The rise of speciality products

Secondary care to become the primary source of drug spend? The rise of speciality products


Over the last decade, Pharma’s portfolios has broadly shifted from being focused on small molecule drugs for chronic conditions (e.g. statins and ARBs) to more complex speciality products (e.g. oncologics, orphan indications and biologics). The reasons behind this shift include more complex manufacturing techniques, increased ability to demonstrate clinically meaningful results and less crowded therapy areas. This has resulted in pharma companies being able to charge significantly higher prices as these products are addressing areas of high unmet need. While this has been a profitable shift for Pharma, what impact has this had on the healthcare systems, particularly the UK clinical commissioning groups (CCGs)?

The current UK NHS drug spend is ~£830 million, with £500 million spent in the primary care sector and £300 million in secondary care. The total UK NHS drug spend is expected to increase to £1.2 billion by 2020. However, growth rates differ hugely between primary and secondary care settings, with growth of only 2-3% in primary care but ~15% in secondary care. The main reason for this is that drug savings from off patent molecules do not match the drug spend for new treatments, especially within the secondary care setting.

Recently one CCG clinical commissioner that Remap Consulting spoke to clearly highlighted the issue: “In five years’ time, our CCG will be spending more on hospital (secondary care) drugs than community (primary care) – this is a paradigm shift and I’m not sure the hospital infrastructure is able to manage this shift.”

“We are also observing capacity issues within hospitals, as a lot of high cost drug treatment needs to be administered here. Hospitals are not set-up for repeat prescriptions; historically they only focused on acute conditions. It is not clear how this will be managed – where will patients go to pick up prescription, and how will the drug be funded?”

The challenge is not only for existing drugs. Formulary committees are facing increased pressure to provide formulary access to an increasingly large number of speciality (particularly oncology) treatments that are currently being approved by regulatory authorities. The key issue here is to understand the real value of these treatments, not just the acquisition costs.

Whilst NICE can determine if a drug is cost-effective to the NHS, it is the responsibility of CCGs to manage their local drug budgets and these cost-effective treatments can still have a huge impact on local healthcare budgets. It is not solely drug costs that are important to CCG commissioners, they also consider additional costs directly related to the treatment, such as the cost of administration or adverse effect monitoring. When these additional cost are factored in, they can have a significant impact on the overall cost of treatment and on the CCG’s resources. In addition whilst these treatments may reduce staff or bed time, it is highly unlikely that CCGs will be able to shut hospital wards or sack medical staff. Whilst Pharma has successfully made the transition to speciality products, it is clear that the CCGs and the NHS are still struggling with the budget impact of these new treatments. There are a large number of structural, resource, financial and logistical issues faced by healthcare systems as pharma companies develop ever increasingly complex treatments which shift administration to the secondary care setting. Pharma needs to work more closely with secondary care to ensure effective implementation and management of new treatments to help address the capacity and financial challenges that

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