Drug companies propped up NHS with £250m after cabinet’s threat

This figure of £250m is about the same as we spend on overseas patients who take advantage of the UKs 4 health services. The amount is small beer – and a distraction from the real issue. How do we ration health care overtly and pragmatically so that it is of a high quality with short waiting lists for everyone? If the quality or the waiting is poor, we have a two tier system…. as is developing by neglect. Big Pharma will do whatever is needed to continue their profits – even selling on line antibiotics into a market where superbug resistance is rising.

The Times’ Chris Smyth and Oliver Wright on 17th Feb 2017 report: Drug companies propped up NHS with £250m after cabinet’s threat – Sir Jeremy Heywood, the cabinet secretary, threatened to impose statutory price caps on drugs in an attempt to raise money to plug a £500 million hole in the NHS budget

Britain’s top civil servant forced the big pharmaceutical companies into a £250 million bailout to help to plug a £500 million hole in the NHS budget.

In the latest sign of panic over NHS finances, Sir Jeremy Heywood, the cabinet secretary, threatened to impose statutory price caps on drugs in an “aggressive” attempt to raise more money.

The pharmaceutical industry then agreed to cover part of a shortfall in an attempt to win government goodwill in talks over medicines regulation and avoid an “acrimonious” row.

Opposition MPs say that ministers must come clean on the gap in the NHS budget and explain why they were spending money that they had yet to receive. The bailout stems from an agreement in 2014 which capped NHS spending on branded medicines at about £8 billion, with any costs above that level refunded by drugs companies.

The pharmaceutical industry had hoped that this would free doctors and hospitals from worrying about the cost of medicines and encourage them to change Britain’s traditional reluctance to use new drugs.

However, instead of funnelling rebates back to areas that spent the most, ministers opted to use the money to prop up the central NHS budget. As a result the Department of Health was caught short when rebates were less than predicted, having already allocated the expected refunds to NHS budgets for 2017-18.

At a meeting in November, Sir Jeremy told the industry that the scheme was failing and threatened statutory price cuts to medicines unless they stumped up more money.

The Association of the British Pharmaceutical Industry said that while it “fundamentally disagree[d]” with the government’s approach, it felt that it was best to agree some sort of deal.

“At best even if the government does not end the scheme early, there would be a significantly more acrimonious relationship going into the next negotiations. There would be significant immediate impact on industry ability to influence and shape the UK commercial environment now and in the future,” industry minutes say.

David Watson of the association told The Times that goodwill with ministers was crucial as the industry approached talks on the shape of the economy and how drugs would be approved once Britain left the EU.

“We are aware that we’ve got a new industrial strategy coming along and there is a lot up for grabs about regulation after Brexit that we want to be working on as partners with the government,” he said.

“Having allocated that money in advance, they found there was a gap in their budget for 2017-18 of £400-£500 million. We agreed to meet them halfway.”

Jonathan Ashworth, the shadow health secretary, said: “It’s embarrassing that ministers have had to go cap in hand to big pharmaceutical industry to plug gaps in the NHS finances. Yet again it exposes the reality that the NHS simply hasn’t been given the investment it needs. With Brexit and the consequent upcoming negotiations over the future of medicine regulation it’s crucial that all transactions between government and the pharmaceutical industry are totally transparent.”

Norman Lamb, the Liberal Democrat health spokesman, said: “What these arrangements expose is the government’s appalling financial planning for the NHS. They have scraped around to find ways of claiming that funding for the NHS has been increased, and now resort to these emergency deals which will inevitably raise eyebrows.”

A spokeswoman for the Department of Health said: ”The successful agreement between government and the pharmaceutical industry on the PPRS payment percentage demonstrates that we can work together effectively and reflects the importance to both sides of ensuring stability for industry and the NHS.”

She added: “Last year saw the fastest growth in spend [on medicines] of any of the last 10 years, and a higher level of spending than previously forecast, as we seek to secure fast access to new medicines for patients.”

Online market in antibiotics fuels rise of superbugs


This entry was posted in A Personal View, Rationing, Stories in the Media on by .

About Roger Burns - retired GP

I am a retired GP and medical educator. I have supported patient participation throughout my career, and my practice, St Thomas; Surgery, has had a longstanding and active Patient Participation Group (PPG). I support the idea of Community Health Councils, although I feel they should be funded at arms length from government. I have taught GP trainees for 30 years, and been a Programme Director for GP training in Pembrokeshire 20 years. I served on the Pembrokeshire LHG and LHB for a total of 10 years. I completed an MBA in 1996, and I along with most others, never had an exit interview from any job in the NHS! I completed an MBA in 1996, and was a runner up for the Adam Smith prize for economy and efficiency in government in that year. This was owing to a suggestion (St Thomas' Mutual) that practices had incentives for saving by being allowed to buy rationed out services in the following year.

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