Procurement in EnglandHow will the national medicines procurement

service be improved?How will contracting arrangements change

in the future?

Peter SharottChairman, Pharmaceutical Market Support Group

peter.sharott@btinternet.com

Subjects Discussed

• Drug expenditure trends

• National strategic approach to medicines procurement

• Current key drivers for medicines procurement

• National Pharmaceutical Supply Group (NPSG)

• National standards for collaborative medicines procurement and management

• Product categorisation

• SHA Pharmacy and Medicines Management Groups

UK Annual Drug Expenditure (£m)

£0

£2,000

£4,000

£6,000

£8,000

£10,000

£12,000

Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Proj.

Jul-11 Proj.

Jul-12 Proj.

Jul-13 Proj.

Jul-14 Proj.

Primary Care Secondary Care

Data Source: IMS

Drug Expenditure Estimates 2009/10• UK - primary & secondary care

= £14.1 billion

• England – primary care– Branded £6.1 billion (80%)– Generics £1.6 billion (20%)

• England – secondary/tertiary care– Branded £3.0 billion (84%)

(includes Homecare at £750m to £1 billion?)

– Generics £590m (16%)

Secondary Care Drug Expenditure is rising by about 14.5% p.a.

High-Cost PbR Excluded Drugs account for 50-60% of expenditure

National Strategic Approach to Collaborative Medicines Procurement & Management

• Supply Chain Excellence Programme (SCEP) (2003)• A strategic framework to source pharmaceuticals for the NHS in

England (October 2005)• Pharmaceutical Products and Services List (November 2008)• NHS Commercial Medicines Unit (January 2010)• Pharmaceutical Market Support Group sub-groups (March 2010)• National Pharmaceutical Supply Group (NPSG) restructuring (June

2010)• Commercial Support Units (CSUs) National Pharmacy Workstream

Report (June 2010)• A strategy for collaborative medicines procurement and

management for the NHS in England (August 2010)• National pharmacy lead for branded medicines (August 2010)

(subject to business case agreement)

Collaborative Medicines Procurement in England: Organisational Chart from 2010

NHS CMU Pharmacy Non-Executive Board

National Pharmaceutical

Supply Group

SHA Pharmacy Procurement GroupsBranded Medicines

TherapeuticRationalisation

QIPP

6 x Regional SCEP Groups

Generic Medicines

NHS Pharmacists(Procurement,

QA, Production, Medicines Informationand Clinical)

NHS CommercialMedicines

Unit

NHS Trusts & PCT

Pharmacy Networks

Clinicians

ClinicalNetworks

PCTCommissioners

SpecialisedCommissioners

National Committees/Groups Specialist Support Procurement Groups Trusts/PCTs

Commercial Support Units

Pharmaceutical Market Support

Group

National Homecare Medicines CommitteePharmacy Business Technology Group

Generic Medicines Sub-GroupBranded Medicines Sub-Group

Transitional Products Sub-GroupSpecialist Medicines Sub-Group

Current Key Drivers for Medicines Procurement

• NHS financial position and efficiency targets• National prescribing and medicines management initiati • Primary focus on secondary care generic and branded

medicines• Market management

– effective and robust supply chain management– efficient and transparent tendering and contracting processes– competitive markets with two or more suppliers– homecare: contracting, corporate and clinical governance

• Collaboration with a wide range of stakeholders• Commercial Support Units

– pharmaceutical leadership– governance and accountability for pharmacy activities

National Pharmaceutical Supply Group (NPSG) (1)

• Chairman: – Andrew Alldred, Clinical Director for Clinical Support and Cancer Services

and Director of Pharmacy, Harrogate and District NHS Foundation Trust • Membership:

– PMSG Chairman and two other PMSG members– QC Pharmacist representing National Pharmaceutical QC Group– PCT Pharmaceutical Adviser– PCT Commissioning Pharmacist– Northern Ireland, Scotland & Wales representatives– Department of Health representative– NHS CMU General Manager, Principal Pharmacist & Lead Category Managers (2)– SHA Commercial Support Unit/CPH representative– NHS Trust Chief Pharmacists representing 10 SHA pharmacy networks

•

National Pharmaceutical Supply Group (NPSG) (2)

• Terms of Reference:– To provide advice to the Pharmacy Non-Executive Board on the cost effective

purchasing, supply and distribution of medicines and other pharmaceutical products to the NHS in England (secondary care) in order to ensure continuity of supply to patients 

– To support national initiatives such as ‘Pharmacy in England White Paper’‘, Standards for Better Health’, ‘Better Health, Better Care’ and ‘Purchasing for Safety’, ‘Quality, Innovation, Productivity and Prevention (QIPP)’, ‘Commissioning for Quality and Innovation (CQUIN)’.

– To work collaboratively with the PMSG and support this group with strategic advice.– To act as a focal point for the DH and NHS for the strategic procurement and supply of

medicines of a national nature and provide pharmaceutical advice accordingly– To act as a strategic link between Pharmacists and key stakeholders in the supply chain.– To maintain a list of PMSG operational and advisory sub-groups, their terms of reference

and reporting frequencies. To consider, evaluate and advise on the strategic impact of the issues arising from these groups.

– To maintain links with primary care commissioners and providers.– To agree the strategy that will inform the annual work plan, objectives and defined

outcomes for the PMSG

Draft National Standards for Collaborative Medicines Procurement and Management (1)

• Contracts for branded medicines will normally be at SHA Pharmacy Procurement Group level, but, where appropriate, may be at sector or network level.

• Contracting at individual NHS Trust level should only occur following agreement with the SHA Pharmacy Procurement Group.

• Contracting decisions should take account of the potential impact on primary care prescribing patterns and costs and may actually be driven by the emerging commissioning agenda.

• Annual and rolling work programmes should be developed in order to drive identification and implementation opportunities for clinically-driven initiatives and demand management projects, through close engagement with the local pharmacy and clinical networks, clinicians, public health specialists and commissioners.

Draft National Standards for Collaborative Medicines Procurement & Management (2)

• Local guidelines for managing the financial impact of contracts for medicines that are covered by the PbR high-cost drugs exclusion list should be developed through consultation with the NHS Trust and PCT chief pharmacist networks and commissioners

• Tendering and contracting for branded medicines should be undertaken by the NHS Commercial Medicines Unit; in those exceptional circumstances where it is necessary to undertake this activity locally at SHA, sector or individual NHS Trust level, there should be full compliance with EU procurement legislation.

• Contracts involving homecare supply should comply with the standards and guidance developed by the National Homecare Medicines Committee.

Draft National Standards for Collaborative Medicines Procurement & Management (3)

• NHS Trusts and contractors should fully comply with contract Terms and Conditions.

• Branded medicines purchased at contract prices should not be sold-on to third party healthcare service providers without the written agreement of the relevant pharmaceutical manufacturer.

• A formal relationship should be developed between the local Commercial Support Unit and the SHA Pharmacy Procurement Group covering the organisational structure, accountability, governance and funding arrangements

 

Product Categorisation Procurement-driven

National – Generic medicines• oral products• hospital-only oral products• Injectables• Transitional, branded to generic medicines• NHS CMU tendering and contracting

SHA/Regional• Branded medicines• Branded biosimilars• Mostly NHS CMU tendering and contracting• Some local tendering and contracting

Product Categorisation Clinically-driven

SHA Pharmacy & Medicines Management Group• Therapeutic rationalisation • Underpinned by procurement and supply chain

management• Assessment of influence and impact on primary care

prescribing• Alignment with QIPP, NICE and other national initiatives• Clinician and clinical network engagement • Commissioner involvement• SHA/sector clinical policy and protocol development

identifying first, second and third choice• Framework agreements – commitment volumes and

prices• Value-added services• Homecare services and community-based services• Pharmaceutical industry engagement and partnerships

Proposed Generic SHA-level Structure

NHS Trust & PCT Pharmacy NetworksClinical Networks

CSU Board

SHA Pharmacy & Medicines Management Group

Trust Procurement

Leads

SPM Representation

PCT Representation

Clinical Specialists

MI/QA Specialists

Strategic Pharmacy Lead(SPM or Procurement Specialist?)

Operational Pharmacy Lead(SHA Procurement Specialist)

SHA Level Stakeholder Engagement