Evidence submitted by the American Pharmaceutical
Group (Def 29)
1. INTRODUCTION
1.1 The current NHS deficit is reported
as approximately £800 million. Although this amount is large,
it is a small proportion of the overall annual NHS spend (1.2%
of the NHS budget) and has been generated by a small number of
NHS trusts. It should also be noted that the NHS has always had
deficits. Greater transparency has lead to a clearer identification
of where these deficits lie.
1.2 Similarly the amount spent on prescribed
pharmaceutical medicines is also a small proportion of the overall
spend (11.2%). Pharmaceutical medicines are often viewed purely
as a cost for the NHS. However, this is a relatively simplistic
view and does not take into account the wider cost-saving effects
a drug can provide. Pharmaceutical medicines may prevent patients
from requiring more expensive hospital care, reduce the need for
nursing care and help to keep patients at work. This has the knock-on
benefit of helping to reduce costs in other government departments;
for example if a patient is able to return to work this reduces
the cost of incapacity benefits provided by the Department for
Work and Pensions. If used effectively spending on medicines can
save the NHS and government money in the long-term as well as
helping to improve the health of the nation.
1.3 The cost of pharmaceutical medicines
in the UK is controlled by the Pharmaceutical Price Regulation
Scheme (PPRS). The PPRS ensures reasonably priced medicines for
the NHS and supports a successful British-based pharmaceutical
industry. Supporting the pharmaceutical industry in this way promotes
and funds research and development in the UK, leading to new and
novel medicines for NHS patients.
2. THE AMERICAN
PHARMACEUTICAL GROUP
2.1 The American Pharmaceutical Group (APG)
represents the ten leading research based US owned pharmaceutical
companies who invest in the UK. The group was established in 1985
to improve understanding of the industry, and the healthcare contribution
of the American companies in particular, among Government, Parliament
and interested stakeholders.
2.2 Collectively, we account for over 35%
of UK sales of prescription medicines and employ over 17,000 highly
qualified staff with over 4,500 working in research and development
(R&D) and almost 4,000 in manufacturing. As a Group we invest
over £1.5 billion a year in R&D and export more than
£1.7 billion of prescribed medicines.
3. NHS DEFICITS
3.1 The current NHS deficit appears to be
multi-factorial, caused by both systemic and local pressures and
failings; as well as greater levels of transparency which has
prevented such deficits from being hidden. It is often assumed
that rising costs of pharmaceutical medicines has pushed the NHS
into deficit. However, the pricing and distribution of medicines
in this country is highly regulated and there has not been a rise
in the price of medicines for over 15 years. In fact, in real
terms medicines are cheaper now than they were ten years ago.
In order for a medicine to be prescribed, it must first prove
its clinical effectiveness and safety before it is given a licence
by the Medicines and Healthcare products Regulatory Agency. The
National Institute for Health and Clinical Excellence (NICE) may
then issue guidance on whether this medicine or procedure is cost
effective for the NHS.
3.2 We support the activities of the current
Government to deliver care closer to patients' homes and our members
are researching new medicines to enable more home-based care across
a wide range of disease areas. While it may be politically expedient
to cut spending on medicines at a time of retrenchment in the
service—this is a short-sighted approach, given the numbers
of people whose health is maintained by pharmaceutical support.
In the long-term this cut may result in many more patients needing
hospital or nursing care: an ultimately more expensive scenario.
3.3 The greater part of the NHS budget is
not spent on medicines (88.8%). This spending is not nearly as
highly regulated as medicines spending which is controlled by
the PPRS, the MHRA and NICE. NHS practices will need to be assessed
on a similar cost-effective and clinical basis to identify inefficiencies,
if NHS trusts in deficits are to turn things around.
4. THE COST
OF MEDICINES
4.1 The cost of pharmaceutical medicines
in the UK is controlled by the Pharmaceutical Price Regulation
Scheme (PPRS). The PPRS acts to ensure reasonably priced branded
medicines for the NHS on the one hand, and a competitive and innovative
British-based pharmaceutical industry on the other. The PPRS allows
for forward planning by the NHS and also ensures that regional
discrepancies are removed. The last three PPRS reviews have seen
pricing cuts—the last of which was a 7% price cut in January
2005.
4.2 The NHS currently spends £7.7 billion
on medicines every year; this is only 11.2% of the overall NHS
budget (£69 billion). The spend on branded medicines fell
by 4.7% in the last year, despite an 4.6% increase in the number
of prescriptions issues by doctors. There is a misconception that
the UK pays more for prescribed medicines than other European
countries. However, if fluctuations in exchange rates and differences
in pack sizes, dosage and formulation, tax variations, rebate
and discount schemes and wholesalers' margin are taken into account;
UK medicine prices move into line with European averages. In fact
the UK spends less on medicines per head of the population than
the majority of other European countries (approximately £200
a year per person)—mainly because the NHS spends the greater
proportion of its money on older, generic medicines.
4.3 The UK has the lowest take up of new
medicines across Europe, which can impact upon patient care. The
reasons for this are complex but slow implementation of NICE guidance
is increasingly an issue. A recent Audit Commission report (September
2005), found that implementation of NICE guidelines was erratic
across the country due to a weakness in financial management and
planning. In contrast, between 1993-2003 the USA was the site
of first launch for 68% of novel medicines. This is clearly of
benefit to US patients who can receive innovative medicines quicker
than other patient populations. In addition; as a result of successive
PPRS price cuts and the ending of many medicine patents, medicines
are 21% cheaper in real terms now than they were 10 years ago.
As a result, the UK has been steadily losing ground to the USA
in terms of research and development, development of innovative
medicines and worldwide sales over the last decade.
4.4 The UK pharmaceutical industry reinvests
over 30% of its sales into research and development of new medicines.
Further price cuts would threaten the pharmaceutical industry's
ability to research and develop new and innovative medicines in
this country. This has been seen in Germany, Italy and Australia
where cost containment policies have impacted on the industry's
ability to invest in the local economy; leading to job losses
and plant closures.
5. THE VALUE
OF MEDICINES
5.1 There is much evidence to support the
cost effectiveness of pharmaceutical medicines, and in fact this
is one of the main purposes of NICE. The APG has listed below
some examples of the value of medicines for the committee's information.
It should be noted that these represent only a few ways in which
medicines can provide a cost benefit to the wider community and
economy.
Coronary Heart Disease
5.2 Coronary Heart Disease is currently
the biggest killer in the UK for both men and women—more
than 105,000 people a year in the UK die as a result of CHD (2004).
The majority of these deaths are a result of a heart attack. 230,000
people suffered from a heart attack in 2004; 30% were fatal. CHD
accounts for around 3% of all hospital admissions in England.
5.3 The economic burden of CHD is obviously
vast. The costs for treating a heart attack or stroke are extremely
expensive and are associated with further costs such as nursing
care, and hospital bed usage. CHD costs the healthcare system
£3,500 million per year. 79% of this is spent on hospital
related care and 16% on buying and dispensing medicine. There
are obviously wider cost implications such as working days lost
by the patient or their carer. The cost to the UK economy every
year due to CHD is £4,400 million.
5.4 Statins are preventative treatments
that reduce cholesterol in the blood; one of the risk factors
of CHD. They are used in the primary and secondary prevention
of CHD. The NHS currently spends £769 million on statins
per year.
5.5 The number of deaths from CHD in adults
under 65 has fallen by over 44% in the last 10 years. The number
of hospital admissions for CHD has also fallen. This is in part
due to the continued increase in the use of statins—nearly
30 million prescriptions for statins and other cholesterol-lowering
medicines are issued annually, almost 17 times the number prescribed
ten years previously.
Diabetes
5.6 Diabetes is a condition in which a patient's
blood sugar levels are raised due to insufficient levels of insulin
(which regulates sugar in the blood). There are two types of the
condition: type 1 where the patient's body is unable to produce
insulin and type 2 where the patient's body does not make enough
insulin or makes insulin which does not work correctly. About
1.4 million people in the UK are diagnosed with diabetes—80%
of those with type 2 and 20% with type 1. However, it is generally
believed that up to 1 million additional people in the UK may
suffer from undiagnosed type 2 diabetes.
5.7 The symptoms and complications associated
with diabetes can be serious and debilitating including blindness,
limb loss and kidney failure. The cost of the disease is a huge
burden to the economy. The average reported yearly loss of earnings
is £14,000 for a diabetes type 2 patient and £11,000
for their carer. The NHS spends £2 billion on the care of
diabetic patients—this is 5% of its budget—and the
rate of sickness absenteeism for the diabetic population is 2-3
times higher than the general population.
5.8 Diabetes is treated by a combination
of lifestyle changes and innovative medicines. The management
of diabetes with medicines can reduce or delay associated complications.
This in turn reduces the need for acute care and provides a saving
for the NHS. Proper regulation of blood glucose levels for the
current diabetic population, using lifestyle changes and medicines,
could save the NHS about 380,000 bed days a year.
Schizophrenia
5.9 Schizophrenia affects one in one hundred
people at some point in their lives—approximately 250,000
people in the UK experience some type of schizophrenic illness.
It can be a disabling condition, but for most people a meaningful
recovery is a real possibility. The symptoms of schizophrenia
are characterized by acute episodes of delusions and hallucinations
and long term impairments such as low motivation, suppressed emotions
and depression. Violence is often wrongly perceived as a symptom
of the condition, whereas a person with schizophrenia is more
likely to harm themselves than anyone else and up to 10% of people
with schizophrenia take their own lives.
5.10 Schizophrenia can be effectively managed
using psychosocial therapies and drug treatments. In 2002 NICE
recommended the use of the newer atypical antipsychotics for people
experiencing a first episode of schizophrenia and for those patients
experiencing lack of efficacy or side effects with older antipsychotics.
5.11 Mental health is a key Government health
priority. The Wanless report highlighted the greater use of atypical
antipsychotics as a key factor in helping to create a world class
mental health service. Evidence has shown that atypical antispychotics
can significantly reduce relapse and therefore reduce hospitalisation
and the expense of costly inpatient treatment. Fewer side effects
with atypical antipsychotics may result in better adherence to
treatment, enabling patients to remain in the community, be more
socially included and possibly return to work.
6. LOOKING FORWARD
6.1 NICE is a body which was established
to prevent postcode lotteries, enable equal access to medicine
across the country and bring cost-effectiveness to the NHS. NICE
assesses a medicine's clinical and cost effectiveness and issues
guidance on how conditions and illnesses ought to be treated.
Much NHS activity is not prone to the same level of scrutiny or
assessment and so inefficient practice or management is harder
to identify and eradicate. In order to implement changes that
will eliminate deficit in the long-term, it is vital that the
Government and the NHS looks closely at current practices, in
a similar manner to NICE, and stop those which aren't working.
6.2 The recent demand for Herceptin, an
expensive but potentially life-saving breast cancer therapy, from
patients with early onset breast cancer, has posed problems for
primary care trusts (PCTs) trying to balance their books. The
APG recognises that demand for new medicines can present issues
for the NHS and member companies are working to manage the entry
of such medicines into the NHS through budget models and other
tools. Ring fencing money for future innovative medicines, may
also help to ensure that a sudden demand for a new medicine can
be met.
6.3 In the examples given previously the
APG has demonstrated the value of medicines and the cost benefits
they can provide. There are already three systems in place to
ensure the efficient use of medicines in the NHS. A further cut
in medicines spending is a short-term solution that will cause
greater problems long-term. Improving access to the best medicines
will serve to reduce demands for expensive secondary care. Encouraging
a fair return for the cost of developing new innovative therapies
will serve to ensure medicine advances that could pave the way
for better public health, a lesser need for recourse to hospital
care and the balancing of NHS books
Jennifer Mitchell
American Pharmaceutical Group
6 June 2006
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