6.9 How the SMC process should be adapted to include commercial negotiation with the aim of (1) ensuring best value for the NHSS and (2) getting to a pharmaceutical companies' best offering on price earlier
6.9.1 There is a need to differentiate between the full process for the assessment and managed introduction of new medicines for use in NHSScotland and the part that SMC and its processes play in that wider process.
6.9.2 None of the stakeholders consulted felt that SMC had a role to play in commercial negotiation. SMC's role and acknowledged strengths lie in health technology assessment and that should remain SMC's primary function.
6.9.3 When discussing this aspect of the Review stakeholders were realistic about the competing priorities involved and recognised that the challenge is how to best manage the interface between NHSScotland and the pharmaceutical industry. A situation where NHSScotland seeks to optimise its use of a finite resource subject to ever-increasing demands while the pharmaceutical industry operates in a competitive commercial environment and seeks to maximise return on its investment and meet the expectations of its shareholders.
6.9.4 The clear, shared interest of all parties evident to the Review is to give patients access to new medicines likely to be of benefit to them in a way that is clinically appropriate, timely and affordable.
6.9.5 Currently there is little in the way of formal price negotiation on behalf of NHSScotland. While consideration of price is part of the development and submission of PAS this process is led by the pharmaceutical companies and the proposed PAS is agreed, or not, by PASAG. This process has been successful in agreeing a number of simple discounts for high-cost medicines but it is a process that is used by the pharmaceutical companies usually in response to anticipated or actual failure of submissions to achieve SMC support.
6.9.6 With PAS to date there has been a preference to pursue simple discounts because of the lesser administrative burden on Health Boards. Some complex PAS have been accepted which rely on ongoing data collection which then influences the actual amount paid. There is a definite enthusiasm on the part of the pharmaceutical industry to explore the potential of this approach and to develop more formal MAS for use in NHSScotland. Several stakeholders also commented that this approach will be necessary to cope with some of the anticipated changes in the way that new medicines will enter the market in future. This is discussed in section 6.11. MAS should be developed as an additional option rather than a replacement for PAS as simple PAS are likely to remain appropriate for a number of new medicines.
6.9.7 To date there has been a reluctance on the part of NHSScotland to enter into payment-by-results schemes despite enthusiasm on the part of the pharmaceutical industry because of the perception that the establishment of systems to support the on-going requirement for data collection is complex and labour intensive and the costs could potentially exceed any gains from the complex PAS. It is going to be difficult to maintain this position and for the reasons outlined in Section 6.11 and elsewhere, NHSScotland now needs to explore complex PAS and other MAS with a view to their early adoption.
6.9.8 The general approach of NHSScotland to the negotiation of prices for end-of-life, orphan and ultra-orphan medicines has tended to be reactive. There is now a need to be more proactive to better deal with the growing competing priorities facing health and social care and the increasing challenge of making best use of the public purse.
6.9.9 It was suggested by one stakeholder that the new approach has actually weakened the negotiating position of NHSScotland. The concern is that the explicit move away from the use of the QALY to assess ultra-orphan medicines indicates that higher costs will be tolerated. Consequently, it was felt that incentives for pharmaceutical companies to offer reduced prices had been removed. In similar vein the increased success rate for IPTR applications may also encourage pharmaceutical companies to maintain higher pricing strategies.
6.9.10 There was a general feeling that the negotiation on pricing has to be part of a different set of relationships and the discussion needs to begin earlier in the pathway of a medicine's introduction. It also needs to involve a wider group of stakeholders than just NHSScotland and the pharmaceutical industry. All of those who contributed to this Review expressed an interest in being involved in discussions about how pricing strategies might be agreed. The need for robust data and data handling expertise to support a new process was highlighted and the Farr Institute was seen as having a significant contribution to make in this regard. As well as addressing issues of cost and affordability a suitable new process will be better able to address issues such as horizon scanning, optimal use of the medicine, outcomes, value and whole system impact. Any future mechanism to set pricing has to possess a level of sophistication capable of dealing with issues such as multi-indication pricing and managed access schemes.
6.9.11 This different relationship between NHSScotland and the pharmaceutical industry will inevitably harbour a tension between the collaboration required to jointly optimise use of and access to medicines, and the competitive stance required to have a commercially robust negotiation on price. These two aspects of the relationship are not mutually exclusive and each has to inform the other particularly in relation to assessment of value as discussed in Section 6.12. It is also important to accept that the relationship has to involve input from the full range of stakeholders already engaged with SMC and this Review and not just NHSScotland and the pharmaceutical industry.
6.9.12 There is active discussion outwith this Review about the introduction of a pause in the process. There is a lack of clarity amongst stakeholders on exactly what this means and how it might operate. Having a mechanism which creates the opportunity for pharmaceutical companies to review their pricing rather than having to resort to full resubmissions is welcomed by some, however other stakeholders spoken to during the Review are concerned that a pause will delay decisions on access and potentially create an environment which could present opportunities for gaming.
6.9.13 It was suggested that one of the limitations of the current system is the number of decision options open to SMC. The choice is effectively binary albeit that an approval decision can be associated with restrictions. It was felt by some that giving SMC an option to give a conditional yes would helpfully enhance the nature of price negotiations and pricing strategies and would be compatible with a move to the adoption of MAS.
6.9.14 A conditional yes would fit with MAS as used elsewhere including in NHS England. SMC would have the option to approve a medicine subject to ongoing data collection and evaluation with the option that if the medicine failed to deliver the anticipated outcomes the pharmaceutical company would refund the costs and the medicine would have its use restricted or would be withdrawn.
6.9.15 Some reservations were expressed about the ability to withdraw a medicine that had not lived up to expectations once it had been established in practice. Despite these reservations it was conceded that such a system would have to be explored particularly in relation to the anticipated introduction of medicines in the future where a medicine would be licensed on the basis of demonstrating potential but before having a conventional evidence base established.
6.9.16 NHSScotland has already demonstrated the benefits of negotiating for medicines using National Procurement within NSS. The most recent success has been the procurement of the new medicines for Hepatitis C. There is the opportunity to learn from and build on this experience and although the circumstances in relation to volumes and critical mass are different when considering end-of-life, orphan and ultra-orphan medicines, there are still parallels in relation to the timing of the negotiation and the mobilisation of expertise.
6.9.17 Discussion with stakeholders and some of the scoping undertaken in support of this Review suggests that NHSScotland could learn from the experience of other countries. New Zealand, Canada and several European Countries were mentioned but none offers a simple, readily-adoptable solution. There would be merit in undertaking a more detailed evaluation of experience elsewhere.
21 Explore MAS with a view to early adoption in NHSScotland. These should build on the experience of complex PAS within NHSScotland and payment-by-results schemes in operation in other health systems.
22 Review the proposal to introduce a "pause" in light of some of the wider changes and actions recommended in this report.
23 Give SMC the additional decision option of "recommend for use subject to ongoing evaluation and future reassessment."
24 Make greater use of National Procurement in NSS to lead negotiations on behalf of NHSScotland on the cost of new medicines
25 Undertake a comparative review of the arrangements in place in the healthcare systems of other countries for the introduction of new medicines and specifically end-of-life, orphan and ultra-orphans, seeking to learn from their experiences.