Paul Midgley, Director of NHS Insight at Wilmington Healthcare, explains how pharma should tailor its approach
Trusts and Clinical Commissioning Groups (CCGs) are coming under increased pressure to budget meticulously and not exceed their financial control totals, which set targets for the maximum deficit or minimum surplus they are expected to achieve.
However, NHS England and NHS Improvement claim that while some trusts and CCGs have generated savings since the publication of the Five Year Forward View (5YFV) in 2014; others are still overspending and effectively ‘living off bailouts from other parts of the country’.
In response to this, NHS Improvement and NHS England have introduced the Capped Expenditure Process (CEP) to ensure that under-performing trusts and CCGs deliver on their control totals and do not exceed their budgets.
In this article, we will look at the circumstances surrounding CEP and the likely impact on services in the areas where it has been introduced. We will also explore what it means for pharma and how the industry should respond.
What does CEP involve?
Previously, every NHS Trust put five percent of its budget into a contingency fund that was used to bail out other struggling trusts. However, since the publication of the 5YFV, the NHS has taken a tough stance on trusts and CCGs that continue to overspend and rely on hand-outs from others elsewhere within the service.
In April this year, NHS England and NHS Improvement made it clear that the newly formed Sustainability and Transformation Partnerships (STPs) must live within their means, and they singled out 14 trusts and CCGs that are expected to fall short of their 2017-18 control targets.
The 14 health economies are spread out across the country from Devon and Cornwall to North West and South-East London, the Vale of York and Scarborough and Ryedale, and Northumberland. Several of these health economies include trusts and CCGs that are already subject to regulatory intervention, including both financial special measures and special measures. In those areas, the CEP will be aligned with the measures already being taken.
All of the 14 organisations have been told they must make ‘difficult choices’ to stay within the combined funding envelope for their area. Overall, the CEP initially aimed to close a financial gap of £470m, which was the difference between the financial plans and targets of providers within the 14 areas. However, proposals drawn up locally suggest they will now be expected to meet potential savings of £250m, although there are significant concerns about the risks involved in delivering them.
What will be the regional impact of CEP?
Trusts and CCGs will have to make drastic cuts in order to comply with the CEP and this is expected to have a huge impact on doctors, patients and the NHS. A variety of measures are being considered as part of the process and they are believed to include closing or downgrading hospitals, wards and services, including maternity and A&E units.
Redundancies and cuts to staff numbers; limiting or blocking outsourcing and patient choice; rationing services and systematically extending waiting times for planned care are among the other potential implications of CEP. It is also anticipated that NHS funding for certain treatments could be restricted or removed. This could include tighter limits on IVF treatments; designating additional treatments as ‘low value’ and delaying funding for certain treatments newly approved by NICE.
How should pharma respond to the CEP?
Identifying where money is being wasted on sub-optimal healthcare and defining how products and services could be changed in order to improve outcomes and save money is already a key priority for the NHS. Effecting such change will be critical in CEP areas and pharma companies that wish to engage with them must gain a clear understanding of the unique challenges they face and tailor their proposition accordingly.
NHS Rightcare is a good starting point since it recently published regional performance statistics in its Commissioning for Value Insight packs, which are designed to provide planning guidance across the NHS. These packs, which indicate unwarranted variation in outcomes and spend for key clinical areas, show, for example, that there is a 175 percent variation between GP practices in England for diabetes prescribing costs.
To help CEP areas better manage their prescribing costs, pharma could conduct a further analysis of Rightcare statistics. For example, in diabetes, it could define the current level of demand for NHS services in a specific CEP area and predict how it is likely to increase. It could then look at high performing trusts and CCGs across the country to assess how they are successfully managing demand for diabetes care and how this could be translated into a CEP health economy.
Balancing doctors’ demands for drugs that demonstrate strong clinical benefit and patient safety against medicines management teams’ focus on cost savings will be critical in CEP areas. Selling expensive new drugs will clearly be very challenging and to gain competitive advantage on any drug, pharma needs to think about adding value wherever it can, whether that be through support on adherence, such as telephone help lines for patients and monitoring technology to ensure drugs have been taken; or gathering real world evidence that proves how a drug can really improve quality of life for patients.
Managing the pharma salesforce
In these fast changing and financially challenged times, localised deployment and targeting resources on a regional basis has never been more important. For many pharma brand teams, the CEP may mean they have a new end customer in these areas. For example, some CEP areas may be forced to adopt a ‘lockdown’ mentality to new drugs, which may result in sales representatives being unable to visit doctors without permission from the Chief Pharmacist.
Rather than struggling to deploy field sales representatives in those areas, pharma may find it more beneficial to have market access experts who can engage directly with the senior budget holders and Transformation Directors who will be making critical decisions on drugs and technologies.
Maintaining a strong relationship with the HCPs who will be prescribing these drugs will still be very important, of course, and, if face-to-face contact is not possible, then pharma needs to ensure that it marries its business proposition in CEP areas with a strong content marketing programme that can be disseminated across a variety of channels.
Examples could include developing or sponsoring online learning modules and providing conference highlights for busy doctors who are often unable to attend such events in person. Pharma could also sponsor or write clinical articles, or newsletters; develop patient case studies, and provide information on new clinical guidelines and advice on how to put them into practice.
In such areas, bringing together multi-disciplinary networks of senior stakeholders across clinical settings, with commissioners, finance, local authority, public health and local third sector partners is an approach that would stimulate a focus on solutions to their shared problems. We have found this really works in Mental Health and other clinical fields.
When it comes to dissemination, multichannel marketing still means ‘email marketing’, to many pharma companies and digital is often viewed in isolation to the rest of the sales and marketing mix. However, it is essential to engage with HCPs through all the digital channels they use, including professional communities, message boards and blogs, and to integrate this with other sales and marketing activity.
In conclusion, CEP areas could present a golden opportunity for pharma or a major challenge. It really depends on the type of product value proposition i.e. whether they are high end drugs or biosimilars, and how the business proposition can be altered to meet the needs of these struggling healthcare economies and show how they can add value to help them meet their short-term cash constraints.
To succeed, pharma must truly understand and empathise with the diverse needs of individual CEP areas and become adept at locally managing and targeting its resources. This could involve the development of networks and dissemination of innovative and engaging content-led marketing campaigns for HCPs as well as the strategic deployment of market access staff if face to face engagement for field sales representatives is not feasible.