Peter Sharott Chairman, Pharmaceutical Market Support Group peter.sharott@btinternet.com

1. Procurement in EnglandHow will the national medicines procurement service be improved?How will contracting arrangements change in the future? Peter Sharott Chairman, Pharmaceutical Market Support Group peter.sharott@btinternet.com

2. SubjectsDiscussed • Drug expenditure trends • National strategic approach to medicines procurement • Current key drivers for medicines procurement • National Pharmaceutical Supply Group (NPSG) • National standards for collaborative medicines procurement and management • Product categorisation • SHA Pharmacy and Medicines Management Groups

3. UK Annual Drug Expenditure (£m) Data Source: IMS

4. Drug Expenditure Estimates 2009/10 • UK - primary & secondary care = £14.1 billion • England – primary care • Branded £6.1 billion (80%) • Generics £1.6 billion (20%) • England – secondary/tertiary care • Branded £3.0 billion (84%) (includes Homecare at £750m to £1 billion?) • Generics £590m (16%) Secondary Care Drug Expenditure is rising by about 14.5% p.a. High-Cost PbR Excluded Drugs account for 50-60% of expenditure

5. National Strategic Approach to Collaborative Medicines Procurement & Management • Supply Chain Excellence Programme (SCEP) (2003) • A strategic framework to source pharmaceuticals for the NHS in England (October 2005) • Pharmaceutical Products and Services List (November 2008) • NHS Commercial Medicines Unit (January 2010) • Pharmaceutical Market Support Group sub-groups (March2010) • National Pharmaceutical Supply Group (NPSG) restructuring (June 2010) • Commercial Support Units (CSUs) National Pharmacy Workstream Report (June 2010) • A strategy for collaborative medicines procurement and management for the NHS in England (August 2010) • National pharmacy lead for branded medicines (August 2010) (subject to business case agreement)

6. Collaborative Medicines Procurement in England: Organisational Chart from 2010 National Committees/Groups Specialist Support Procurement Groups Trusts/PCTs NHS Trusts & PCT Pharmacy Networks Clinicians Clinical Networks PCT Commissioners Specialised Commissioners NHS CMU Pharmacy Non-Executive Board Commercial Support Units 6 x Regional SCEP Groups Generic Medicines National Pharmaceutical Supply Group Pharmaceutical Market Support Group NHS Commercial Medicines Unit SHA Pharmacy Procurement Groups Branded Medicines Therapeutic Rationalisation QIPP National Homecare Medicines Committee Pharmacy Business Technology Group Generic Medicines Sub-Group Branded Medicines Sub-Group Transitional Products Sub-Group Specialist Medicines Sub-Group NHS Pharmacists (Procurement, QA, Production, Medicines Information and Clinical)

7. Current Key Drivers for Medicines Procurement • NHS financial position and efficiency targets • National prescribing and medicines management initiati • Primary focus on secondary care generic and branded medicines • Market management • effective and robust supply chain management • efficient and transparent tendering and contracting processes • competitive markets with two or more suppliers • homecare: contracting, corporate and clinical governance • Collaboration with a wide range of stakeholders • Commercial Support Units • pharmaceutical leadership • governance and accountability for pharmacy activities

8. National Pharmaceutical Supply Group (NPSG) (1) • Chairman: • Andrew Alldred, Clinical Director for Clinical Support and Cancer Services and Director of Pharmacy, Harrogate and District NHS Foundation Trust • Membership: • PMSG Chairman and two other PMSG members • QC Pharmacist representing National Pharmaceutical QC Group • PCT Pharmaceutical Adviser • PCT Commissioning Pharmacist • Northern Ireland, Scotland & Wales representatives • Department of Health representative • NHS CMU General Manager, Principal Pharmacist & Lead Category Managers (2) • SHA Commercial Support Unit/CPH representative • NHS Trust Chief Pharmacists representing 10 SHA pharmacy networks

9. National Pharmaceutical Supply Group (NPSG) (2) • Terms of Reference: • To provide advice to the Pharmacy Non-Executive Board on the cost effective purchasing, supply and distribution of medicines and other pharmaceutical products to the NHS in England (secondary care) in order to ensure continuity of supply to patients  • To support national initiatives such as ‘Pharmacy in England White Paper’‘, Standards for Better Health’, ‘Better Health, Better Care’ and ‘Purchasing for Safety’, ‘Quality, Innovation, Productivity and Prevention (QIPP)’, ‘Commissioning for Quality and Innovation (CQUIN)’. • To work collaboratively with the PMSG and support this group with strategic advice. • To act as a focal point for the DH and NHS for the strategic procurement and supply of medicines of a national nature and provide pharmaceutical advice accordingly • To act as a strategic link between Pharmacists and key stakeholders in the supply chain. • To maintain a list of PMSG operational and advisory sub-groups, their terms of reference and reporting frequencies. To consider, evaluate and advise on the strategic impact of the issues arising from these groups. • To maintain links with primary care commissioners and providers. • To agree the strategy that will inform the annual work plan, objectives and defined outcomes for the PMSG

10. Draft National Standards for Collaborative Medicines Procurement and Management (1) • Contracts for branded medicines will normally be at SHA Pharmacy Procurement Group level, but, where appropriate, may be at sector or network level. • Contracting at individual NHS Trust level should only occur following agreement with the SHA Pharmacy Procurement Group. • Contracting decisions should take account of the potential impact on primarycareprescribing patterns and costs and may actually be driven by the emerging commissioning agenda. • Annual and rolling work programmes should be developed in order to drive identification and implementation opportunities for clinically-driven initiatives and demand management projects, through close engagement with the local pharmacy and clinical networks, clinicians, public health specialists and commissioners.

11. Draft National Standards for Collaborative Medicines Procurement & Management (2) • Local guidelines for managing the financial impact of contracts for medicines that are covered by the PbR high-cost drugs exclusion list should be developed through consultation with the NHS Trust and PCT chief pharmacist networks and commissioners • Tendering and contracting for branded medicines should be undertaken by the NHS Commercial Medicines Unit; in those exceptional circumstances where it is necessary to undertake this activity locally at SHA, sector or individual NHS Trust level, there should be full compliance with EU procurement legislation. • Contracts involving homecare supply should comply with the standards and guidance developed by the National Homecare Medicines Committee.

12. Draft National Standards for Collaborative Medicines Procurement & Management (3) • NHS Trusts and contractors should fully comply with contract Terms and Conditions. • Branded medicines purchased at contract prices should not be sold-on to third party healthcare service providers without the written agreement of the relevant pharmaceutical manufacturer. • A formal relationship should be developed between the local CommercialSupport Unit and the SHA Pharmacy Procurement Group covering the organisational structure, accountability, governance and funding arrangements

13. Product Categorisation Procurement-driven National – Generic medicines • oral products • hospital-only oral products • Injectables • Transitional, branded to generic medicines • NHS CMU tendering and contracting SHA/Regional • Branded medicines • Branded biosimilars • Mostly NHS CMU tendering and contracting • Some local tendering and contracting

14. Product Categorisation Clinically-driven SHA Pharmacy & Medicines Management Group • Therapeutic rationalisation • Underpinned by procurement and supply chain management • Assessment of influence and impact on primary care prescribing • Alignment with QIPP, NICE and other national initiatives • Clinician and clinical network engagement • Commissioner involvement • SHA/sector clinical policy and protocol development identifying first, second and third choice • Framework agreements – commitment volumes and prices • Value-added services • Homecare services and community-based services • Pharmaceutical industry engagement and partnerships

15. Proposed Generic SHA-level Structure CSU Board Strategic Pharmacy Lead (SPM or Procurement Specialist?) Operational Pharmacy Lead (SHA Procurement Specialist) NHS Trust & PCT Pharmacy Networks Clinical Networks

16. SHA Level Stakeholder Engagement