2Improving services and managing costs
Data to inform where improvements can be made
15.In order to assess whether NHS England is meeting its objectives for its commissioning of specialised services, NHS England needs to collect consistent data on costs, activity and outcomes. NHS England told us that currently it does not have consistent data on costs and activity for all specialised services because it uses three different payment arrangements for these services. Consistent data are available for about 40% of spending, where the payments are based on the level of activity and unit prices (tariffs) set at national level. But for the remaining spending, there are no consistent national data because NHS England’s local commissioning teams collect data differently. This includes spending on services paid for according to local agreed prices (about one-third of spending) and the costs of high-cost drugs and expensive medical devices that are reimbursed at the prices paid by providers to suppliers (about a quarter of spending). NHS England told us that it is improving the take up of more standardised formats for submitting data and the quality and completeness of that data through validation.21
16.There are significant unexplained variations in the locally agreed prices paid for specialised services. For example, in 2014–15, the price paid for a kidney transplant with a live donor varied from £13,000 to £42,000 across the eight centres providing this service.22 NHS England acknowledged that there is “a bit of dispersion” in the prices paid for these services that “owes more to history than it does to what a fair, efficient reimbursement would be”.23
17.On measuring outcomes for patients, NHS England recognised that progress needs to be made, particularly in measuring outcomes in a consistent way and collecting patient experiences. It felt that it had added to benefits for patients where it had done some work, for example peer reviews in major trauma, while also stating that measuring patient outcomes robustly is not straight forward for specialised services.24
High-cost drugs
18.NHS England has found it challenging to live within its budget for specialised services. In 2013–14, it overspent by £377 million (2.9%) and in 2014–15, it overspent by £214 million (1.5%). In 2014–15, the Cancer Drugs Fund accounted for £136 million of the overspend.25
19.NHS England told us that the increasing volume of effective but often expensive drugs (costing about £3 billion in 2015–16) and high-cost medical equipment (about £0.5 billion in 2015–16) are causing particular financial pressures. In December 2016, NHS England’s board noted that keeping within the future budget for specialised services would be exceedingly challenging, as it had limited its cost estimate on potential new drugs to the lowest end of its projected range.26 NHS England told us that if it is unable to live within its budget for specialised services, this will affect its ability to resource other health services.27
20.NHS England told us that some of the drivers of the rising costs of high-cost drugs are outside of its control.28 The Department leads on the Pharmaceutical Price Regulation Scheme, which limits overall NHS spending on branded drugs, and the pharmaceutical industry makes payments to the Department to cover any spending above the limit. NICE appraises the clinical and cost-effectiveness of new drugs and recommends which drugs are to be routinely funded by the NHS. NHS England assesses whether to approve funding for those high-cost drugs and devices not approved by NICE. NHS England acknowledged that these different elements of medicine management are not working together ‘optimally’.29 It highlighted that once NICE recommends a drug for NHS use, commissioners must fund it within 90 days, noting that NICE does not always consider affordability when approving these drugs. NHS England told us that about three-quarters of NICE recommended drugs apply to specialised services and that most of the budget increase for 2016–17 is related to NICE approved drugs.30 It also told us that the Pharmaceutical Price Regulation Scheme had served the NHS well for a long time, but is becoming a “bit leaky around the boundaries”.31
21.NHS England highlighted that NICE is able to allow flexibility in the implantation of its decisions under certain specified circumstances and had taken a more thoughtful approach for a new Hepatitis C treatment, enabling a phased approach to introduction. NHS England has been able to manage the impact on its budget of delivering this new treatment to 167,000 potential patients by being allowed to phase the introduction of this new treatment over a number of years.32 The Hepatitis C Trust informed us that it is very concerned about the impact that this phased approach, or treatment cap, will have on patients and has filed court proceedings challenging NHS England’s decision to adopt this approach.33 NHS England also noted that in having to fund NICE approved drugs, this may pre-empt other potential investments that might have offered higher value for patients overall.34
22.The Department told us that while it is responsible for providing a pricing framework for new drugs, NHS England is responsible for managing the volume of demand for these drugs. The Department believes better prices could be obtained if providers had ‘greater confidence in the level of demand’.35 NHS England confirmed that it has managed to secure substantial discounts for some high-cost drugs through bulk-purchasing.36
Service standards
23.All NHS service providers are required to meet the generic quality and safety standards set by the Care Quality Commission for all services. NHS England has also set additional national specifications or standards for specialised services that all trusts are expected to meet. These specifications and standards reflect the best available clinical evidence or practice to improve patient safety and outcomes. In February 2016, only 83% of services were compliant with these standards, with the compliance rate varying from 74% in the North West to 95% in the East Midlands. For 2015–16, 38% of trusts were not compliant with one or more service specifications.37
24.NHS England highlighted that, prior to 2013, there was no national visibility about differences in the way that specialised services were provided across the country, and that the introduction of service specifications had increased transparency and revealed these differences.38 NHS England noted that these specifications are often ‘gold standards’ set with a view more towards the quality or excellence of outcomes rather than affordability, and reflect what people should aspire to, over and above the minimum level that the Care Quality Commission and others say is necessary. Nevertheless, the level of compliance in some areas suggests that these standards are often perfectly achievable.39
25.NHS England told us that meeting some of these standards may involve moving services from one provider to another and that for some standards, complex changes “at very considerable cost” were required that may be difficult to bring about “in the real world”. It confirmed that it aims to get as much consistency across the country as possible while getting the balance right between quality and the resources available. It also argued that some of the variation recorded in different compliance levels may be down to the quality of underlying data.40
26.We challenged NHS England on what the variable levels of recorded compliance meant for the relative standard of treatment available to people in different parts of the country. NHS England told us that it did not think that the variation in compliance with standards reflected a “radical difference in the quality of care for patients”.41
22 C&AG’s Report, para 2.14
25 C&AG’s Report, para 7
26 Qq 6, 28, 31, 33; C&AG’s Report, paras 7, 9
29 Qq 6–8, 29, 31; C&AG’s Report, para 2.12; C&AG’s Report, Investigation into the Cancer Drugs Fund, HC 442, Session 2015–16, September 2015, paras 2.1–2.2, Figure 15
32 Qq 7–8, 72–78; C&AG’s Report, para 2.12
37 Q 9; C&AG’s Report paras 11, 3.7, Figure 15
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12 July 2016