UK - How will the aftermath of the economic recession affect the UK pharmaceutical market?

Reductions in health spending and industry job cuts could have an impact on the market, but an ageing population and a health service under pressure will guarantee an increasing demand for pharmaceuticals.

The UK pharmaceutical market is set to experience moderate growth over the coming years, tempered slightly by the effects of the economic recession. Public spending cuts are inevitable, as public debt continues to increase, and health expenditure is set to suffer as a result. In 2010 the NHS budget is £102.3 billion, but this could fall by 2.5 to 3.0 per cent per annum from 2011/12. According to the Budget 2010, the NHS and the Department of Health will be required to make savings of £4.35 billion (US$6.81 billion) by 2012/13. This follows a period of huge growth in health spending under the Labour government, which has seen the NHS budget almost triple. Despite budget constraints, increased pressure on the NHS to cope with the health needs of an ageing population will lead to a rise in demand for pharmaceuticals, and a willingness to invest in new therapies to ensure effective treatments.

Many pharmaceutical companies based in the UK have announced job cuts and site closures in recent months, in an effort to reduce costs. AstraZeneca announced the closure of a number of its R&D sites in March 2010 leading to 3,500 job cuts worldwide, including a site in Charnwood and another in Cambridge. This follows a further 8,000 job cuts within the company worldwide, which were reported in January 2010. In February 2010, GlaxoSmithKline announced in 380 jobs cuts at its R&D site in Essex, following a shift in the company’s research focus. Furthermore, Eli Lilly, Pfizer, GlaxoSmithKline and AstraZeneca all announced job losses worldwide during 2009, affecting positions in the UK. These cuts are to be expected considering the economic climate, as well as upcoming challenges for these companies, including patent expiries, increased generic competition and slowing innovation.

Further reading - An in-depth review of the UK pharmaceutical market is available from Espicom: The Pharmaceutical Market: United Kingdom (published May 2010)

UK - How will the economic recession affect the UK pharmaceutical market?

Reductions in health spending and industry job cuts could have an impact on the market, but an ageing population and a health service under pressure will guarantee an increasing demand for pharmaceuticals.

The UK pharmaceutical market is set to experience moderate growth over the coming years, tempered slightly by the effects of the economic recession. Public spending cuts are likely, as public debt continues to increase, and health expenditure is set to suffer as a result. In 2010 the NHS budget is £102.3 billion, but this could fall by 2.5 to 3.0 per cent per annum from 2011/12. This follows a period of huge growth in health spending under the Labour government, which has seen the NHS budget almost triple. However, the NHS is well equipped to deal with the financial shortage, as it has seen marked improvements in recent years.

Many pharmaceutical companies have announced job cuts worldwide in recent months, in an effort to reduce costs, and many staff based in the UK are likely to be affected. These companies include Eli Lilly, GlaxoSmithKline, AstraZeneca and Pfizer. Job cuts are to be expected considering the economic climate, as well as upcoming challenges for these companies, including patent expiries, increased generic competition and slowing innovation.

A number of key pharmaceutical and biologic products are going off patent in the coming years, which will strengthen the generics market. Despite budget constraints, increased pressure on the NHS to cope with the health needs of an ageing population will lead to a rise in demand for pharmaceuticals, and a willingness to invest in new therapies to ensure effective treatments.

Further reading - An in-depth analysis of the UK pharmaceutical market is available from Espicom: The Pharmaceutical Market: United Kingdom (published January 2010)

UK - CQC Rates More NHS Trusts ‘Excellent’, but Concerns Remain

The Care Quality Commission (CQC) released a report on the performance of NHS trusts on 15th October 2009.

The report, carried out annually, revealed that the NHS is achieving higher standards overall, but that a significant number of trusts are failing to reach key targets.

More than half of Primary Care Trusts (PCTs) achieved scores of ‘excellent’ or ‘good’ for the first time, but fewer acute trusts were given a top rating, with more receiving a ‘fair’ judgement.

In total, 20 trusts were rated ‘weak’ and a further 27 have not reached a score above ‘fair’ on both quality and financial management indicators for the past four years. However, only one trust was judged to be ‘double-weak’ for its quality of care and financial management, compared to six in 2008. This was Barking, Havering and Redbridge Hospitals NHS Trust.

The CQC expressed concern that 63,000 operations were cancelled for non-clinical reasons, but a higher proportion of procedures are now being rearranged within 28 days of the original appointment.

A total of 48 acute trusts failed to meet at least one of the three standards for infection control according to the report, compared to 44 in 2008. However, progress has been made in rates of hospital-acquired infections, such as Clostridium difficile and MRSA, which have both fallen by around a third.

The report also found that 98% of the 19 million patients who visited A&E were seen within four hours of arrival, and more patients are receiving hospital treatment within 18 weeks of referral.

The CQC will soon gain new powers which will allow it to close down any under-achieving trusts. All trusts must be registered with the CQC from 1st April 2010, and must adhere to core standards or risk being refused a licence to operate. Currently, only half of trusts fully comply.

Further reading - An in-depth analysis of the UK pharmaceutical market, including more information on the NHS and the CQC, is available from Espicom: The Pharmaceutical Market: United Kingdom (published September 2009)

UK - NHS in Wales Scrap 22 Local Health Boards

On 1st October 2009, the 22 local health boards in Wales were scrapped, and integrated with NHS trusts to form seven new local health boards. These will control all hospital and community services, in addition to GP and dentist funding. The new boards will also be responsible for meeting hospital targets on waiting times.

The new local health boards are:

• Betsi Cadwallader;
• Hywel Dda;
• Abertawe Bro Morganwg University;
• Powys Teaching;
• Cwm Taf;
• Cardiff and Vale; and
• Aneurin Bevan.

The only NHS trusts to remain are the Welsh Ambulance Service and Velindre Hospital in Cardiff, which specialises in cancer treatment.

Further reading - An in-depth analysis of the UK pharmaceutical market, including some background information on the NHS, is available from Espicom: The Pharmaceutical Market: United Kingdom (published September 2009)

UK - Summary of NICE Appraisals in October 2009

NICE Rejects RoActemra for Rheumatoid Arthritis on the NHS

The National Institute for Health and Clinical Excellence (NICE) has issued preliminary guidance rejecting the use of RoActemra (tocilizumab) on the NHS to treat rheumatoid arthritis.

The drug, which is produced by Chugai Pharma and distributed by Roche, has demonstrated its potential benefits to patients in clinical trials. In studies including 4,000 patients, RoActemra, alone or in combination with a disease-modifying anti-rheumatic drug (DMARD), such as methotrexate, significantly reduced the symptoms of rheumatoid arthritis compared to DMARDs alone, regardless of previous therapies and the severity of the disease.

However, NICE has concluded that the drug is not cost-effective, costing £9,295 a year for a patient weighing around 70kg.

The National Rheumatoid Arthritis Society said the guidance means that sufferers’ only options now will be to retry therapies that have already failed or palliative care, which involves large doses of steroids which could cause side effects such as osteoporosis in the longer term.

NICE’s final guidance is due to be issued in February 2010.

NICE Approves Hycamtin for Small Cell Lung Cancer

NICE has approved Hycamtin (topotecan) for patients with small cell lung cancer on the NHS, under certain conditions.

The regulator’s Final Appraisal Determination recommends the use of the drug in patients suffering from a relapse of the disease, but only when treatment with the first-line therapy again is not appropriate, or the combination of cyclophosphamide, vincristine and doxorubicin chemotherapies is contraindicated.

In addition, the oral form of GlaxoSmithKline’s Hycamtin should be used, as the intravenous version is considered too expensive. The cost per cycle for the oral form of Hycamtin is £638, which is equal to an average cost per patient of £2,552, whereas the cost for the intravenous version is £1,495 and £5,980, respectively.

Lung cancer is one of the most common cancers in England, with over 33,000 new cases in England and Wales a year, of which between 10% and 20% are of the small cell type.

In September 2009, Hycamtin was approved by NICE to treat cervical cancer on the NHS (See NICE Approves NHS Use of Hycamtin for Cervical Cancer).

Further reading - A detailed review of the UK pharmaceutical market, including more information on NICE and its appraisal procedures, is available from Espicom: The Pharmaceutical Market: United Kingdom (published September 2009)

UK - Diabetes Now Affects 5% of the Population

Around one in twenty people in the UK has diabetes, with around 145,000 new cases diagnosed in the past year, according to figures published by Diabetes UK in October 2009.

The data was compiled from GP practices and reveals that 2.6 million people now suffer from the condition, and around 90% of these have diabetes type II, which is linked to obesity on many occasions.

Diabetes UK warned that the increasing number of cases is putting a strain on the NHS, as diabetes already costs the health service £1 million an hour to treat. Also, diabetes can lead to more serious conditions such as heart disease, stroke, kidney failure and blindness.

Furthermore, it is estimated that around half a million people in the UK have the condition but have not been diagnosed, as the condition can remain undetected for around 10 years. Therefore, many of these may already have complications by the time they are diagnosed.

The rise in cases of diabetes is known to be linked to rising levels of obesity, which is a factor in around 80% of cases of type II diabetes, according to the International Diabetes Federation.

Further reading - A detailed analysis of the UK pharmaceutical market is available from Espicom: The Pharmaceutical Market: United Kingdom (published September 2009)

UK - NHS Report Reveals Concerns on Treatment Available for Blood Cancer Patients

A survey, published in September 2009, has revealed that 18% of patients suffering from myelodysplastic syndromes (MDS), a type of blood cancer, could have lived longer if drugs were available to them, which are currently not approved by the National Institute for Health and Clinical Excellence (NICE) for use on the NHS.

The survey, conducted by the UK MDS Patient Support Group, also found that 56 of 100 haematologists believe lower priority is given to rarer cancers than other types of cancer.

Of those surveyed, 89% said they had faced situations in which they have been unable to provide treatments for a patient because the drug they needed is not available on the NHS or has not been approved by NICE. Furthermore, around 12% of respondents said they had not informed patients of treatments which could be beneficial to them, at the risk of distressing them over treatments they cannot have.

Further reading - An in-depth analysis of the UK pharmaceutical market, including some background information on NICE appraisals, is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)

UK - NHS Workforce Proposals Rejected

Proposals to cut the NHS workforce in England by up to 10% in the next five years have been rejected by the government, who claim the NHS need more staff, not less.

Consultancy firm McKinsey and Company advised the Department of Health in September 2009 that the loss of 137,000 clinical and administration posts would save around £20 billion by 2014. The report also recommended a recruitment freeze to begin within two years, with the possibility of medical school places being reduced, and also suggested an early retirement programme should be established.

However, Health Minister Mike O’Brien said, “Ministers have rejected the suggested proposals in the McKinsey report and there are no plans to adopt these proposals in the future”, claiming that certain services, particularly maternity, nursing and primary care, need more staff rather than fewer.

McKinsey also claimed that up to £3 billion a year could be saved by improving staff productivity, while nearly £2 billion could be saved on external contracts for areas such as food and waste.

Further reading - An in-depth analysis of the UK pharmaceutical market, including some background information on healthcare personnel, is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)

UK - NICE Approves Erbitux for NHS Use

The National Institute for Health and Clinical Excellence (NICE) issued final guidance in August 2009 recommending the use of Erbitux (cetuximab) on the NHS to treat bowel cancer.

More specifically, Merck KGaA’s Erbitux has been approved for use in combination with the chemotherapy FOLFOX (5-fluorouracil, folinic acid and oxaliplatin) as a first-line treatment for patients with colorectal cancer. However this is subject to the following conditions: the tumour in the bowel must be operable; the cancer must only have spread to the liver and is inoperable; and the patient must be well enough for surgery on both tumours if this is possible after the treatment has taken effect.

NICE has also approved the use of Erbitux in combination with FOLFIRI (5-FU, folinic acid and irinotecan) as a first-line treatment if the patient is unable to take oxaliplatin.

The drug is subject to a cost-sharing agreement proposed by Merck, whereby it offers a 16% rebate to the NHS on the cost of treatment per patient. NICE has also stipulated that no one should be treated with the drug for more than 16 weeks.

Further reading - A detailed analysis of the UK pharmaceutical market, including some background information on NICE, is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)

UK - Study Finds Huge Variations in Funding for Off-Label Cancer Drugs

There are huge variations in the way that NHS trusts are funding drug treatments for patients with rare cancers, according to a new report from the Rarer Cancers Forum, published on 14th August 2009.

Off-label treatments are often used in patients with rare cancers, as there are few licensed products for these specific cancers. Instead, the treatments prescribed are licensed for common cancer areas, but where the cancers have a similar underlying disease process. However, since the treatments necessary are not licensed for this use, patients must apply to their NHS trust to obtain them.

The report, Off limits - an investigation into NHS organisations’ policies and processes for determining requests for the use of off-label treatments for people with cancer, found that the opinion of trusts towards this form of prescribing, known as ‘near-label prescribing’, varies widely. It found that over the past three years, over 3,000 patients have applied to their Primary Care Trust (PCT) for funding for off-label treatments, and more than 1,000 have had their requests rejected. The study also assessed that patients with rare cancers in the UK are less likely to have access to off-label treatments than in France and Germany.

The report makes 25 recommendations for improvements, including:

• Near-label cancer treatments should be funded at the national level;
• Mandatory guidance should be issued to the NHS on the near-label treatments used most frequently; and
• The pharmaceutical industry should contribute to the costs of running the new system, provided that patients with rarer cancers benefit from improved access to medicines.

Further reading - A detailed review of the UK pharmaceutical market is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)

UK - 40% of PCTS are Not Providing Approved Blood Cancer Drugs

Just 60% of primary care trusts (PCTs) and 35% of local health boards (LHBs) routinely use therapies recommended by the National Institute for Health and Clinical Excellence (NICE), a survey from Leukaemia Care has shown.

The survey, published in August 2009, found that 23% of PCTs and 22% of LHBs are still making Velcade (bortezomib) and MabThera (rituximab) only available through Individual Funding Requests (IFR), despite the fact that they are both approved by NICE (although MabThera was only approved in July 2009), suggesting that they are not adequately following NICE’s guidelines.

Leukaemia Care also found there is confusion over which treatments to fund for blood cancer patients. The survey found that 39% of PCTs in England and 30% in Wales fund treatment with dasatinib, even though it has yet to be approved by NICE. It has, however, been approved by the All Wales Medicines Strategy Group (AWMSG) but the survey did not show that dasatinib was more routinely funded in Wales, as expected.

Leukaemia Care has expressed concern that PCTs and LHBs are not responding to NICE guidelines for haematological cancer treatments in the same way as they do for other therapies. The body has come up with a five-point plan to help develop a more consistent and transparent process for funding treatment across England and Wales. The five suggestions are:

• The provision of a central reference point for guidance on new treatments;
• The faster introduction of the NHS Constitution, which safeguards the right of patients in England to NICE endorsed therapies;
• The introduction of a specific requirement to collect data on the guidance implementation;
• Better guidance on the use of IFRs; and
• Setting up procedures to record data on the uptake of treatment ‘top-ups’.

Further reading - An in-depth analysis of the UK pharmaceutical market is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)

UK - NICE Approves Use of Stelara for Psoriasis

The National Institute for Health and Clinical Excellence (NICE) approved the use of Stelara (ustekinumab) in the NHS in England and Wales, for adults with severe cases of psoriasis, in August 2009.

Janssen Cilag’s Stelara is a fully human monoclonal antibody and has been approved for use for patients who are considered to have severe psoriasis, according to the Psoriasis Area Severity Index (PASI) or the Dermatology Life Quality Index (DLQI). The therapy has also been approved for patients who are unresponsive or intolerant to other treatments such as ciclosporin and methotrexate.

In addition, the approval is under the condition of a pricing agreement with the manufacturer, whereby the 90mg vial necessary for patients weighing more than 100kg is provided at the same cost as the 45mg vial, to keep the cost per QALY at £9,335. NICE has also included in the guidance that treatment should be stopped in any patients who fail to show an adequate response to the drug after 16 weeks, judged as showing a 75% reduction in the PASI score, or a 50% drop alongside a 5-point lowering in the DLQI rating.

Further reading - A detailed analysis of the UK pharmaceutical market, including some background information on NICE, is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)

UK - HIV Drug Intelence Approved for Use on the NHS in Scotland

The Scottish Medicines Consortium (SMC) approved Intelence (etravirine) for patients with HIV under the NHS in Scotland, in August 2009.

Tibotec’s Intelence is a next generation non-nucleoside reverse transcriptase inhibitor (NNRTI), and the company claims that it is the first to show efficacy in those patients resistant to the first-generation NNRTI therapies.

Further reading - An in-depth review of the UK pharmaceutical market, including some background information on the SMC, is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)

UK - United Drug and Medco Health Solutions Join Forces to Provide Home-Based Pharmacy Care

United Drug agreed a deal with Medco Health Solutions to provide home-based pharmacy care services in the UK, in August 2009.

The joint project will provide a range of services to NHS patients, including prescription drug dispensing and home delivery and on-site nursing care for the administration of oral, injectable and infused agents.

Currently homecare pharmacy services comprise around £1.6 billion of the UK’s prescription drug spending. Investments in services such as these have grown at an annual rate of over 20% over the past five years.

Further reading - An in-depth review of the UK pharmaceutical market, including some background information on pharmacy services, is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)

UK - NICE Approves Alimta for NHS Use

The National Institute for Health and Clinical Excellence (NICE) recommended Alimta (pemetrexed) for use in patients with non-small cell lung cancer in August 2009.

Eli Lilly’s Alimta can be used in combination with cisplatin on the NHS as a first-line treatment of locally advanced or metastatic NSCLC if the tumour has been confirmed as adenocarcinoma or large-cell carcinoma. In total, around 80% of lung cancers are the NSCLC type, and these are made up of squamous cell carcinoma (45%), adenocarcinoma (45%) and large cell carcinoma (10%).

Currently, the NHS treatment for NSCLC is Eli Lilly’s chemotherapy Gemzar (gemcitabine), which holds an 85% market share, followed by vinorelbine with an 11% market share.

NICE originally rejected Alimta in 2007, on the grounds that there was no evidence that the drug was more clinically or cost-effective than the other treatments already available.

Further reading - A detailed analysis of the UK pharmaceutical market, including some background information on NICE, is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)

UK - Foundation Trusts’ Spending Plans are Over-Optimistic

Foundation trusts were warned that their spending plans up to 2012 are overly optimistic, by Monitor, the regulator of foundation trusts, in August 2009. The trusts have been asked to also submit a downside forecast, which will give a more realistic projection of future spending growth.

Overall, 115 trusts have forecast a growth in their income of 4.2% in 2009/10, 2.1% in 2010/11 and 1.6% in 2011/12. It is known that NHS funding will increase in the next two years but funding post-2011 has not yet been finalised.

Further reading - An in-depth analysis of the UK pharmaceutical market, including some background information on NHS funding, is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)

UK - NICE Rejects Celgene’s Vidaza

The National Institute for Health and Clinical Excellence (NICE) rejected Vidaza (azacitidine) as a treatment for blood cancers in August 2009, because it is not a cost-effective use of NHS resources.

Celgene’s Vidaza is used to treat myelodysplastic syndromes (MDS), including chronic myelomonocytic leukaemia (CML) and acute myeloid leukaemia (AML). However, NICE considered it too costly for use among NHS patients, despite agreeing that the drug is clinically effective and even taking into account recent guidelines on appraising end-of-life treatments.

The recommendations can be contested up until August 24th and there will be a Second Appraisal Committee meeting on September 3rd.

Further reading - An in-depth analysis of the UK pharmaceutical market, including some background information on NICE, is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)

UK - NHS Faces Bill of £400 million for Private Contracts

The NHS is facing a bill of £400 million in the next two years, when independent sector treatment centre (ISTC) contracts with private sector operators expire.

Around £200 million will be paid for operation capacity bought by Primary Care Trusts (PCTs) but not used, as it is estimated that the health service only delivered around 85% of the agreed number of operations. A further £200 million will be paid to buy the premises built by the private sector operators.

Since ISTCs opened in 2005, they have cut waiting lists and introduced competition. So far, they have provided more than 1.7 million operations and other procedures, helping to cut the maximum NHS waiting time to 18 weeks.

ISTCs were originally commissioned by the Department of Health. They offered a five-year deal guaranteeing volumes of patients, with a buy-back clause on the buildings, and prices around 11% higher than NHS prices.

It will now be up to PCTs to decide if they want to renew the contracts, under different terms, most likely with no guarantees of volume and standard NHS prices.

Health Minister Mike O’Brien insisted that the initiative had been value for money, claiming it had cleared a backlog of 250,000 NHS patients who had to be treated to reduce waiting times. He told the Financial Times, “We wanted to ensure we had sufficient capacity. And if you hit your target, as we have, you have value for money.”

Further reading - A detailed review of the UK pharmaceutical market, including some background information on healthcare infrastructure, is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)

UK - Report Forecasts Future for NHS Funding

A report into the possible future of NHS funding was published in July 2009. The report, How cold will it be? Prospects for NHS Funding: 2011-17, by The King’s Fund and Institute for Fiscal Studies, analyses how much of an impact the economic recession could have on NHS funding. Public spending will be inevitably hit by the financial crisis, and the report analyses the different outcomes this could have on the NHS in England between 2011/12 to 2016/17.

There are three possible funding outcomes over the next two spending review periods:

• ‘Tepid’ – annual real increases of 2% for the first three years, increasing to 3% for the final three years;
• ‘Cold’ – zero real change; and
• ‘Arctic’ – annual real reductions of 2% for the first three years, falling to 1% for the final three years.

The financial future of the NHS remains uncertain, and depends on the extent of tax increases and productivity levels. The report notes that over the next spending review period (2011/12-2013/14) the budget could reduce for all government areas, including the NHS, by an average of 2.3% per year. If the NHS were to be protected by a greater or lesser degree, this could result in greater cuts for other departments, although this could be lessened by an increase in taxes.

The changes to the budget could have implications on taxation. Even the ‘tepid’ scenario would require an increase in taxation (or reduction in spending on social security benefits and tax credits) of £6.9 billion, which would be equivalent to £220 extra per family, or raised through a 1.6% increase in the level of VAT.

The report notes that demographic pressures, including a rising and ageing population, are likely to cost the NHS around £1.0-1.4 billion extra each year at 2010/11 prices, and would require funding increases of around 1.1% to maintain quality. Only the ‘tepid’ scenario would provide enough money to cover this. These pressures are also adding to the demands placed on the healthcare system, and the report argues that productivity gains are essential, regardless of the future funding of the NHS.

The report notes that the NHS could fill this gap in funding with increased productivity levels. However, these would need to be significant if they were to make an impact. The report states that over the period between 2011 and 2017, the NHS would need to make gains of between £21.6 billion and £47.0 billion, equivalent to improvements of 3.4% to 7.4% per year, or £3.6 billion to £7.8 billion per year.

The report argues that the NHS in England is in some ways better prepared than ever to deal with the downturn. Current funding levels mean that it has employed more professionals, there have been huge improvements in the infrastructure and waiting times have been dramatically reduced.

Further reading - An in-depth analysis of the UK pharmaceutical market, including some background information on NHS funding, is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)

UK - Kennedy’s Innovation Report Published

A study into innovation within the pharmaceutical industry was presented to a NICE board meeting by Sir Ian Kennedy on July 22nd 2009.

The report outlines recommendations on how NICE can ensure its appraisal procedures take innovation into account and how innovation should be defined. It was commissioned in response to a report by Sir David Cooksey, Review and Refresh of Bioscience 2015, which called for an independent review into the importance of innovative medicines and new health technologies.

Sir Ian is particularly critical of the recent change to NICE’s consideration of end-of-life treatments, warning that they could represent a ‘Trojan horse’ making it increasingly difficult for NICE to withhold approval.

The recommendations have some similarities with the idea of an Innovation Pass, which would allow some drugs to be made available on the NHS without having gone through a NICE appraisal, as proposed in the Office for Life Sciences Blueprint on 14th July 2009.

Some of the recommendations are:

• NICE’s appraisals should continue to be based on the ICER/QALY approach into which is incorporated explicit consideration of relevant benefits. A two-stage approach should not be adopted;
• NICE should consult all relevant parties and draw up a list of those health-related benefits to be taken into account in its appraisals. The list should be reviewed through an appropriate mechanism from time to time;
• Social benefits should not currently be taken account of by NICE in its appraisals, but NICE should commission or participate in research to determine whether such benefits could form part of NICE’s approach and, if so, how;
• NICE should work with others to develop an active policy on disinvestment by the NHS in products which do not offer value for money;
• NICE should formulate a definition of ‘innovation’. So that a judgement can be made that a product meets the NHS’ needs, the Secretary of State for Health should from time to time make explicit the priorities of the NHS regarding intervention and treatment;
• NICE should establish a mechanism whereby pharmaceutical companies can signal as early as possible that a product may constitute an ‘innovation’. NICE should work closely with pharmaceutical companies, using for example its scientific advice programme, to ensure that the data required by NICE to make this judgement is generated. NICE should offer advice and support to newer companies to facilitate competition in the sector. NICE should consider, as incentives to pharmaceutical companies, agreeing a higher threshold in the case of ‘innovation’ (as defined) and maintaining it for a fixed period or agreeing the use of a scheme under the revised PPRS (flexible pricing or patient access). NICE should revisit the threshold to be used in the appraisal of products which do not meet the criteria of innovation if a higher threshold or one of the schemes under the PPRS is used as an incentive to promote innovation;
• NICE should establish a mechanism whereby the NHS is compensated for the financial loss incurred, if a product subsequently proves not to meet initial expectations;
• NICE should build on its reputation as leading the world in the appraisal of products to establish itself also as a world leader in promoting innovation and the early adoption of treatments;
• NICE should urge government to make appropriate adjustments to the supply side, as recommended by Sir David Cooksey and the Office of Life Sciences to encourage innovation on behalf of the NHS and patients;
• NICE should only offer incentives for innovation when it is realised;
• NICE should consider establishing a formal and transparent process, using such options available to it to offer incentives to pharmaceutical companies when a product is said to have the promise of innovation. NICE should pilot the process for a period of time if it decides to establish it;
• NICE should work with the Office of Life Sciences such that, if an ‘innovation pass’ is thought necessary and appropriate, conditions apply. NICE should establish a committee of experts to advise on whether the criteria for use of the ‘innovation pass’ are met. NICE should seek to ensure that funding for the purchase of the products subject to the ‘innovation pass’ comes from a specially created fund and not from the NHS. NICE should seek to ensure that the ‘innovation pass’ during which a product is not evaluated by NICE should last for a fixed period of time (e.g. a maximum of three years). NICE should seek to ensure that at the expiry of the fixed period of time the product is appraised by NICE and falls within the threshold for approval;
• NICE through its Medical Technology Advisory Committee should play an increasingly active role in encouraging research into medical technologies to be carried out in the UK.

NICE will issue a formal response in September, which will be followed by a three-month public consultation.

Further reading - A detailed analysis of the UK pharmaceutical market, including some background information on NICE, is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)