Friday, 3 June 2016

A new twist on Make/Buy for the NHS - how to avoid the latest drugs rip-off?

I was very late getting to today's Times but when I did get round to reading it I was fascinated to find a procurement story dominating the news: "'Extortionate' prices add £260m to the NHS drug bill". I won't try to explain the whole story but in a nutshell it appears there's a loophole in the NHS purchasing policy which has created a 'get rich quick' opening for a few entrepreneurs.  The opportunity is linked with the selling of patents which are bought from the big pharmaceuticals by comparatively small, clever,  opportunistic entrepreneurs, who are then able to harvest excessive profits from the NHS, etc.  For example, here's one price trend provided by The Times:
For more than five years the NHS in England paid pharmacists £3.77 for a 28-pack 25mg tablets and £5.71 for a packet of 50mg tablets. In July 2014, under [one of the firms using the strategy], the price suddenly increased to £24 and £48 a packet respectively. Eight months later both prices doubled. Eight months after that, last November, they almost doubled again, this time rising to £97 fro a 25mg pack and £154 for a 50mg packet.
The Times suggest that this, perfectly legal practice, is costing the NHS an extra £262m a year for over 50 drugs! When NHS budgets have been unsustainable for a few years it seems odd that the Times uncovered this as opposed to the NHS - what's been happening there with benchmarking prices, procurement strategy and category management?

Now, it would be easy to throw stones at the NHS but I wondered what I would recommend if I was involved in NHS procurement. Of course I have no inside knowledge of what is actually going on but I think I would start with:

  1. Exploring why such price increases have been justified and accepted?
  2. Clarifying why the market isn't working effectively?
  3. Ensuring prescribers only name the drugs in question when absolutely no other alternative is available - pharmacists will have a part to play here? 
  4. Exploring the feasibility of a new model of patenting, and agreement to purchase, with the major pharmaceuticals which ensured that the NHS had first refusal on a transfer of some patents?
  5. Establishing why the NHS, WHO or even the EU couldn't intervene and take on role which the entrepreneurs have - clearly the business case evidence is there?
It does strike me this is another variation of the make/buy decision.  Yes, I appreciate that what I'm suggesting may well be contrary to the prevailing political philosophy but when the money is running out of the NHS 'piggy-bank' surely all options need to be explored.

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