UK healthcare is transitioning from Clinical Commissioning Groups to the Integrated Care System. This change will have a significant ripple effect on a sub-national level. Industry experts Sara Jacobs, Graham Tatham and Rachel Rowbottom explain how this will affect manufacturers and what steps they need to take for continued growth.
Special thanks to Sam Calderwood for contributing to this article.
Alongside national level reforms, important changes are occurring to the sub-national landscape which will directly impact the commercialization of medicines in the UK. Evolving stakeholder roles, transition of budget holder responsibility, and other funding reforms will require manufacturers to adapt their strategy in order to optimize access and ensure successful uptake, especially in competitive indications.
Transition to the Integrated Care System (ICS)
There are multiple influencing factors increasing the relevance of sub-national stakeholders with the greatest being the transition from Clinical Commissioning Groups (CCGs) to the Integrated Care System (ICS).
The foundations for change were confirmed by the NHS Long Term Plan in 2019, though legislative changes are yet to be passed by the UK government via the Health and Care Bill As of January 2022, the Health and Care bill, first published in July 2021, is in the House of Lords and is subject to change until the legislation passes through the UK Parliament and receives Royal Assent.
Aware of the strain on the healthcare system, the government is keen to encourage broader coordination between healthcare providers. ICSs are new partnerships formed between the NHS, local authorities, and third sector bodies in order to address fragmented health and care needs, improve population health, and reduce inequalities.
The importance of integration has also been spurred by the COVID-19 pandemic, during which the benefits of synergistic working have been recognized by the NHS. From July 2022, the Integrated Care Boards (ICBs) within the 42 ICSs, will assume responsibility of the CCGs’ statutory function and budget. This concentration of sub-national decision-makers will result in the ICB’s having much broader commissioning responsibilities and holding greater power than their CCG predecessors.
Funding landscape shift and scrutiny on high-cost drug spend
Furthermore, the shift in funding landscape will strongly influence the way the ICSs operate. Though economies of scale would suggest cost-savings can be made under the ICS structure, the trajectory of CCG spending (£507 million overspend in 2019/20) indicates that funding and formulary decisions will remain pressured. With the greater negotiating power of ICSs, manufacturers may also be under increased scrutiny. The ICBs will be responsible for distributing a large budget over varying levels of the ICS. However, the extent to which local decision-makers are motivated to contain spend will depend on financial incentives, overall budget, and retention of realized savings.
The allocation of funds will be influenced by the shift from activity-based payment schemes, which were underpinned by the national tariff, to a blended approach. The ongoing consultation on the NHS financial framework suggests a fixed and variable element, with the latter covering deviations from the planned volume of activities. Additionally, meeting Commissioning for Quality and Innovation (CQUIN) targets will support intuitive decision-making, rewarding providers for improved population health outcomes.
For competitive therapeutic areas in which costly treatments are included in the fixed element, sub-national commissioners can adopt a more strategic view of the treatment pathway. One such area may be dermatology. If ICSs negotiate rebates on such products, it could lead to preferential formulary positioning, as this would enable savings and create flexibility elsewhere in the budget. Moreover, NHS England (NHSE) is eager to devolve commissioning responsibilities by empowering local level decision-makers to cover certain specialised services, further increasing the importance of sub-national decision-making.
The extent to which NHSE will delegate this responsibility and the specific functions to be transferred is yet to be determined. However a phased approach is proposed, focusing initially on established services, which the ICS’s deem ready to take responsibility for, and are easily transferable. Recent interviews with CCG commissioners suggested multiple sclerosis and chronic kidney disease as examples of early targets which would benefit from more localized management.
The shift in funding and planned increase in responsibility for specialised services will significantly increase the financial burden. As a result, cost-sensitive prescribing becomes even more pertinent with payers attempting to balance the budget with stronger recommendations to optimize formulary choice (e.g., switching to a biosimilar). Further adjustments to formularies may also be expected as a result of organizational mergers and to align with the health needs of the ICS’ wider population.
Ultimately, emphasizing the value of high-cost products across the entire system will become integral to the success of funding, as will aligning with NHS priorities, and ensuring engagement strategies are targeted to the right stakeholder.
Conclusion & next steps
As ICSs expand their remit of commissioning and negotiating power, their stake within the UK price and market access landscape should not be overlooked. In addition to the planned reforms to the NHS funding framework, budget sensitivity has increased post-pandemic. ICSs are likely to tighten their purse strings and ensure calculated access decisions.
The need for manufacturers to develop value propositions that not only achieve access through NICE but remain credible under sub-national pressures is essential. Formal transition to the ICS model is set for April 2022, but as the Health and Care Bill transitions through Parliament and further guidance is released, the sub-national landscape will continue to evolve, as will visibility on the wider impact of such changes.