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Feeling the heat: The impact on Lansley of NHS reform

Will the pressure to deliver the government's £20bn savings goal break or make Andrew Lansley?

Fireman with hoseIt is tempting to speculate on the demise of Andrew Lansley and his NHS reforms, reading the headlines and thinking it has never been this bad before. It is easy to be distracted by the noise and smoke of battle over the NHS reforms. Most reforming health secretaries have almighty rows, and it can be the making, rather than the breaking, of them. 

Beware those who have swallowed whole the rhetoric of reform. NHS reform in recent decades is a catalogue of grand visions and only partial delivery by a service resilient to real change. This time may be no different. 

Lansley is on the rack. But does it matter? It is important for the future of value based pricing (VBP), but the biggest issue remains the £20bn savings goal. Lack of money, not the NHS reforms, will pose the greatest challenge to market access and uptake.

Survival of the intransigent?
Twenty years ago, Health Secretary Ken Clarke created GP Fundholding and the internal market. The BMA launched a £3m advertising campaign against the reforms, including one picturing a steamroller with the caption "Mrs Thatcher's plans for the NHS". Opinion polls showed overwhelming opposition to the reforms but they still became a reality1. The row over the reforms blazed before the 1992 election, but the Conservatives won again, and Clarke was promoted.  Alan Milburn faced similar public rows over the Private Finance Initiative and the creation of Foundation Trusts.  

Reforming health secretaries need thick skin and intransigence, and Andrew Lansley certainly believes in his reforms. History advises that he and Cameron dig their heels in. But can Lansley's vision ever be realised?

Resilience over reform
The NHS is an organisation remarkably resilient to reform. In the 1990s only half of GPs became commissioning Fundholders. Today just over half of hospitals are Foundation Trusts, despite 2007 being the deadline for all to have that status. Similarly, the NHS can change structure but may not change in practice. Last year, the Parliamentary Health Committee said commissioning had failed to realise its potential despite existing for 20 years in various guises. Many PCT executives privately despair at their inability to affect service change locally; others do not want to.

For better or worse, some local and national NHS leaders are already expecting that GP Consortia could differ little from PCTs in a few years time. And if the results of the Listening Exercise are to water down new competition rules and tie GP Consortia to the incumbency of their local NHS trusts through putting secondary care and local council representatives onto Consortia Boards, then two of Lansley's levers for NHS change will be weakened.

Money money money
The big challenge for Lansley and for pharma is the lack of money. Blair oiled NHS change with funding and pay increases. Lansley is reforming at the same time as trying to make savings on a scale never achieved before.

The fears of an extra squeeze on pharmaceutical access and prices is being realised, as reduced access and uptake, NICE being ignored, new prescribing blacklists, increased local tendering, and other measures emerge and increase. An innovative savings agenda, recognising the value of medicines as well as many other elements in best care, needs strong leadership in commissioning and purchasing. But many PCTs have their eye understandably off the ball and on the reforms. 

Two flagship trusts have recently declared themselves to be in severe financial difficulties, and analysts believe twenty or more will follow. Cuts in volumes and types of elective surgery are making headlines, and PCT and hospital managers are already worried about where the QIPP savings in future years will come from, after the low hanging fruit has been picked. Privately, DH officials believe the financial problems will get worse in 2012. 

A weakened reform agenda only compounds this. An NHS less able to reshape its local services will put greater pressure on external costs (including medicines) to achieve savings. 

Value based pricing
If Lansley is to go, it may be that the cuts, and not the reforms, will be his undoing. The savings agenda pre-dates this government, but his opponents are already blaming cuts on his reforms. 

If he did go, an important question for pharma is would anyone in government still want value based pricing? VBP is Lansley's personal passion, and whilst this government instinctively dislikes the managed-market format of the PPRS, industry and others could argue that there are higher priority health problems to be fixed. 

Moreover, new systems bring unpredictability. Huge overspends on new GP, consultant and dental contracts show the DH has an appalling record of accurately predicting spend on renegotiated payment structures. No wonder the Treasury is already conducting its own independent assessment of VBP. With so little money to spare, could stability and predictability – central tenets of the Pharmaceutical Price Regulation Scheme (PPRS) – become as important to government as they have always been to pharma?

Andrew Harrison, hanover
The Author

Andrew Harrison is a director at hanover, a policy, market access and media communications consultancy.


1Nicholas Timmins, The Five Giants;  1995

21st April 2011

From: Healthcare



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