Health and Social Care Bill

· Sustainable pricing is needed - understandable by/within the NHS and assuring best value for purchasers.  DH is taking steps to reinforce the appropriate behaviours but needs to act also on the issues below.

... but there exist many unnecessary costs that should be removed from the supply chain

There is insufficient ‘Do It Once and Once Only.’ Particular issues are:

· There are multiple points of entry to the NHS, in conjunction with a variety of onerous conditions and fees required to take part in the procurement process. The purpose of this is to raise ‘Activity Based Income’, charging suppliers a percentage of total sales organised by the intermediary. These practices add to supply chain and health care costs and the basis for their existence is challenged in recent NAO reports [3] . There is no national consistency in these policies, and they are difficult to defend in terms of international codes/conventions of business practice (e.g. UK Bribery Act, US Foreign Corrupt Practices Act;);

· There are varied terms and conditions for contracts and ancillary documentation, with competing NHS stakeholders at national, regional and local levels; and

· NHS Supply Chain, as a national agent of the NHS, run by DHL through its subsidiary Exel Europe, commissions production of ‘own label’ products ‘direct from manufacturer.’ This treats products as commodities, in order to reduce price. Supply Chain thus has a dual role as both a tenderer for public supply and a competitor with incumbent suppliers, with the benefit of privileged market information including its suppliers intellectual property. This issue has not yet been exposed to full transparency. These questions on NHS Supply Chain business processes extend to its regulatory compliance, which has been thrown into doubt by a recent report.

Examples of barriers to uptake

Exmoor Innovations (SME, Somerset) produces Epidural System, ‘Epiderm’, a drug delivery system that allows clinicians more accurately to identify the epidural space. The system has a shorter learning curve for clinicians and has been proved to reduce the number of negative episodes from around fifty per thousand to ten. It was developed by this UK company working closely with a Somerset Hospital. Despite the hospital currently owning 10% of the patent, the sales in the UK are currently zero as procurement managers fail to recognise the wider benefits of the system and only assess the upfront cost.  Epiderm is currently in use in a number of markets including Australia, Europe and the Middle East.

Medtronic’s device system allows patients with implanted devices to be monitored at home, obviating the need for follow up appointments. In order for a Hospital trust to start using this system it must first approve the terms, conditions and patient privacy statements. Each NHS Trust has its own unique series of forms to complete to gain approval. Despite the benefits to patients and the savings that can accrue, this process has had to be run 85 times with different trusts.

Pathogen Solutions Ltd (SME, West Midlands) has a UV steriliser for killing airborne bacteria and viruses, reducing health-care acquired infections.  Despite positive review by the Rapid Review Panel under the Health Protection Agency scheme and subsequent acceptance in the NHS catalogue, in order to sell this innovative product the company had to approach each NHS Trust individually to obtain approval.

Safe Patient Systems, founded by Consultant Surgeon David Morgan and based at the Heartlands Hospital in Birmingham (10 staff), has a passive radiofrequency identification (RFID) tagging system to monitor patients and operating theatre throughput, ensuring the correct patient is operated on and that the correct procedure is conducted on the correct organ/limb.  Despite being based within a hospital Trust, and having insider knowledge, the company has had to approach each Trust individually throughout the country and is struggling to gain widespread adoption.

Seating Design & Development Ltd (less than 10 staff, university collaboration in Midlands and Essex base) produces a range of seating technologies to reduce the risk of deep vein thrombosis (DVT) for long-term wheelchair users.  In order to sell this innovative product onto the market it has had to replicate slightly revised trials with each NHS Trust across the country.

In summary, as regards its acquisition of technology:

- the NHS continues to focus on price, rather than value and to see suppliers as transactional rather than business partners.

- NHS systems tend to increase supply chain costs, through the variety of intermediary organisations involved.

- There are specific issues on NHS Supply Chain business processes.

ANNEX A

Possible amendment to clause 19, for the NHS Commissioning Board to promote innovation (new clause 13H for National Health Service Act 2006)

The NHS Commissioning Board should in pursuit of its duty to promote innovation:

1. Ensure that evidence-based medical technologies, of which some are assessed by NICE, lead directly to appropriate changes in the NHS ‘adoption architecture’:

– clinical coding and ensuing tariff for procedures

– support for uptake through the NHS Technology Adoption Centre, or a similar function embedded in NICE

– measurement of uptake of new medical technologies with

o links to the NHS ‘Atlas of Variation’ for patients and professionals to consult; and

o strong link to patient choice and control

2. Take into account the NHS’s role as an innovation champion for UK healthcare/lifesciences industry which employs almost 140,000 people in the UK, has a turnover of about £34bn and has a record of innovation greatly exceeding its size in global terms.  The Commissioning Board’s annual report should demonstrate how it has taken this into account with reference to the points at 1 above inter alia.

March 2011