Health Matters | Paul Corrigan's blog

This Government came into power promising to do a range of things about health reform. Over the last two years the rather curious political fact is that the Government have got into the most trouble for carrying out reforms that they said they would not do.

So just over 2 years ago the new Government reconfirmed in the Coalition agreement that,

“We will stop the top down reorganisations of the NHS that have got in the way of patient care”

(Of course I am still a bit puzzled how this fits with the White Paper released 5 weeks later which reorganised – from the top and moving all the way down – everything that it could get hold of. But that is now so much failed reform water under the bridge.)

I thought it might be a good idea to look at what was happening with something that they did say they were going to do. Well before the last election the Conservative Party made a pledge to the pharmaceutical industry to move to a system of value based pricing.  This pledge also formed part of the Coalition Agreement of May 22^nd 2010.

In the period leading up to the election I was particularly interested in the idea of ‘value based pharmaceuticals’ because every month or so someone within the industry asked me what I thought the Conservative Party meant by it. Answering the question was always difficult, since I didn’t think anyone knew.

The method for working out what on earth the new value of value based drugs was, as we are going to see later in this post, always going to be tricky. But the much wider issue of economics made this all a lot simpler. After all we now knew that there was to be no new money to spend on drugs – whatever their calculated specific value was.  Therefore any increase in costs based upon the new value would have to be met with a lower volume of drugs.

So two years on I was interested to see how far the Government had reached in developing its policy. A couple of weeks ago Andrew Lansley reconfirmed the Government’s intention to introduce value based pricing in January 2014. This will only apply to new chemical entities and will therefore have to work alongside the replacement for the existing pharmaceutical price regulation scheme that will price all existing drugs.

The first problem is how these two very different schemes will operate together. Within the old scheme NICE makes a judgement on whether the price put forward by the drugs company is cost effective based on the £30,000 cost per quality threshold. This uses a formula to measure improvements in quality of life over a period of time.

This method of calculating the worth of drugs has led to NICE has becoming a world leader in the field. Several other countries look to the NICE calculations to make their own decisions and hundreds of thousands of US citizens use the NICE website to find whether the drugs for which they have to pay deliver value for money.

Internationally this Government’s turning away from NICE has always been seen as a crazy idea which other countries regard with horror.

But let’s see where the new policy has got to in two years.

Once a value based price is agreed with the company the NHS will be required to fund it.  Since this will be spending public money Mr Lansley has promised that the new system will be open and transparent. But the first problem to arise is that the Association of British Pharmaceutical Industries wants British prices to be kept secret as they claim that publication will deter global firms from doing business in the UK.

So the Government wants to publish – and the firms want to keep it secret.

What about the timetable? Negotiations between the Government and the industry are not due to begin before the end of this year. It is only after these have been concluded that will we have an idea of the details of the scheme.

Pharma companies have already warned that they would not be ready for the proposed introduction in January 2014. A spokesperson for the Association of British Pharmaceutical Industries said that “If a company was going to be ready to put a drug forward for value based pricing in January 2014 they would need to have started work a year ago, but nobody knows what work to start”    

To sum up progress,

• In the last two years it has been agreed that the new scheme will operate alongside the old scheme and that it will start in 2 years’ time.
• One side wants it public the other one secret.
• One wants to start in January 2014 and the other says to achieve this start date the work should have started a year ago.

This ‘progress’ leaves me thinking that it’s a toss-up between the Government’s ability to carry out reforms that it did not intend -and its ability to carry out reforms that it did.