NHS should pay for medicines based on outcomes, argues Novartis-backed report

A new report from the Social Market Foundation think tank argues that the UK’s National Health Service should switch to paying for medicines based on patient outcomes.

The report, Outcomes-based reimbursement of medicines, was sponsored by Novartis’ UK operations, but was independently authored by the think tank.

Its message is certainly in line with Novartis’ thinking in the UK and beyond however, as the company is among the leading pharma exponents of ‘pay for performance’ and similar deals.

While outcomes-based payment clearly has some potential risks for pharma, Novartis believes the switch could save the NHS money, and allow patients to access new medicines faster.

The UK has one of the slowest uptakes of new medicines among developed nations, but the report suggests it could learn from pioneers in outcomes-based payment, such as Italy.

Report author and SMF research director Nigel Keohane said:

“With pressure on the health budget growing, the NHS should adopt the principle of only paying for what works when it buys medicines. This would simultaneously drive better value for money and mean that patients could be given earlier access to new treatments.”

“Given the NHS spends £17bn on medicines each year, the reforms would also steer manufacturers to develop innovative drugs that can make the largest improvements to patient health.”

Drawing on international experiences in countries such as Italy, lessons from other UK public services and the wider NHS reform agenda, the report recommends that:

• New drugs that meet specific criteria – such as addressing ‘unmet need’ among patients – would be eligible to go through the new purchasing scheme and fast-tracked to patients.
• The NHS and the manufacturer would agree the health outcomes that should be achieved and the basis on which the manufacturer would be paid if and / or when the drugs are successful.
• The NHS should lead an exercise towards better outcomes measurement and data to enable performance to be tracked properly. The report says this would be of wider benefit to NHS commissioning reforms.

The report comes at a confusing time for the UK pharma industry, its future clouded by the many uncertainties of Brexit.

Theresa May’s government has stressed that the life sciences sector is one of UK’s most important, but new budget control measures enforced by NHS England are causing consternation in the pharma industry.

The key UK pricing agreement, the PPRS , is due to renewal from December 2018, and many pharma companies have expressed their dissatisfaction with the system, which has capped spending but not delivered on promises to accelerate new medicines uptake.

Meanwhile the next few months are due to see the Government belatedly publish its response to the Accelerated Access Review, while Sir John Bell is set to unveil the Life Sciences strategy.

Commenting on the report, Barak Palatchi, Oncology General Manager, Novartis UK & Ireland, indicated that outcomes-based reimbursement was the way forward.

“We know that our health system is incredibly stretched. The NHS is being asked to do more with less funding, and patients are, rightly, demanding swift access to the effective, innovative treatments, they deserve. We need a different approach so the health system is sustainable, delivering better economic value over the long-term, and ensuring better patient outcomes”, said Barak Palatchi.

“We are working in partnership with the medical and patient communities to bring our science-based innovation and pioneering approach to deliver novel treatments to more people when they need them”, he concluded.

Novartis has pioneered outcomes-based payment in the US for its heart failure drug Entresto, with many other companies agreeing similar deals with health insurance companies there.

The report also gathers insights from Italy, which already uses two different outcomes-based agreements: since October 2012, there have been16 'Payments-by-Results' deals and two 'Risk Sharing' contracts.

The UK industry association the ABPI is currently consulting with its members on what they want from the next PPRS agreement. It is far from certain that the industry would back a move to an entirely outcomes-based system, though there is growing appetite from the NHS and the industry for a much greater use of such mechanisms.

Read the full Social Market Foundation report here.