PROCUREMENT & DISTRIBUTION INTEREST GROUP Autumn Symposium 2007

1. PROCUREMENT & DISTRIBUTION INTEREST GROUPAutumn Symposium 2007 http://www.pdig.org.uk/

2. Performance Management of Branded MedicinesPDIG Award Kirsteen Docherty, Procurement Services Manager, UCLH Trust

3. Medicines Procurement • Trust or regional • consortia • Therapeutic • P.I. tendering • Economies in • physical practice • Trust or regional • consortia • P.I. tenders • Economies in • physical practice National SCEP Generic Branded Branded Free market Monopoly Oligopoly Potential for Purchase/Contracting Supplier Strategy

4. Research Questionnaire Content (24 forms returned) • Consortia purchasing • Multiple consortia purchasing • Parallel Imports • Volume discounts • Benchmarking • Tender paperwork • Performance monitoring (inc savings and cost pressures) and barriers to this • Therapeutic switching • Horizon scanning • The future for branded medicines procurement

5. Consortia purchasing

7. Impact of size of purchasing organisation Single Hospital Trust Regional/ Division Consortium National/ Division Purchasing Power Size of Organisation Ease of Co-ordination

10. Multiple consortium purchasing together % of Trusts interested in becoming involved in multiple consortium purchasing. Yes – 86% No – 14%

11. Respondents perceptions on effectiveness of multiple consortia purchasing

13. Parallel Importing % of Trusts who tender for parallel imports? Yes – 83% No – 17%

14. Factors that may prevent the purchase of PI’s? • Continuity of supply 54% • Labelling/packaging 54% • Counterfeiting 42% • Reputation of supplier 8% • Sourcing 4% • Limited discounts available 4%

15. Volume Discounts • Ability to take advantage of large volume discounts? Yes – 79% No – 21% • Approx 50% of those who can take advantage stated this was because of access to a regional store

16. Benchmarking prices

17. Reporting on procurement performance? 62% of respondents compile a yearly report on procurement performance. Information included in the report; • Savings achieved 100% • Tendering work undertaken 80% • Further savings opportunities 80% • Work plan for next year 53% • Other 13%

18. Reporting on procurement performance? Who is interested in seeing the report? • Senior pharmacy managers 93% • Finance director 87% • CEO 33% • Trust procurement mgr 27% • Procurement hub 20% • Other 13%

19. Savings • 83% of respondents measured contract savings • 34% were given a savings target per annum from the medicines budget • 31% had medicines savings removed from the medicines budget

20. Price increases • 71% of respondents measured price increases • How often price increases are measured?

21. Cost pressure analysis Definition: Monitoring the medicines budget using price changes and volume changes. 43% of respondents use cost pressure analysis (30% of these use this for all branded medicines)

22. Who is cost pressure analysis work shared with? • Finance director 80% • Senior pharmacy mgr 70% • Trust procurement mgr 20% • Other 20% • CEO 10%

23. Other performance monitoring tools • Compilation and review of high expenditure 96% branded products e.g. Top 100. • Value, number or % of high expenditure branded 71% products without a contract • The number/ % of branded lines tendered per annum 25% • The average % discount for branded lines as a whole 13% • The average % discount for branded lines per company 4% • The average % discount per therapeutic group 0%

24. Suggested other performance measurements • Supplier performance monitoring • Price tracking in relation to patent expiry • Impact of entry of competitor products • Opportunities for therapeutic switching

25. Barriers to measuring branded medicines contracting performance

26. Therapeutic Switching • 83% of Trusts are currently involved in therapeutic switching • For 73% of those Trusts the pharmacy procurement team are involved

27. Therapeutic switching, easy or difficult?

28. Key problems with implementation of therapeutic switching • Reluctance to change 50% • Clinical concerns 42% • Insufficient resources 42% • Industry funding (linked to product) 13% • Other 13% • Lack of clinical data 8% • Other priorities 4% • Insufficient savings 4%

29. Respondents views on future structures for branded medicines procurement • Involvement of NPSG & PMSG 88% • Collaboration between Trust procurement, 83% consortium and PaSA • Collaboration between Trusts in form of 67% consortium • Multiple consortia purchasing 67% • CPH involvement 21% • NHS Supply Chain involvement 17% • Trusts supply dept involvement 17%

30. What are the current trends in branded pharmaceuticals management? • More collaboration between Trusts and Consortium e.g. LPP. Trust contracting likely to decrease further. • Increased use of branded medicine tendering • Companies increasingly offer volume based frameworks

31. What are the current trends in branded pharmaceuticals management? • Introduction of payback schemes e.g. Velcade. • Increase in treatment of patients within their home environment • Increase in development of biotech drugs – decreased competition, limited tender/negotiation opps. • Encouragement of therapeutic switching across multi-consortia e.g. LPP.

32. Why are we contracting for branded medicines? • Current PPRS profit cap model is not effective at controlling prices? • OFT proposal for value/ evidence based pricing by NICE. Takes branded medicine management work load from local and multi-consortia to national level. • Reference pricing in New Zealand & Australia and cross product strategic agreements in New Zealand. • Govt/PPRS and manufacturer price negotiations prior to product launch e.g. French model.