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All things Pharma

NHS finance and budget impact modelling

Many decisions about the design of the financial system at the heart of the NHS are taken at national level. However, as key elements of the future NHS evolve, including integrated care systems (ICSs), new provider collaboratives and new forms of contracting, many of these decisions are also being taken at a more local level with place becoming the key point of intervention and transformational currency.

While plans to restore financial and operational performance have often proved very short-lived, pharma’s support of the NHS through the pandemic signals an opportunity for industry to adapt its approach to partner with the wider NHS to and help achieve its broader aims of financial sustainability and tackle disparities in health outcomes.

New financial arrangements, including the dismantling of Payment by Results (PBR) and the increasing importance of system-wide working, accountability and responsibility makes the management of costs, delivering quality services and the metric on how that is measured everyone’s business. The focus on cost generation will fall on collective performance, not just where it is generated.

An outlook and approach for the times

Health spending is likely to rise significantly as a proportion of GDP over the coming decades as a result of demographic pressures but also due to growing technology costs and rising demand. In addition, reform of social care has resulted in a significant initial increase in health spending but it is envisaged that this will ultimately reduce to help support the social care system and ensure that the cap on personal spending is effective with the current financial envelopes. This gives ICSs a finite amount of time to achieve financial balance and continue to support wider improvements in population health.

New products targeted at specific conditions will need to be considered in the context of a wider clinical pathway approach with preventative health, reducing the burden, providing people with the right care first time and reducing demand on services finding the foreground. Focusing on one aspect of a patient’s condition will not yield the necessary deliverables from a pharmaceutical perspective. The impact of new drugs and devices and their interaction with the lifecycle of the patient’s condition will increasingly become the focus, so helping the NHS to understand how the drug or product can assist in a wider, richer context will be crucial. In essence, there will be a shift in emphasis from transaction to transformation.

The industry has access to resources it can share with the NHS, which can be blended into an overall NHS/Pharma partnership offer. This is a key marking-out factor in the historical relationship between industry and the NHS. The legacy of purchaser/supplier type interactions is changing. The industry’s standing in the NHS and with the public has grown, due in part to the role it has played throughout the pandemic, and it has the right, credibility and legitimacy to further its place as an agent of healthcare transformation and innovation. However, Pharma needs to be clear on what its total offer is and how it aligns with NHS longitudinal ambitions, aims and goals.

The value of unmonetizable benefits in ICSs

Healthcare delivery in ICSs is multi-dimensional; addressing health inequalities through the identification and risk stratification of higher-risk populations, considering the wider social determinants of health in building clinical care and reducing the burden of disease are all factors in the effort to redefine value. The new context promotes concepts like dignity, shared-decision-making, choice, patient participation in care and positive lifestyle restoring factors as pivotal fractions in the quality equation. In its growing partnership and place as a healthcare provider, Pharma must continue to adopt this definition of value and quality as its own and push it further.

Budget impact flexibility – Pharma models and supporting ICSs 

Historically, in supporting NHS organisations, Pharma has generally taken an in-year approach to defining benefit, however, with multi-year budgets and significant work force challenges the opportunity to invest to save in the longer terms becomes a real possibility for the emerging ICS’s. This needs to be underpinned by the methodology outlined in the HM Treasury Green Book which provides a methodology for assessing value in making these kinds of investment decisions. This requires Pharma to develop a new kind of Budget Impact Model (BIM) which shows the wider benefits of a product over a longer period. This will involve looking at all the factors identified in the new outlook on value and quality, as well as challenges like workforce impact and alignment.  Patient outcomes, in particular ensuring a reduction in health disparities and keeping people independent for longer will remain a key objective.

Effective budget impact modelling (BIM) can promote and support reinvestment in new treatments and better care for people. It can drive significant efficiencies that can contribute to creating financial headroom for local systems. Approaches like brand switches, price reductions and a shift to generic prescribing will need to be viewed through the lens of how changes in prescribing patterns can generate wider system benefits.

System and scale – creating the headroom for innovation and change at pace

Even with increased funding to the NHS, the growth in demand for services, a growing medicines bill, technological advantages and life science discovery could challenge the available resource. Priorities like cancer treatment, mental health, improving primary care and the need to increase out of hospital models of care, and generate savings from secondary care will add to the pressure. Ensuring that patients are treated in the right setting at the right time within a population health and preventative health-based framework will become the predominant models within the NHS.

The Budget Impact Models of the future should quantify long term costs and benefits supporting the development of optimal care pathways which support multi-disciplinary teams working across specialities to ensure that patients are receiving the best care at the right time. Supporting patients with multi-morbidity to ensure their outcomes are optimised for all their conditions and they are able to continue living independently supporting their families and community rather than being dependent on social care or other such services.

Pharma and real world evidence to support NHS partnerships

The industry’s capacity and capability for discovery and development triangulated by science-proof of concept-assessment and validation is a key asset in its relationship with the NHS. Developing a test-bed approach is a cornerstone of innovation and, when invested with patient experience, creates a shared and productive endeavour at local and system-level. Demonstration of impact prior to the adoption of a scheme by an ICS, or undertaking preparatory work to implement the same, demonstrates a willingness to share the risk of making a change and is a powerful indication of commitment to an NHS partner. In addition, what has been tested in one particular system can be offered for wider adoption nationally and serve the testing ICS as an exemplar of good practice.

Accessing data on drug use and outcomes will help ICSs with maximising outcomes based on existing options. Developing a bank of real-world evidence to shape the optimal care pathway and increase access to, and the reach of, a medicine or product can drive improvements that reduce disparities and support population health modelling aligned with the key priorities of ICSs. In addition to supporting ICSs it can add valuable insights for Industry to support product development to support sustainability and improve outcomes for those most disadvantaged patients.

It is important to keep in mind that clinical care accounts for only about 20% of health outcomes. The other 80% are accounted for by social determinants of health – health behaviours like tobacco use, diet and exercise, social and economic factors, education, employment and then physical environment, air and water quality, housing and transportation. Looking at the data that can assist with managing these drivers for health, can highlight opportunities to maximise non-medicalised approaches.

One size doesn’t fit all

While common issues abound, ICSs will each face specific challenges in addressing national objectives. Local conditions relating to deprivation, pre-existing inequalities, prevalence of disease and multi-morbidity factors will create particular needs that shape local strategies and service delivery approaches. Understanding the impact of these and being able to tailor the partnership-working offer to suit the specific need will continue to elevate the industry beyond the sum of its products.

As ICSs become legal entities, their preoccupation with corporate and clinical governance, operational structures and workforce issues will reduce. However, the pressing needs will remain; that is, to make the new entities work and deliver value-based, quality driven services that improve the experience and health outcomes for local people. The budget for achieving this will always be subject to some level of financial constraint. The way in which budget impact is modelled and articulated is not as limited. Pharma has the opportunity to imbue its NHS partnership offer and proposals with a multi-year, whole pathway and system-wide approach via a comprehensive model of costs and benefits (both financial and non-financial), as outlined in the HM Treasury Green Book.

Other areas of Government have had to follow this approach for decades, the need to address disparities, workforce and other challenges make this approach even more important to the development of sustainable and equitable healthcare in England.

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Emma Cooper
Emma Cooper
Emma is Content Manager of Pf Media.


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