Six potential high-impact outcomes of NHS devolution for industry

The Conservatives, lead partners in the coalition government, have just announced a hugely significant new experiment in how health and social care is provided in the UK: The Greater Manchester Region is to be handed control of the country’s first ever unified budget for health and social care.

The region’s 10 councils, 12 Clinical Commissioning Groups (CCGs) and 15 National Health Service (NHS) providers will take over a £6 billion budget covering all health and social care spending from 1 April. The system will work on a transitional basis for the first 12 months, after which full devolution of powers will be introduced.

The radical shift has been overseen by NHS England, and a memorandum of understanding signed by the Chancellor George Osborne, who says the devolution of power and budgets will produce “better, more joined-up health care”.

Lead Senior Principal, Market Access at IMS Health Angela McFarlane looks at the significance of the reform, and suggests six potential high impact outcomes for the pharmaceutical industry.

Depending on the detail, this could make the organisational chaos created by the 2012 Health and Social Care Act, and its impact on health service budget holders and decision makers look like a storm in a teacup. The experiment in Greater Manchester will be the first time in history that local NHS strategic plans, priorities and budgets will ultimately be determined by an elected mayor and local councillors.

The timing of the announcement is no coincidence: the UK is just two months away from a General Election on 7 May; opinion polls confirm that the future of the NHS ranks in the top three issues for voters, along with the economy and immigration.

Labour’s leader Ed Miliband talked about politicising the health system (‘weaponising’ the NHS) but it was the Conservative Treasury Secretary George Osborne that did the deed. The future could see decisions on innovative medicines being ultimately controlled by a new kind of elected mayors and local councillors in England’s devolved regions, in the mould of London’s mayor Boris Johnson and the London Assembly.

The motivation behind this strategy? This is Westminster anticipating just how tough a challenge health will be over the next five years due to the £30 billion funding gap (in England alone).

“One of Labour’s flagship health policies has been stolen by George Osborne, like a thief in the night!”


The political spin, of course, will be ‘clinically-led decision making’ via CCGs and their engagement with Health and Wellbeing Boards (HWBs), new organisations which were created to oversee integration of health and social care. In political terms, Labour can’t challenge the move; because this is exactly what shadow health secretary Andy Burnham committed them to doing should they win power on 7 May. One of Labour’s flagship health policies has been stolen by George Osborne, like a thief in the night!

If we assume Greater Manchester is the pilot, London will follow swiftly (it has already proven the electoral popularity of a mayoral system with Boris Johnson’s success as Mayor of London), followed probably by the North East. The remaining devolved regions would then probably follow in quick succession through 2016-17.

So what are the potential implications for the pharmaceutical industry? The model will be one of strategic planning and budgetary decision making by HWBs. The £6 billion, as has been promised to Greater Manchester, is 1/10 of the total CCG allocation from NHS England.

HWBs will be the Command and Control Centres and the Joint Strategic Needs Assessment (JSNA) will be the local health blueprint.

Outlined below are six potential high impact outcomes for industry:

1. Health and Wellbeing Boards will be the new local health king-makers

    a. Take a good look at the current leading-edge HWBs (and their Joint Service Needs Agreements) to get insight into culture and priorities.

    b. The culture of HWBs will demand a more sophisticated industry engagement strategy than has been the case to date with CCGs – if, indeed, HWBs consider industry to be a valued stakeholder at all.

2. Impact of medicines outcomes on Social Care as well as health will be a key determinant to regional access

    a. Pre-NICE decisions on funding and access to medicines in areas such as diabetes, COPD and mental health will be increasingly influenced by evidence on return to employment, wider societal value, equity as well as the traditional prioritisation criteria.

    b. Think about the proposed criteria for highly specialised medicines and you won’t be miles away from the new order.

3. The regional mayor and local councillors will have to answer to the local electorate

This will include issues around access to ‘politicised’ medicines. So, for example, imagine if we had been introducing drugs like Aricept in this environment, it would not have taken years to get local funding in place, irrespective of a financial challenge. But what about more politically-challenging decisions, such as preventive anti-viral medicines in HIV high risk cohorts or IVF treatment?

    a. In the US, the Oregon state model involved local people voting on how they wanted the health budget spent, and making decisions on investing in special care baby units or better care for older citizens.

    b. Consider a scenario where one devolved region has access to a new innovative treatment (pre-NICE) and its neighbouring region has refused to fund.

        i. What pressure will councillors and the mayor bring to bear on medicines management teams to change their minds, especially close to election time?

4. Medicines optimisation teams will develop different prioritisation criteria

These may look more like the prioritisation frameworks proposed (and still supposedly under consultation) and developed by NHS England for speciality and rare disease medicines.

5. Public health situated in Local Authorities will re-engage with medicines optimisation agenda

The key questions on access are likely to be affordability and allocative efficiency.

6. Potential for split care pathways – at regional level funded and planned by elected representatives and at the really high-cost end of the pathway

These will be prioritised by unelected career NHS management and supported by expert clinical opinion.

One example could be lung cancer: the local HWB will own responsibility for how the service is prioritised, service redesign, local delivery BUT NHS England will make decisions via the Cancer Drugs Fund (CDF) about chemotherapy regimens for specific cohorts of that pathway – without any local consultation. If a drug is not funded via the CDF, the mayor and councillors will be under political pressure to provide access.


In political terms, the Conservative decision to press the fast-forward button on integrating health and social care is a canny move stealing a key health strategy from Labour and their coalition government partners the Lib Dems, who have been advocating these ideas for some time.

However, the boldness of the move can’t disguise the fact that there is a funding crisis, both in health and social care. The great hope is that real integration of health and social care services could help eliminate inefficiencies and improve services, but NHS England is still calling for £8 billion more in funding every year on top of reforms, or otherwise face that £30 billion shortfall by 2020.

These figures were set out by NHS England’s chief executive Simon Stevens in October last year in the Five Year Forward View report – but none of the political parties has yet unequivocally agreed to meet these funding commitments, meaning the long-term sustainability of the system remains unclear.

Finally, despite budgets being drawn together and unified, there is a huge risk that the reforms will complicate, not simplify, how health care is funded in England, and how medicines are reimbursed and reach the market.

About the author:

Angela McFarlane is Senior Principal IMS Health Local Market Access. Prior to acquisition by IMS Health in October 2013, she was a founding Director of market access agency HGS, which pioneered developments in the UK market access environment since 1998.

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