s trade adviser, Dan DiMicco, said Britain will be offered a free trade deal before the rest of the European Union ahead of his election victory, offering the possibility of a welcome political and economic boost after this year’s upheavals.
Although Trump’s victory sent the dollar sliding on currency exchanges, pharma stocks outside of the US ticked up.
GlaxoSmithKline, AstraZeneca and Sanofi all made small gains, suggesting that Trump’s election could be seen as a let-off for the industry.
While the ramifications of Trump’s victory are still not certain, there was some clearly good news for pharma in California, where voters decided against Proposition 61. This would have introduced new powers to negotiate prices direct with the industry at state level, but heavy funding from pharma has helped to persuade voters to reject the idea.
Whatever the next four years of a Trump presidency bring, pharma knows its current pricing model is unsustainable. Ongoing investigations by US authorities into pricing tactics of companies such as Mylan, means the industry is already looking to change to its approach. Whether a Trump administration will support or move against the sector is yet to be seen.
08 November 2016, Pharmaphorum, Leela Barham
The PPRS is the keystone of the UK’s medicines pricing system, but is the agreement launched in 2014 working for the pharma industry and the government?
The Pharmaceutical Price Regulation Scheme (PPRS) is the UK government’s pricing agreement on branded medicines with the pharmaceutical industry, and has been around in one form or another for more than 50 years.
However there were some significant changes when the new PPRS agreement was launched on 1 January 2014, most notably a new mechanism to cap the growth of NHS medicines spending in each year of the agreement.
The deal was struck at the height of the UK government’s austerity measures, and the planned ‘allowed growth rate’ in medicines spending reflected a squeeze on NHS budgets.
There was no permitted growth in the branded medicines bill in 2014 and 2015, with growth then allowed to begin in 2016, 2017 and 2018, but limited to 1.8%, 1.8% and 1.9%, respectively.
Moreover, if and when expenditure exceeds these agreed level, PPRS members as a whole have to make repayments – PPRS payments – back to the government.
These payments replaced the old system of headline price cuts of previous schemes, and the industry has to date paid back over £1 billion to the government (figure 1).
The Association of the British Pharmaceutical Industry (ABPI) agreed to this deal with the Department of Health (DH), in return the 2014 PPRS included key commitments on patient access– a long running concern of industry.
As we approach the end of 2016, the deal has reached it half way point, with the agreement to complete its 5 year lifespan on 31 December 2018.
So what trends and conclusions can be drawn from the agreement so far?
Analysis of the PPRS needs to look widely – as widely as the agreement itself – but one of the clearest guides can be found in the quarterly reports of the PPRS payments. The latest data was published in September, making it possible to take a look at PPRS payments at the half-way point in the scheme.
In agreeing the deal in late 2013, neither the Department of Health nor the ABPI could be sure whether actual growth in medicines spending would exceed the annual growth caps or not.
Expectations on both sides were informed by forecasts made at the outset of the 2014 PPRS. For example, the DH and ABPI published a Heads of Agreement in December 2013 that included forecasts for the growth rate in measured spend (the 2014 PPRS has some exclusions, so measured spend is not the same as the total spend on branded medicines), the share of new products in that measured spend, as well as the expected annual payment percentages.
Growth in measured spend has been much more variable than expected – whilst it was far higher than forecast in 2014 (6% rather than just under 4%), the following year it was far lower, under 1% compared to the predicted 3.5% (figure 2).
In turn, payment percentages have been adjusted too, with a higher payment percentage in 2015 than expected in 2013, and now lower in the final years of the scheme (figure 3).
The situation may have changed since the revised forecasts in December 2015 as well. According to formal review minutes of a meeting between the ABPI and the DH in March 2016, “growth was now significantly below the original project profile for this stage in the scheme.”
Where do the PPRS payment go?
While companies have to make quarterly payments to the DH, the PPRS agreement doesn’t say where they go from there. In practice, the DH has agreed a split of PPRS monies across devolved nations. The DH has allocated PPRS payments into the overall allocation to NHS England (NHSE).
The Department of Health
NHSE then makes its own decisions about how much to allocate to itself for the services that they commission and pay for (such as specialised services for relatively rare and complex healthcare, including drugs used as part of those services) and how much to allocate further out to the Clinical Commissioning Groups (CCGs).
Advance PPRS payments factored into allocations to the NHS
The DH took the decision to allocate estimated PPRS receipts in advance to NHSE. This has created a novel problem where the DH has actually overpaid NHSE, as PPRS payments have been less than anticipated (figure 4).
The ‘shortfall’ is driven in large part by parallel imports and divestments to the Statutory Scheme (the default for those companies who choose not to join the voluntary PPRS). The DH has said that sales of £157m have moved out of the PPRS and into the Statutory Scheme. It’s also driven by the agreement struck to limit the amount paid back on products in the Cancer Drugs Fund (CDF).
The shortfall in PPRS payments was made up by the Treasury in 2015/16.
It remains unclear whether the PPRS payments will hit the DH’s forecast of £647m for 2016/17. If not, this could see a repeat of the problem from the previous financial year, as an allocation of £518m has already been made to NHSE.
Time will tell how the PPRS will evolve after December 2018. The successor to the 2014 PPRS could revert to headline price cuts. There’s something appealing about keeping it simple: it would certainly demystify the PPRS, which has become more complex over time. There should be a lot of sympathy for those who struggle to reconcile the PPRS with other headlines on spend on medicines.
For example, NHS Digital’s prescribing costs in hospitals and the community in England 2014/15 illustrates a 7.8% increase on spend versus 2013/14. This is not an apple to apple comparison: a financial year, just for England and including generics versus the calendar year, UK wide and for growth in measured spend on branded medicines. Even despite this, the difference between around 8% growth and the revised growth in measured spend of around 1% raises questions about what is really happening in the medicines market.
Those questions intensify in light of what different sources seem to suggest. For example, ABPI analysis discussed with the DH in March 2016, highlights that IMS data shows 7.8% growth from 2014 to 2015 at list prices for branded medicines sold by members of the PPRS. PPRS measured spend reported by companies suggests a decline of 0.2% for the same time period. Even parallel imports and other exclusions can’t explain all of the gap between the IMS data and measured spend. Discounting could be it: the DH seem unconvinced, though, about the real gains from discounting, suggesting that it hadn’t led to a saving in the drugs bill.
At the same time, many individual pharmaceutical companies have expressed unhappiness with the agreement, saying the promise of greater uptake in new medicines has not materialised.
If PPRS payments continue, the DH may decide to be more cautious. They could pass on payments once the sums have been added up for example. That may be financially prudent – avoiding the need to go cap in hand to the Treasury – but it would add (even less) credibility to the idea that underwriting the NHS spend on medicines could improve access to medicines.
09 November 2016, Chemist & Druggist, Vincent Forrester
“Very serious flaws” in the government’s justification for the pharmacy cuts is cause for court action, a lawyer acting on behalf of the National Pharmacy Association (NPA) has said.
Andrea James, a partner at LHS Solicitors, which is acting on behalf of the NPA, is confident that the shortcomings in the Department of Health’s (DH) approach to the proposed £113 million cut to funding in England justifies mounting a legal challenge.
She pointed out that this year the pharmacy organisation has already successfully challenged the government’s claim that expanding hub-and-spoke dispensing will improve patient safety, and help push the intended implementation date of the cuts back from October to December.
The NPA has “explored every possible avenue to help its members”, including negotiations with the government, Ms James told C+D last week (November 4).
“The NPA has sought, at all times, to behave reasonably and negotiate sensibly with the DH, so legal action was never considered inevitable right up to the publication of the final [funding] package,” she added.
The NPA said last week that it had “no option” but to take its fight against the cuts to court.
The DH has been asked to respond to the legal challenge by 4pm today (November 9). The NPA had not received a response at the time of going to press.
09 November 2016, The Pharmaceutical Journal
An influential group of cross-party MPs has launched an inquiry into the impact of the government’s decision to cut community pharmacy funding in England.
The All-Party Pharmacy Group (APPG) announced the terms of reference for its inquiry on 8 November 2016.
The details emerged two weeks after MPs from the APPG met health minister David Mowat; Keith Ridge, chief pharmacist for England; and others from the Department of Health to discuss the cuts.
Kevin Barron, Labour MP and chair of APPG, says: “The APPG has previously called for further investment in community pharmacies to allow them to provide more health services and ease the burden on GP surgeries and hospitals.
“The Department of Health believes this can be achieved with the new funding package that has been announced. The APPG will therefore scrutinise what is being proposed in detail to better understand what their reforms will mean for community pharmacies, and the patients they serve.”
The inquiry, which will begin later in November 2016, follows confirmation by Mowat that the government will slash community pharmacy funding by 12% from December 2016 to March 2017 and by another 3.4% in 2017–2018. It will consider the impact of cuts on pharmacies, staff and services and what the government expects from pharmacists employed by GP practices.
The inquiry will also look at how the proposed £42m pharmacy integration fund and the roll out of minor ailments schemes will work.
The APPG, which receives financial support from the Pharmaceutical Services Negotiating Committee, the Royal Pharmaceutical Society and Pharmacy Voice, will consider whether the pharmacy access scheme will guarantee the long-term future of premises in remote or deprived areas. It also intends to look at the potential impact of the King’s Fund review of community pharmacy.
From Factory to Pharmacy
As part of our mission to build awareness, understanding and appreciation of the vital importance of the healthcare distribution sector, we developed an infographic explaining the availability of medicines. It identifies the factors that can impact drug supply, as well as the measures that HDA members undertake day in, day out to help mitigate the risks of patients not receiving their medicines.See the Infographic
Apply to become a Member
Membership of the HDA guarantees your organisation:
- Access to leading policy and industry forums of debate and discussion
- Invitations to a range of networking industry events organised through the year, including an Annual Conference and a Business Day
- Representation on HDA working parties, including the Members’ Liaison Group
- A daily Political and Media Bulletin and HDA Newsletters
- Access to HDA policy documents and all sections of the HDA website
- Branding and marketing opportunities