Within the last week formal discussions on the new Pharmaceutical Price Regulation Scheme (PPRS) have begun between the Department of Health and Social Care (DHSC) and Industry, via the ABPI. The existing PPRS, the agreement between government and the pharmaceutical industry regulating the price of branded medicines, ends on the final day of 2018. With the weather warming bringing with it the promise of summer the year-end draws closer, and urgency for progress to set out key timelines and terms of engagement for the negotiations increases.
With so many topics potentially in the melting pot for discussion, we look at what it might mean from a rare disease perspective.
The PPRS payment mechanism ensures that the growth in NHS spending on branded medicines does not exceed an agreed percentage by requiring PPRS members to pay back excess revenue over that allowed growth rate. However, in the case of rare diseases over half of Orphan Medicinal Products (OMP) licenced by the European Medicine Agency do not secure reimbursement from NHS England (NHSE) and so do not count in PPRS spend.
Simply not commissioning a whole range of products is one way of capping spend. But other methods are being used too, in particular those being negotiated by the new Commercial Medicines Unit at NHSE.
The first major results from this new approach were revealed last November by Simon Stevens, who announced ground-breaking pricing deals struck confidentially with Roche and Merck, enabling their respective treatments to be commissioned by NHSE for a discount. Stevens emphasised that their ‘outcomes-based’ nature, which relies on the NHS collecting data on the medicine, spreads the risk between pharma and NHSE.
Significantly, Stevens views these creative commercial agreements as the future of the healthcare system in the UK. Their merit was highlighted this week in a parliamentary question answered by DHSC Minister Steve Brine MP, who stated that Managed Access Agreements accrued savings in excess of £50 million per year for NHSE. Therefore, we can expect the formal PPRS negotiations to include discussions over whether pay-for-performance agreements can be integrated into the next deal.
However, industry strongly opposed NHSE’s recent introduction of the £20 million budget impact threshold triggering obligatory negotiations between the provider and NHSE, so pay-for-performance agreements are likely to receive similar push-back from Industry. Crucially for pharma, they are concerned that recent developments are stifling financial incentives to invest in research and innovation, which is counter to one of the aims of the PPRS, and essential for progress in rare disease.
Another area ripe for discussion is over the issue of how the NHS budget can better accommodate the commissioning of new and expensive rare disease treatments without adversely impacting upon the allowed growth rate in branded medicines spend. Could an additional tier for rare disease be discussed, or can the calculations assign less weight to spend on OMPs?
In the last informal meeting between the DHSC and ABPI, the ABPI raised concerns over the Accelerated Access Review (AAR) – a document outlining recommendations for speeding up the uptake of innovative treatments by NHSE. The ABPI suggested the AAR may limit the focus on rare disease uptake since its scope is narrow; only a maximum of 5 technologies a year are expected to be routed along it. This is an understandable concern; the AAR is only concerned with the most transformative technologies, which leaves behind more standard technologies that could still have high efficacy. Therefore, in the negotiations, pharma is likely to leverage their concerns over the direction and implementation of the Life Sciences Industrial Strategy to highlight a lack of concerted efforts to fairly commission all effective rare disease treatments.
Rather than focusing narrowly on patient access rights to treatment, pharma is increasingly making robust arguments surrounding the wider societal benefits of treating rare disease patients, some of which mitigate and can even exceed the high costs of the drugs, but are normally not taken into account. For example, in the 2016 Annual Report of the Chief Medical Officer,Professor Dame Sally Davies discussed how treating rare disease victims contributes significantly to economic growth, as it can enable sufferers to work and pay taxes as well as relieving the burden on carers. Furthermore, not treating rare disease patients often directly results in higher costs for NHS and social care. There are also ethical and patient need arguments, such as a right to life (a third of those affected with rare disease will die by the age of five, often without ever having a diagnosis), improving quality of life and providing a chance of normality. Therefore, arguably what is required, and might be reflected in the negotiations, is a paradigm shift in how we think about value – looking from a more long-term and holistic perspective.
In the end, what results from the negotiations will largely depend upon the respective strengths and demands of the negotiating teams. Steve Oldfield (ex-Sanofi and Teva GM), as the new Chief Commercial Officer at DHSC leading the team, is likely to bolster the Government’s position and provide valuable industry experience when negotiating with senior members of the largest companies. Industry too regards him as a positive appointment since his background gives him that deeper understanding of the industry perspective, and hopefully ensure that what is put in place from 2019 represents the best deal for patients, including those with rare diseases.