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What can pharma glean from the first round of Transformation Funding for STPs?

Paul Midgley and Steve How, of Wilmington Healthcare, explain how the NHS is rewarding its most promising STPs and what they need from pharma.

Sustainability and Transformation Partnerships (STPs) may be only a few months old, but the NHS has been closely monitoring their progress and it has already identified the schemes that are ripe for its initial tranche of capital funding.

Fifteen STPs, in areas ranging from West, North and East Cumbria to North East London and Norfolk and Waveney, have been deemed the strongest and most advanced schemes, judged on hospital performance, patient-focussed change and transformation.

These 15 STPs are being rewarded with a share of the £325m capital funding that was earmarked by the Government in its Spring Budget ‘to enable investment in modern equipment and NHS facilities’.

In this article, we will assess the significance of the Transformation funding allocation; the types of organisations and projects that will benefit and, most importantly, what this means for pharma and how the industry should respond.

How have STPs been selected for capital investment?

The recent announcement by Health Secretary Jeremy Hunt on which STPs would benefit from a share of the £325m capital funding allocated in the Spring Budget, was a defining moment for the NHS.

It clearly demonstrated that having challenged STPs to find new and innovative ways of delivering integrated care in their localities, as envisaged in the Five Year Forward View (5YFV), the NHS is now segmenting them, based on their initial progress.

STPs that have already demonstrated their ability to meet specific targets are being incentivised and rewarded; while STPs that are struggling are being told in no uncertain terms that they must improve.

Of the 15 STPs across the country that have been earmarked for a share of the £325m funding, the ones that are expected to receive the highest sums are Dorset (urgent care); Greater Manchester (surgery) West, North and East Cumbria (cancer care).

NHS England’s Operations and Information National Director, Matthew Swindells, recently gave an insight into how STPs have been segmented when he released a baseline performance rating chart for them.

The NHS England chart grades STPs on specific measures relating to emergency care, elective care, general practice, mental health, cancer care, leadership and finance. It categorises STPs as ‘outstanding’, ‘advanced’, ‘making progress’ and ‘needs most improvement’ on broad measures of hospital performance, patient-focused change and transformation.

STPs regarded as needing the most improvement were Bristol, North Somerset and South Gloucestershire; Humber, Coast and Vale; Northamptonshire; Staffordshire; and Sussex and East Surrey. A further 14 were described as ‘making progress’.

How do the Transformation-funded STPs operate?

Transformation funding is being made available to healthcare economies that are becoming more ‘patient-centric’ by moving services away from traditional settings, such as hospitals, to provide them in the community or in patients’ homes. These economies are already likely to be quite advanced and to have introduced services such as primary care homes, primary care acute care systems and multi-specialty community service providers.

Since these healthcare economies are actively exploring new ways of working, they are more likely to be interested in premium products that may be more expensive but can improve outcomes and reduce costs across the whole pathway.

How should pharma engage with Transformation-funded STPs?

Since the publication of the 5YFV in 2014, the NHS has demonstrated a clear desire to work in new, innovative and collaborative ways. Furthermore, as evidenced by the recent Transformation funding announcement, it plans to reward STPs that can help it achieve its vision.

As the NHS moves towards new models of care with capitated fees and an outcome based commissioning structure within new Accountable Care Systems (ACSs), there is increased focus on efficiency and cost, and a growing need to measure the value of drugs and services in both the short term and longer term.

The NHS can now stratify patients and evaluate outcomes in both primary care and secondary care. It can also validate the efficacy of specific drugs, thanks to the availability of systems such as ‘Eclipse Live’, which can identify real world outcomes linked to specific healthcare interventions over time.

The 15 areas that have received Transformation funding are fertile ground for pharma companies that have premium products, provided they can prove that these products are ripe for Transformation funding – a conversation that is probably more appropriate for healthcare development managers to have with local system leaders rather than traditional salesforces.

But to achieve success in these areas, pharma must prove that it too is willing and able to change the way it operates; to be more accountable for results and to take more responsibility for improving patient outcomes.

One way of adding value to a drug, which is becoming increasingly popular, is packaging up a value-added service as part of the contract. A key example is Homecare delivery services which enable a 20 percent VAT saving on the purchase price of a medicine, provided it is delivered to a home setting and administered there.

This incentive has encouraged a number of pharma companies to work with the NHS to set up medication delivery services, particularly for injectables and some of the biologics, enabling them to be delivered and administrated at patients’ homes.

Concordance programmes should be another key area of focus, since evidence shows that between 30 and 50 percent of long term medicines are taken incorrectly. This not only results in huge costs on wasted medicines, but local real world evidence for effectiveness may not justify investment compared to the promoted results from clinical research trials.

To address this problem, pharma companies could improve adherence rates and demonstrate the effectiveness of drugs by developing compliance and patient engagement programmes that can be packaged up with the product, e.g. by incorporating digital monitoring, or pharmacy led concordance programmes.

Pharma could also consider guaranteeing outcomes to encourage the NHS to invest in new premium products. Very few companies are currently willing to do this because they don’t know enough about the metrics they can use for outcomes management and evaluation. Furthermore, it’s clearly a huge risk to say that if a product is not working, then the NHS does not have to pay for it.  However, as the NHS and other healthcare organisations in Europe become increasingly focussed on results, and the patient data technology becomes more ‘joined up’ some pharma companies, particularly the ‘Big Five’, are already moving into that space.

STP calls on pharma for help

Evidence shows that some STP areas are proactively looking at new ways of working with industry. For example, the Greater Manchester Health and Social Care Strategic Partnership Board (which is the Greater Manchester STP), recently proposed a Pharmaceutical Memorandum of Understanding. The document followed a meeting on 27th September 2016, in which a delegation of pharmaceutical industry UK General Managers and ABPI officials met with senior GM leaders from across the sectors to explore challenges and potential opportunities for collaboration.

It identified two key areas for development, ‘capitalising on the unique conditions and environment that exist in Greater Manchester’. These are:

  • The co-creation of new models of working that include engagement with pharma companies to provide improved outcomes for people while addressing the clinical and financial sustainability challenges of GMHSCP
  • The development and expansion of a globally competitive ‘living lab’ based on Greater Manchester’s interconnected data capability, generating real world evidence for research and assessment of value of medicines

The Pharmaceutical Memorandum of Understanding shows how forward-thinking STPs are clearly looking to establish a different kind of relationship with the pharma industry and see it as key to creating and delivering the new models of care outlined in the 5YFV.


NHS England’s performance-based segmentation of STPs and recent allocation of Transformation funding to the strongest and most advanced partnerships, provides further evidence of the NHS’s commitment to improving efficiency and outcomes by doing things differently.

There is a role for pharma to play in supporting STPs, particularly those that have received Transformation funding. However, as the NHS gathers real world evidence on drugs, the pharma industry must review its own methods of doing business and prove how its products will provide more effective and cost-efficient care that will improve patient outcomes and bring benefits across the care pathway.