NHS England (NHSE) has published a draft Commercial Framework (‘Framework’) that formally outlines the principles on which NHS commercial medicine negotiations are to be based going forward. It fulfils a commitment reached between DHSC and the ABPI in the Voluntary Scheme for Pricing and Access to Branded Medicines (VPAS). The formal engagement exercises, including a consultation survey, run until 10th January 2020. The completed version of the Framework will be published in early 2020.
The overall rhetoric of the Framework is positive and indicates that NHSE is willing, in principle, to work more collaboratively and flexibly with industry to secure prompt patient access and fair reimbursement for medicines. It speaks of driving earlier engagement with industry about questions of value, affordability and transactability.
There are few new proposals in the Framework, but crucially it does attempt to clarify the commercial flexibilities that are available to companies. However, even if a positive step, the Framework still fails to provide sufficient clarity on a number of key areas.
The Framework confirms that NICE will appraise all new active substances in their first indication from April 2020, except where there is a ‘clear rationale not to do so’. This ‘clear rationale’ is not defined and leaves industry guessing.
Some manufacturers might welcome the move by NICE, as a positive appraisal ensures that a treatment is routinely available as an option on the NHS. However, NICE appraisal processes are time-consuming, costly and labour-intensive. Manufacturers of new active substances that will be used in primary care could particularly find the new requirement onerous. Furthermore, treatments that struggle to collect a sufficient volume or quality of clinical evidence might find NICE processes less favourable.
It is unclear whether NICE can generate sufficient capacity to meet its new obligation. No detail is provided on how NICE will expand its operations.
Industry has recently been negatively impacted by mandatory fees for NICE appraisals. This goes to fund appraisals on a cost recovery basis, therefore, finance is not the limiting factor to increasing NICE’s capacity. Instead, the fixed number of Technology Appraisal Committees (TACs) is likely to limit its capacity – particularly as recruiting experts and clinicians to the roles has long been a challenge. Therefore, it is unclear whether NICE will be able to fulfil its expanded remit. This is doubly concerning as there is already a backlog of products going through TACs – the knock-on effects of which could delay patient access to new treatments.
At present, Horizon Scanning identifies potential new treatments that would likely have a significant impact upon clinical practice, service design and finance. Treatments that are likely to have the greatest impact are prioritised for NICE appraisal, whilst the reimbursements decisions for lower impact treatments can be made instead by locality-based medicines advisory committees (e.g. in CCGs).
Within the Framework, there is a lack of clarity on how these prioritisation criteria align with the ambition for NICE to appraise all new active substances. It is unclear whether the current topic selection process will be amended to no longer prioritise medicines for appraisal based upon important considerations such as therapeutic benefit.
The Framework reveals that simple Patient Access Schemes (PAS) are still the preferred and default position of NHSE. Therefore, the ongoing preference for a simple PAS confirms that there is no shift in mindset from NHSE for commercial agreements.
Managed Access Arrangements (MAAs) are commercially confidential and enable long-term data to be gathered on medicines that have uncertainty surrounding their clinical and/or cost-effectiveness. Currently, MAAs are only available within the context of the Highly Specialised Technology (HST) programme, Cancer Drugs Fund and for products that exceed NICE’s Budget Impact Test. Therefore, most technologies are ineligible for the commercially confidential, and complex, MAAs. For these technologies, manufacturers wanting to improve their cost-effectiveness calculations, currently only have a choice between using a simple PAS that is confidential, or a complex PAS, that is not. Many manufacturers are unwilling to use a complex PAS because they are not confidential and can negatively affect global pricing strategies.
Therefore, the announcement of new Confidential Commercial Agreements (CCA), which may include complex arrangements, is welcome. But at what price? NHSE will enter into a CCA where the company wants to propose an enhanced value offer and/or where there are unusual or unique circumstances that mean launching a product is considered particularly challenging or commercially unviable.
One significant caveat to this announcement is that an enhanced value proposition has to be ‘at or below the lower end of the standard NICE cost effectiveness threshold range’ (i.e. £20,000 per QALY). This is problematic since companies that are most likely to need a CCA are those that lack a compelling data package to drive a low QALY. Therefore, CCAs will place considerable downward pressure onto manufacturers to lower their commercial pricing.
Although the announcement of a CCA sounds like a boost to industry, the confidentiality will come at a price and is a further clear sign of NHSE driving a hard bargain.
A second consideration is the announcement of a CCA for ‘unusual or unique circumstances’. This
includes cases where uniform pricing between indications can lead to a reduction in total revenues. As figure 7 shows, there would be strict criteria imposed.
Non-uniform pricing would benefit industry, particularly in disease areas with molecules covering multiple indications, such as oncology. However, the terminology creates a lack of clarity. For example, the use of ‘clear differentiations between indications’, ‘loses significant revenue’ and ‘lost revenue in later years’ is not sufficiently specific. By not defining the exact parameters, NHSE has given themselves discretionary power to decide on which products they will offer a CCA.
Orphan medicines could particularly benefit from the new CCA. Industry has been increasingly critical of the HTA processes for orphan medicines that fail to meet the strict criteria of HSTs, but also struggle to fulfil the data quality and level of certainty requirements of a single technology appraisal (STA). This is often because of the challenges of collecting clinical data in a small patient population. A CCA, such as an outcomes-based dose cap or rebate, can enable technologies to be confidentially reimbursed by NHSE for conditions that have limited clinical data. This would be a very positive step in helping to provide faster patient access to treatments for rare diseases.
The raison d’être of the Framework was to provide clarity and transparency on the commercial arrangements available to industry. The Framework has some positive announcements and provides some additional clarity, particularly around the roles and responsibilities of industry, NHSE and NICE. However, overall there are still too many unanswered questions. It inadvertently perhaps, provides discretionary power to NHSE and not the commercial clarity that some within industry crave. Although, others will feel that this lack of clarity provides NHSE with the necessary commercial flexibility to come to reimbursement arrangements with companies for technologies that have been stuck within the system.
The consultation period offers a chance for industry to highlight its concerns and reservations. If the final Framework largely mirrors this draft proposal then industry might only know the true ramifications once the first batch of test cases go through the adapted processes.
By Sebastian Guterres