Healthy Skepticism Library item: 18454
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Publication type: Electronic Source
jean-francois.delas
What might the NHS white paper mean for Pharma commercial models?
InPharm 2010 July 16
http://www.inpharm.com/content/what-might-nhs-white-paper-mean-pharma-commercial-models
Full text:
Earlier this year we published a white paper on the new commercial realities and their implications for Life Sciences companies. Recognising the significant business shifts both in Primary and Secondary care, it recommended radical new ways of working and governance, especially in countries evolving faster towards a payers-driven environment such as the UK. Many companies are currently implementing and experimenting with these new models, in all cases a major change for their organisations.
The recent announcement of the NHS White paper, Equity and Excellence: liberating the NHS, is about to introduce yet another ‘revolution’ in the way care is organised and delivered. If the intent and underlying principles are laudable, it presents major challenges both to Healthcare Professionals and to the Life Sciences industry with a high risk that new commercial models being developed are not fit for purpose anymore. This short paper attempts to summarise the changes and their possible implications for Pharmaceutical companies … a need for a new new commercial model.Current focus of the pharma industry for its commercial model in the UK
Pharmaceutical companies in the UK have been taking a lead in the introduction of new commercial models centred on Account Management. This evolution has been triggered by the changing stakeholders’ landscape, moving away from doctors as main customers to a more complex picture with increasing influences of payers and patients.
This is a reality both in Primary and Secondary care even if specific challenges are different.
In primary care the focus will be around providing a service beyond the product itself and along the patient care continuum, from prevention to disease management and compliance. The basis for ‘contracting’ is likely to involve working in partnership with payers and decision-makers to provide cost-effective services.
In secondary care, the ultimate requirement will be to demonstrate ‘value’; this is even truer with the upcoming implementation of Value Based pricing in replacement of the PPRS scheme. This will heavily influence market access, including the scope of the initial indication. Commercial focus will then be on collaborative work with payers, HTAs and regulators to prove benefits.
The more visible aspect to the implementation of this new model is the introduction of new capabilities, roles and the restructuring of existing sales forces, in most cases with significant reduction in headcount.
The typical commercial organisation will be organised around Business Units (TA/Disease based) with different layers to manage interactions with the different stakeholders:
National management in charge of dealings with NHS and related bodies
Regional organisation in charge of relationships with SHAs (Strategic Health Authorities)
‘Field Force’ in charge of calling on PCTs and practices
With this increasing focus on payers and decision makers and less on doctors and practices, numbers of representatives have dwindled, especially in primary care. Instead of counting in hundredth, it is now in tenth.
Key changes to be introduced following the new NHS white paper
The new NHS white paper is being heralded as the biggest shake-up of the NHS since its creation in 1948.
It will radically change the way care is funded and prioritised, how it is commissioned and delivered.
Care funding
Following earlier discussion on the replacement of the PPRS scheme by the introduction of Value-Base pricing by 2014, the new white paper is reinforcing the commitment to this move with a vision for an NHS to be held accountable for clinically credible and evidence-based outcomes measures. In addition to its current role as HTA, NICE will also be responsible for the implementation of Quality standards with a direct impact on care payments (150 will be produced over the next 5 years).
An independent NHS commissioning board will be set-up to review progress in achieving health outcomes and on that basis decide on the allocation of NHS resources.
A new NHS Outcomes framework will set-out a new set of targets focusing on clinically relevant benefits to include treatment safety and effectiveness and patient experience. It is expected to be in place later this year for a first implementation from April 2011.
Care commissioning
One of the key departures from the current system, GPs will be at the core of commissioning, taking the responsibility back from the PCTs. It will be a phased transition with overtime SHAs and PCTs being scrapped.
Commissioning will be done by GP practices consortia. Compared to currently 10 SHAs and 152 PCTs, it is estimated 300-500 such groupings.
If GP practices had previous experiences in commissioning services through Practice-based-Commissioning (PbC), sole responsibility is a key and major change for them.
The roll-out of consortia will be progressive with shadow entities (to PCTs) set-up in 2011/12 before handing over full responsibilities from April 2013.
Local professionals and providers will be given more autonomy than before in return for demonstrated results they achieve, guided by a commissioning outcomes framework (derived from the NHS’).
On this basis, consortia and providers will have to agree on local priorities. NICE quality standards will be reflected in commissioning contracts and financial incentives. The NHS commission board will calculate practice-level budgets and allocate these directly to consortia.
Following initial progress with Payment by Results (PbR), the NHS commissioning board will refine and accelerate the development of best-practice tariffs (starting in 2011/12). In parallel, a more comprehensive payment for performance scheme is being designed, conditional on achieving quality goals.
The longer-term vision and ambition is the move to personal budget, putting patient even more in control of their own health. Pilots will be encouraged in discrete areas but a more general roll-out it is not expected in the near future.
Care delivery
More than ever before, providers will be made accountable for their care with payments directly reflecting their performance with Patient-Reported Outcomes (PROMs) being a key measure and focus.
In a similar way, within the next 3 years, all NHS Trusts will become or be part of a foundation trust, with associated freedom and autonomy, under the joint supervision of Monitor (to become an economic regulator) and the Care Quality Commission (CQON).
The DoH will extend the scope and value of the Commissioning for Quality and Innovation (CQUIN) payment framework to support local quality improvement goals.
A similar model will be introduced in primary care with the establishment of a single contractual and funding model.
Patients will also be given increasing choice in deciding on their care, including treatments and selection of providers. That will be supported by increasing amounts of information on safety, effectiveness and experience and enabled by greater control on their health records.
Implications for Pharmaceutical commercial models
From the above review, we foresee two main changes for pharmaceutical commercial organisations:
Nature of the conversation: an acceleration towards value based discussion
We believe that many signals are pointing to an increased focus on the demonstration of ‘Value’ as the common denominator for discussions with the various stakeholders, in most cases economically motivated:
The Value-Based pricing scheme will lay-out the foundations looking at a broader definition of value across the whole patient care continuum including post-care and societal costs.
The new NHS commissioning board is independent of political influence with various financial incentives to make the whole system more productive and effective
GPs consortia will have the freedom to commission with local contracts, funding and incentives designed to reward achievements against targets.
There are opportunities for a higher degree of involvement of the private sector to support consortia and delivery of care, reinforcing the focus on financially sound provision of services
Structure of the conversation: devolution of decision-making to the front-line
Compared to the current regional focus for the implementation of national guidelines via SHAs and PCTs, the decision line will now be with GPs, at the point of interactions with customers.
As SHAs and PCTs are being ‘dismantled’, consortia will take over their previous responsibilities in planning and commissioning in addition to their traditional role of carers for patients.
This is in some way a return to the ‘old model’ with GPs enjoying more freedom of prescribing decisions.
As PCTs before, consortia will be involved in activities such as prioritisation of care, services (re)design and recommendation/evaluation of providers and outcomes.
Implications for the commercial models
These two key changes will have implications on the commercial operations for Pharmaceutical companies. Some will be minor and a natural continuation or acceleration of current initiatives; some might be more fundamental and structural.
Capabilities:
In our white paper on the new commercial realities, we had laid out a list of future commercial capabilities to either further develop or introduce, including lobbying, contracting, Account Management, HEOR, Epidemiology.
The good news is that they are increasingly relevant to sustain the new nature of the conversation as described above. As such, their implementation should become an even greater priority.
However, their specific description and content should be reviewed to support the new specific set of stakeholders’ requirements to be introduced via the NHS white paper.
The mapping of capabilities to commercial roles in the organisation is also likely to change as the customers’ landscape is evolving. For example, the Field Force is likely to need more than before training on HEOR as it is likely to interact with consortia.
Structure and size:
This is possibly the more critical implication.
As described in the introduction, the typical set-up of commercial operations in the UK is organised around national interaction with NHS and related level bodies, regional liaison with SHAs and Field based engagement with PCTs and practices.
With the phasing out of SHAs and PCTs (respectively 10 and 152) and the devolution of planning and commissioning power to consortia of GP practices (estimated to be between 300 and 500), there will need to review both the structure and the size to current regional and field operations.
Current ‘regional directors’ in charge of the relationship with SHAs will see their roles slightly modified as they need to transition to interacting with consortia.
The biggest change might be for the current Field Operations including ‘Health Managers’ for PCTs and Representative for GPs, especially for the former group as they need to have achieve good coverage of all consortia as independent and autonomous commissioning entities.
This is likely to imply an increase in numbers, primarily of ‘health managers’. And this could prove a challenge as their skill set is different from representatives’ and that they are more difficult to recruit.
The way forward
Implementation of changes to the NHS will span over the next few years but importantly will start later this year in view for some of them to be operational for the next fiscal year, from April 2011. In this context, companies should start thinking now how/if to adapt.
We would recommend a three-stage process:
Landscape analysis – detailed review of the future NHS
Companies should start reviewing in detail the future stakeholders’ landscape, looking specifically at the way care will be funded, commissioned and delivered, who will be the decision-makers and influencers along this process, and what will be the new set of requirements.
The introduction of this change should be plotted over time signposting specific ‘triggers’ and milestones and their implications. This will be useful to help understanding how to phase companies’ change plan.
Commercial capabilities implications – competencies and roles
The landscape analysis and understanding of requirements will then inform an audit of commercial capabilities needed, which ones are existing and need reinforcing/development, which ones need to be introduced. Capabilities will be specific to the interaction with specific stakeholders.
In a second step, these capabilities should be mapped onto roles in order to understand who in the organisation will ‘perform’ them. It is possible at this stage that opportunities for role change (job profile change or new role) are uncovered.
Commercial organisation adaptation – size and structureOnce clarity is obtained on capabilities and roles, the last phase will focus on adapting the commercial organisation chart, including structure and size.
Sizing is likely to be dictated by workload considerations, based on the number of customers, their relative importance and the degree of planned activities.
The NHS white paper will bring disruption to current commercial models, still in their infancy. Good and early analysis and planning around the level of additional changes and its implications on the organisation is critical to pro-active and effective management of this new major transition.
About the Authors
Jean-Francois Delas is a Vice President at Kinapse Ltd. and leads the Marketing & Sales Consulting Practice
E: jean-francois.delas@kinapse.com
Stephen Mayhew is a Manager in the Consulting Practice at Kinapse Ltd. He consults to the life sciences industry in valuation, deal-making and asset and portfolio management.
E: stephen.mayhew@kinapse.com
About Kinapse
Kinapse provides consulting and outsourcing services to the life sciences industries, globally.
Our mission statement is: ‘Collaborating with our clients to innovate for exceptional results’. Kinapse clients include many of the world’s leading pharmaceutical, biotechnology, medical device and specialty pharmaceutical companies, government organisations and life sciences service providers.
Our key advantages are:
Focus on the life sciences industries
Deep industry experience and technical acumen
Proven blended onshore-offshore delivery model
Track-record of innovative solutions and results
For more information please visit www.kinapse.com
