Memorandum by the Association of British
Healthcare Industries (MT 24)
1. SUMMARY
1.1 The ABHI is delighted to submit written
evidence to this inquiry and welcomes the investigation into this
vital, and often under-acknowledged, sector of the NHS. It is
estimated that approximately 38 million people in the UK have
contact with a medical device in any one day.
1.2 The ABHI whole-heartedly supports the
findings of the Healthcare Industries Task Force (HITF) report
and endorses its outputs. Given the breadth of the HITF report,
we believe it is important to prioritise the report's outputs
and proposed actions. Questions remain over the report's implementation
and the processes that are still to be developed to ensure that
these recommendations come into force. In addition, the recommendations
do not address all of the barriers to the introduction of effective
technology to patients in the NHS. We continue to have concerns
over the procurement processes of the NHS. These urgently need
to be addressed if patients and clinicians are to be assured of
equal and fair access to the best available treatments and medical
devices.
1.3 As a monopoly buyer, the Department
of Health has a dual responsibility to ensure that the NHS gets
the best value for money from suppliers while ensuring that a
healthy market is in place. The ABHI understand the need to contain
the costs of the NHS and would welcome a commercial extension
of the HITF programme where government and industry engage to
jointly explore and introduce methods of evaluating the cost effectiveness
of treatments for both primary and secondary care as opposed to
an arbitrary "lowest unit price". ABHI believes that
the UK should follow the example of the USA and introduce legislation
to proscribe anti-competitive purchasing behaviour in the healthcare
sector.
2. THE ASSOCIATION
OF BRITISH
HEALTHCARE INDUSTRIES
(ABHI)
2.1 The ABHI is the lead trade association
for the medical technology and devices industry. This sector comprises
not only manufacturers of medical devices, equipment and consumables,
but also service companies, distributors, professional groups
and other suppliers to the medical community. Medicines are not
included. All these products and devices are regulated under the
European Medical Devices Directives. The ABHI has nearly 200 member
companies, many of which are small to medium sized enterprises.
2.2 The healthcare technology industry plays
a vital role in meeting the needs of an increasingly health-aware
population. The industry's composition is diverse:
— plasters to MRI scanners;
— walking sticks to implantable defibrillators;
— autologous cartilage implants to
tape; and
— DNA probes to tongue depressors.
2.3 The UK healthcare technology industry
also makes a significant contribution to the economy. The industry
is made up of approximately 2,000 companies, employs in excess
of 55,000 people, and has combined annual sales of £6 billion.
3. HEALTHCARE
INDUSTRIES TASKFORCE
REPORT (HITF)
3.1 ABHI was closely involved in HITF and
worked to develop the programme of action as outlined in the final
Report. The programme is an exciting blueprint that—if implemented—could
lead to major medical breakthroughs, improve quality of care for
patients and herald a new era of co-operation between the NHS
and the medical technology industry.
3.2 The report contained five major outputs:
— A new device-evaluation service to
make it easier to identify new devices and accelerate the process
of getting these used across the UK.
— A modern approach to NHS regional
procurement so that the best technology is bought for the best
value.
— An Innovation Centre to pull together
all the innovative work done in the NHS and link this to the existing
networks around which the Medical Devices Faraday operates.
— The building of a new research and
development capacity that gives more prominence to developing
new medical devices.
— Activity to assess the needs, capacity
for delivery and benefits associated with a more structured approach
to training and development, especially in relation to the use
of medical devices.
The ABHI fully supports these recommendations
as the foundation of a programme of action for the next two to
three years. In addition, exports are of importance to the medical
technology industry in the UK. HITF recommends that UK Trade and
Investment focuses its strategic activities and resources in favour
of the United States, Germany, France, Japan and China in relation
to the devices industry.
3.3 ABHI believes there are a number of
threats to the successful implementation of the HITF report, however,
which may prevent fair and appropriate access to treatments and
technologies for patients. There are two key threats:
— unclear accountability for each output's
implementation (4.4); and
— an NHS preference for short-term
savings to be made, at the expense of long-term advantages for
patients (4.5).
3.4 While the report has been developed
with the consultation of over 200 individuals and organisations
and a taskforce has been established to monitor implementation,
there is a lack of clear accountability within government departments
or an impetus to ensure that the outputs are achieved. ABHI remains
concerned by the risk of implementation drift.
3.5 ABHI is concerned by the inherent preference
within the NHS to purchase technology and medical devices at the
lowest cost—regardless of whether the chosen products are
the best treatment solutions for patients in the long run. While
the HITF report acknowledges these challenges, little action was
suggested to address this challenge directly. Further information
on this point is included in section 5.
4. INTRODUCTION
OF NEW
TECHNOLOGIES
4.1 Effective procurement by the NHS is
at the heart of successful delivery of medical technology to patients.
There are a number of barriers within the NHS, however, which
prevent this effective procurement from taking place—and
which slow or prevent the introduction of new technologies to
the NHS and its patients. With the NHS spending around £15
billion a year on goods and services (£3.5 billion through
PASA), the ABHI believes the purchasing function within the NHS
is currently under-resourced and under-skilled.
4.2 Price
Several fundamental weaknesses exist within
the purchasing process at PASA and elsewhere in the NHS: there
is often a lack of clinical involvement in the buying process;
many products are purchased only if they meet certain limited
criteria—even if they are more effective products available;
but most importantly, lowest price is predominantly chosen as
the most important procurement factor. If lowest price is prioritised,
several consequences occur. These include:
— The best technologies for patients
do not reach the NHS. Products that offer huge benefits to the
patient, efficiency and effectiveness of healthcare delivery will
simply not be available in the UK.
— A barrier to innovation develops.
The industry has little incentive to invest in R&D for new
products and devices. Larger companies will re-locate activities
away from the UK, while many SMEs may move out of the market altogether.
— Opportunities for partnership with
the NHS disintegrate. Suppliers will not support their products
but will simply sell them into the market on an opportunistic
basis.
— Choice in the NHS will become limited.
Clinicians, and therefore patients, will be restricted in the
choices of technology and treatment available to them.
— Patient safety could be compromised.
Restricting the availability of the very technologies, which can
deliver improved performance, would prevent hospitals from being
as clean and as safe as they need to be. In addition, UK industry
will not be in a position to respond to NHS requests to design
safer technologies.
4.3 Budgets
The NHS market itself also prevents the successful
use of medical technology. The budget silos that characterise
NHS funding can often lead to inefficient management of the patient
pathway. An example of this is the use of insulin pumps and monitors
for diabetes. While they may initially be more expensive than
needles—and therefore far less likely to be favoured by
procurers—they are far more effective both for diabetics
and for the NHS in terms of cost effectiveness. Their use means
fewer patients present with hypoglycaemic episodes at A&E
and many avoid serious long-term issues, such as amputations or
even blindness. The NICE guidelines for diabetes clearly state
that pumps and monitors should be the first choice treatment—but
few have been purchased by the NHS.
4.4 Payment by Results (PbR)
4.4.1 The reforms to NHS financial flows
under PbR will affect NHS procurement, including the purchase
of medical technologies. The tariffs for medical technologies
are to set according to the national reference cost for each Healthcare
Resources Group (HRG). The derivation of the current HRG list
and tariff is not clear and some procedure payments appear to
be so inadequate, they would fail to cover the cost of the technology
alone. Many of our members are already undertaking bottom-up costing
exercises and this assessment is intended to highlight where industry
can work effectively with the Department of Health to ensure a
good and effective system. It is hoped that this collaboration
will continue in order to be sure that Payment by Results will
not have an adverse impact on the introduction of new technologies
to the NHS.
4.4.2 ABHI is concerned that if PbR is not
implemented with great care, perverse incentives will operate
to:
— further slow the availability of
choices for new innovative technology; and
— in the worse case scenario, reduce
the number of options available for clinicians and patients for
existing technology based treatments.
4.4.3 For example—in a bottom-up costing
exercise, for cardiac resynchronisation therapy (CRT), industry
has estimated that the average tariff shortfall for these procedures
will be in the region of £3,000-£5,000. This means that
the hospital will lose money for every CRT procedure administered;
making it likely that services will be withdrawn. Other similar
examples can be viewed in Appendix 3.
4.5 Reverse E-auctions
Reverse e-auctions have recently been introduced
as a procurement process for the NHS. In a reverse auction, a
buyer specifies a set of goods to be purchased. Suppliers then
bid the price down to win the contract. Reverse e-auctions therefore
work on the principle that lowest cost is the final judging factor.
As section 5.2 and 5.3 illustrate, this leads to serious negative
consequences for the introduction of existing and new medical
technologies and devices to the NHS.
4.6 See Appendix 4 for a case study on the introduction
of new technologies.
5. COST EFFECTIVENESS
OF NEW
TECHNOLOGIES
5.1 The potential benefit for patients from
equitable and fast access to medical technology is obvious. New
devices can diagnose and treat conditions quicker and better,
drastically improve quality of life and in many cases, even save
lives.
5.2 New technologies can also improve productivity.
In the last 20 years, medical technology has accounted for around
two percentage points of the annual growth of NHS spending. The
Wanless Review projected that under the "fully engaged"
scenario, this would rise to 3%. It also stated that this growth
in medical technology could help achieve a growth in NHS productivity.
5.3 See Appendix 5 for a case study on the
cost-effectiveness of new technologies.
6. TELE-MEDICINE
6.1 Tele-medicine is one of a number of
technologies, which can help to improve the quality of care for
patients. In particular, tele-medicine has been shown to improve
diagnosis, choice of treatment and management of referrals between
healthcare providers in the NHS. Remote monitoring and management
of patients in the community offers enormous potential for shifting
the burden of care away from expensive hospitals. Telemedicine
offers patients an enhanced quality of life.
7. ABHI RECOMMENDATIONS
7.1 The ABHI has a number of recommendations
for the improved management of medical technology within the NHS.
All of these are integral to the effective use of technology and
to ensure patients have access to the best available treatment
and technology. These recommendations are as follows:
7.1.1 The HITF outputs must be followed
through with clear accountability across government for delivery.
7.1.2 The new arms-length body—"The
NHS Institute for Learning, Skills & Innovation"—needs
to quickly establish its role as a focus for driving innovative
service development.
7.1.3 Both industry and clinicians need
to be fully engaged in the process of HRG tariff development.
7.1.4 Reverse e-auctions should be eliminated
as a method for procuring medical technologies.
7.1.5 The Government should deliver
on its Wanless Report commitment to increase the level of purchasing
of medical technology as a key driver for improved patient care
and NHS productivity.
7.1.6 The ABHI believes that the UK
should follow the example of the USA and introduce legislation
to proscribe anti-competitive purchasing behaviour in the healthcare
sector.
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