- Advertisement -
- Advertisement -
- Advertisement -

Find a job

Subscribe for free

All things Pharma

Full steam ahead

 In the fourth part of the Matrix Revolutions instalment, Omar Ali highlights the major changes in the way commissioning is set to change and how QIPP and NICE Quality Standards will be used to evaluate outcomes. It could be a bumpy ride.

On June 9th this year I have co-ordinated a meeting. A forum to bring together a whole new way of commissioning formulary pathways for the medium-term investments. Amongst the invited is the chief executive and director of finance of our hospital, three GP consortia chair, commissioning leads and a handful of rheumatology consultants, GPwSI, business managers within the fracture liaison and DEXA scanning provider units. Oh, and the pharmaceutical company Amgen. They’ve come along for the ride…

In short, NICE has recommended Prolia but neither of the PCTs are very keen to fund it. Add to this varying traffic light coverage – red in one PCT and blue in the other, yes, you did read correctly, blue – and we have postcode prescribing within the shared care pathway already. So why the funding issue? It all comes down to cost. But not costs as we know it. NICE has already stated that Prolia offers general NHS cost benefit and has deftly cleared the NICE hurdle in this guidance. These funding issues are related to a) a vacate the premises mindset, and b) internal wheels of health economics brought about by the transactional basis of the White Paper.

You may ask what I trying to achieve from this meeting? I’m trying to secure a commissioned pathway reflecting NICE guidance by dealing with the new tenants of the NHS. I’ve spoken to both PCTs and stated that I am looking to fund this drug directly between the hospital and the GP consortiums that are at a pathfinder status – who have hard cash rather than Monopoly money – as they are keen to move forward. If they want to fund this, we set the template, if they don’t, that’s the remit for the consortia. Don’t forget that within both PCTs, whilst some of the consortia are pathfinder and can ‘get their chequebooks out’, many are not. Life has got very, very interesting…

New health economic models

It is no longer good enough to say ‘Prolia is cost-beneficial to the wider NHS’. In fact, the deeper into the White Paper we go, the more it’s about internal wheels of health economics for the commissioning basis. This is purely due to the transactional basis that has changed healthcare from ‘budgets’ to ‘cash’. Let me explain. Within two-years all GPs must be within a GP consortia and all hospitals must become Foundation Trusts? Why? It all comes down to cash. In fact, it’s all about cash. No longer will we have budgets. We will all need bank accounts and we will all deal in cash. That’s what this White Paper is all about. We will all be working for companies you will slowly see disappearing from the healthcare provider and commissioner agencies you deal with – whether as a patient or as a representative. This is what the ‘privatisation’ story is about. We – doctors, nurses and pharmacists, etc. – will all be working for companies that will now deal with cash. Forget budgets. Think cash.

In the old model, when you ran out of budget you were simply ‘over budget’ – both the PCTs we neighbour are £50+ million and £70+ million over budget/deficit. Well, when we move to cash and chequebooks we are now talking hard cash. And, unlike budgets, when a company runs out of cash, it isn’t over budget, it has simply run out of money. If a company has a cash flow problems and goes bankrupt we then talk about liquidity, but that’s not going to happen. So, the first change you will see with GP consortia is that they need to keep cash flow and they can’t run out of money. That’s the same for hospitals/Foundation Trusts. They too will be companies now with their own bank accounts and will need to generate income. This is what the new transactional nature of GP commissioning has done – we all work for companies, and hence have become ‘commercial’ overnight. Think about that in terms of pharma/NHS relations vs pharma/commercial company relations. I can promise you there’s a lot of ‘compliance’ to be ironed out here.

This is something that pharma needs to understand. The old model was pharma ‘selling’ to the cuddly, patient caring NHS. It’s time to move on from this. The White Paper has market forces provider competition and commissioning based on a transactional ‘cash’ based managed care system. This means the new world looks like pharma coming to visit an income generating, commercial NHS.

We will all work for companies – just look at the names of some of the new GP consortia, do you see the words NHS anywhere? So when two commercial organisations get together what does compliance look like? It’s a disaster. Trust me, I know. Three PCT advisers and I have formed a medicines management provider agency and pharma is struggling to see how they can support us – they can ‘sponsor’ a healthcare professional, but seem not able to sponsor a commercial organisation. Furthermore, the corporate healthcare agencies are in town, unregulated and are cleaning up. Tell me, do you think they are worried about pens and pads? The ABPI is NOT fit for purpose in the new world. Simon Jose, ABPI President, if you’re out there and listening…it’s the Matrix Revolution calling.

Provider and commissioner models

The block with Prolia is the internal wheels of health economics. This innovative product is an injection you give only twice a year for osteoporosis. Believe it or not, that’s causing a problem with hospital income generation – paying for a month’s supply works, paying for the whole year creates an imbalance with the tariff. The current system with ibandronic acid IV currently earns the hospital between £30k-£40k pa. If I was to swap these patients to Prolia, it would shift to losing the hospital approximately £8k pa. That’s a swing of nearly £50k, and I can assure you my chief executive will not see this as a viable solution. This process is called unbundling the tariff, and is the only way to find true efficiency streams within the pathway. Here we have an issue.

The PCT doesn’t want to fund it and the hospital loses income from the tariff – the drug costs £166 for one injection, but outpatient tariff earns the hospital just £80! The problem is I go into deficit every time I treat a patient. How long do you give a hospital in the current climate when this is the state of affairs? The tariff and commissioning has been set up with market forces setting efficiency drivers. So now we are the mercy of two new health economic systems that are now far more important that the ‘wider health economics’. It’s the new financial framework for prescribing pathways and commissioning, and it’s no longer about saving money. It’s about income generation – some say this is what private medicine is all about, welcome to the White Paper.

Introducing competition and NICE Quality Standards

Around four-years ago my father had a heart bypass. It was a stressful time but all went well and thankfully he is now safe and sound. We have nothing but praise for St. George’s Hospital and their staff for the treatment he received. He was in and out within ten days. Not long after that, my Dad’s GP will have had a bill for approximately £10k. This bill is the tariff for a non-elective bypass HRG code and this price is fixed everywhere – give or take Market Forces Factors, otherwise known as MFF in commissioning terms. We were offered private providers and the tariff was the same. The idea is you may choose to ‘shop around’ on quality and, as the cost is fixed across the country, you can now concentrate on quality.

Using Quality Standards

Lowering/removing the collar tariff allows providers to begin to compete on price. Now ‘any willing provider’ can choose to entice the consortia with lower prices. In fact, every single hospital intervention, be it inpatient or outpatient, is now up for grabs – with providers everywhere looking to streamline costs/overheads/drugs etc. to provide a lower price to entice GP commissioners to contract with them for hips/knees/cataracts/etc.

An obvious risk comes to mind. A provider offers bypass operations in their ramshackle garage for £5k which could result in an awful outcome. But currently the tariff pays for activity and not the outcome – my Dad’s GP is billed £10k for doing his bypass, regardless of how it went! Well, that has now changed. To get paid the full tariff for activity you will need to meet NICE Quality Standards – there are around 35 now, with 150 planned. So for instance, in the case of my father’s bypass, if the tariff is still £10k, the GP consortia may only need to pay £6k for the activity. But remember the White Paper is about commissioning outcomes not activity! So how does the hospital/provider receive the remaining £3k it is owed? Well, this is where the NICE Quality Standards come in. There will be some simple audit measures that need meeting:

· was there a CABG site infection within 60-days of procedure (yes/no) = £1k

· was there primary sit stent/graft failure, occlusion or re-admission with related HRG/read code (yes/no) = £1k

· did the patient suffer a venous thromboembolism (VTE) event within 60-days of procedure (stroke/PE/clinicalDVT) (yes/no) = £1k

If a patient suffers all three of these adverse outcomes the consortia will not pay the remaining £3k! Most providers will not survive on this penalty. So we have the tipping point: offer procedures and services ‘at competitive tariffs’ to introduce competition, but keep reducing costs at your peril to failure to achieve the Quality Standards.

The QALY returns

I think this is the first time this has been done in any healthcare nation. A functional, QALY assessment of every provider over 12 to18-months and developed into a validated league table for providers and commissioners to assess functionality of the procedures and compare/contrast the patient reported outcomes – these have ever increasing importance right now, known as PROMs.

PROMs relate to the premise that doctors, nurses and pharmacists all think they are providing a great service, smile at all their patients and discharge them back to primary care effectively. This QALY/EQ-5D assessment – this is HTA jargon, don’t worry too much other than its validated and can be put into a matrix that compares various institutions and procedures – is a way of asking patients how they have found the intervention. It’s not a measure of ‘how well were you looked after?’, ‘was the food nice?’, or ‘did the consultant listen to your needs?’ This is a functional assessment around ‘has the operation worked for you?’, ‘are you still in pain?’, and ‘do you wish you never had it done?’ type question and answer which are validated. Hence why we in the NHS may say we are following guidelines, procedures, meeting cost/budgets but the PROMS/patients are saying ‘my hip doesn’t work!’ That’s not going to be good for any provider nor will consortia be impressed – remember they are paying for these outcomes! If your PROMS are poor with hips, it’s entirely plausible that a consortium may flex its muscles and look elsewhere to commission this procedure. Either way, it leaves a provider in a poor negotiating position when it comes to tariffs and income generation when the league tables of ‘what the patient has to say’ does not look good.

Financial segmentation vs biological basis

In a previous meeting with similar attendees, we set about the notion on commissioning on outcomes within respiratory disease. The biological basis of asthma and COPD are well established, but we are now talking about a new way of working on commissioning on outcomes. We found in respiratory patient registers within one of the consortia that although the ‘A&E admissions’ were not excessive within the list was a top-slice of 15% of very frequent flyers. We then carried out a ‘financial segmentation’ on the frequent flyers and found a blend of patients who are significant users of A&E and admissions to hospital for a variety of reasons that need untangling and this takes time. We have now ‘tagged’ these patients with an ICP in asthma and COPD. When they are admitted we recognise them as frequent flyers, and they now follow a different pathway and a new set of interventions. This is a new way. It’s about segmenting patients financially.

In areas of London managed care plans have already started evaluating tendering providers to ‘reduce hospitalisations by 20%’ as a commissioned model. This means we are not commissioning on FEV. We are not commissioning on breathlessness. We are not commissioning on how much sputum is in a goblet cell. It’s financial segmentation based on health disutility. This is where pharma gets interesting. Dig out your hospitalisation and reduction in hospitalisation data. Read the new financial penalties for hospitals who have readmissions with the same patient with same/similar read codes within 30-days of discharge – they will not get paid! This is already having a dramatic impact and was the driver for this respiratory ICP generated between provider and consortiums.

Where does QIPP fit into this?

You must understand QIPP to prevent abuse, misuse and plain disregard for what is a common sense approach to a flat-line budget. The template of QIPP is as follows:

Quality – we know this costs money, but there is no extra money

Innovation – lots is expected from pharma, but again costs money which isn’t there



All these things will cost money. But when new drugs come out from pharma’s pipeline, obviously they say ‘this nasal spray is an innovative pain reliever’, ‘this new antiplatelet prevents death by 1%’, or ‘we improve the quality of our COPD patients with this new inhaler’.

But you have forgotten about productivity. The letters of QIPP are not optional. It’s not a pick and mix. You don’t choose a few and put it into an advanced notification dossier. All the letters are mandatory. In fact, productivity pays for the other three aspects which all require investment.

What does that mean?

If a new intervention or product provides quality, is innovative and prevents illness, death or morbidity, there is a final aspect that needs squaring. Is there a productivity change by introducing this new medicine? If the answer is yes, what is the financial value of this change? Is the financial value at least equal to the investment required?

If the productivity provided by the new drug can pay for the investment required then we introduce the intervention. We fund it. We pay for it. Because QIPP tells us it will pay for itself.

You can sell a drug that ticks off the first three letters of QIP but you may not have developed a QIPP framework looking at productivity. In which case the drug will not be funded. This is a return of investment paradigm. It’s more ‘save to invest’ than ‘invest to save’, but that’s all it is. Pharma needs to understand this.

‘Any willing provider’ and managed care

What happens when people all around you keep saying ‘diabetes patients are costing us too much?’ Before you just went ‘over budget’. Not now. Not in the cash based market. Now, we need to answer this statement with a question. “What do you want diabetes patients to cost you?” You take that value – let’s say £850 per newly diagnosed patient per year, you set a commissioned package of one year of care around it and you fill it with what is required to deliver critical aspects of care. However, when the needle hits £850, nothing else can go in. You go back and start playing around with times/clinics/referrals and medicines. You soon realise that within the set £850 there is flexibility. Either way, patients are brought into aspects of their managed care and will make choices about their care – BUT it won’t go over the red-needle point. This will be the first signs of ‘patient choice vs patient demand’ where making choices will have a financial canvass on which we are all trying to dab a little colour of paint…welcome to the Matrix Revolutions.

Omar Ali is the Formulary Development Pharmacist for Surrey & Sussex Healthcare NHS Trust.

- Advertisement -


- Advertisement -



Sign up to receive our digital newsletter, for all the essential headlines, Jobs of the Week and thought-provoking features.

Claim my free subscription