Implications of the NHS 10-Year Plan: Balancing Cost and Value in Pharma Market Access

​With the publishing of the NHS in England’s 10-Year Plan, the team at Petauri Evidence have been asking our NHS Associates to share their on-the-ground experiences and discuss the impact of new policy on their world. With cost and budget ever at the heart of the issue, we once again turn to Patrick McGinley (Head of Costing and Service Line Reporting, Maidstone & Tunbridge Wells NHS Trust) for his thoughts on what this all means for those balancing the books at England’s Hospital Trusts and the implications for market access.

As an experienced cost accountant and service improvement teaching associate, Patrick is committed to understanding costs as a lever to provide a better view of value. Patrick is a standing member of the Diagnostic Assessment Committee, an associate member of Quality, Service Improvement, and Redesign (QSIR) teaching faculty, and a strategic council member of the All-Party Parliamentary Group On Obesity. Patrick is one of our most popular NHS Associates due to his real-world knowledge of NHS finance and his ability to put this into perspective for industry. Over to Patrick…

The NHS’s Focus on Cost Reduction in 2025–26

What with the devolution of NHS specialised commissioning, 50% cuts to integrated care boards (ICBs)’s running costs, and Trusts needing to deliver between 8 and 12% in annual cost reductions, there is no doubt that cost reduction is the primary focus for the NHS in 2025–26. What does this mean for market access and adoption now? The immediate effect is a focus on the overall cost envelope. An innovative drug that needs to be taken more frequently but has better health outcomes is likely to be delayed in its adoption this year. So, the argument that there is better value based on better outcomes, becomes trumped by the cost implications that include more frequent hospital visits. The intervention may offer better value long-term, but if it’s more costly in the short-term, NHS stakeholders are likely to be less receptive.

There is a definite message within the 10-Year Plan that value, outcome measures, and productivity will be paramount key performance indicators in the future. As these are presented as something to work towards, the implication is that these may be less critical in the here and now.

Does this emphasis lend itself to developing new payment methods? i.e. Could the price paid be linked to specific outcomes, such as rates of reduction in adverse events (e.g. falls, accident and emergency [A&E] attendances, or hospital admissions) over an agreed period? Alternatively, perhaps a baseline price could be explored, where the price is discounted unless outcome measures like these are met. The challenge is that innovative payment terms need both a receptive finance department and some form of independent party, such as the Health Innovation Network (HIN), to hold the ring on baselines and monitor the measures. Both are very possible to deliver, but the pressure on the short-term cost reduction agenda is still likely to be the major element. The key to success is understanding the impact on patients, identifying the value in terms of improved outcomes, and then releasing resources for more appropriate care.

Changes to ICB Budgets and Devolution of Specialised Commissioning

I think that ICBs will be looking at overall spend, despite their intended role as strategic commissioners, so any underspend in one budget releases pressure elsewhere. However, budget spend will likely vary between ICBs and this will not have the same impact nationally, especially if ICBs merge. If the number of ICBs reduces through mergers, change of staffing, etc, there would certainly be a reduction in corporate memory over both commissioning arrangements and funding streams. The number of ICBs would notably reduce, possibly from 42 to the mid-twenties, and all ICBs would have 50% fewer staff. The obvious pressure is on maintaining current relationships, but this also provides an opportunity for more significant strategic changes.

Some ICBs will have already assumed responsibility for extended specialised commissioning and will be using price as a method of keeping overall score on how they are doing. For example, they’ll be thinking we’ve overspent in this category, but we’ve underspent in that category, so all is ok as no cash transaction is needed if underspend is greater than overspend. The attention from the centre will be on overall positions not individual elements of local acute, primary care, specialised commissioning, or mental health, so I don’t think any area will really be “ring fenced”.

This adds to the complexity for Pharmaceutical colleagues, and is obviously driven by cost reduction, but does mean that elements within the system will be amenable to innovative pricing solutions. For example, is the NHS better off if care is transferred from more expensive acute settings to community and primary care? In our hypothetical scenario of a medicine providing better outcomes but being more expensive and needing more frequent interventions, it may be important to ask: If there is a shift to move care closer to home? It’s envisaged that ICBs will become more strategic and drive the move of care closer to home. As they hold many budgets, they are a key stakeholder, but so are Trusts, community diagnostic centres (CDCs), and primary/community care, as we wait to see what neighbourhoods can deliver. Acute Trusts are increasingly recognising that transformation of services is required to balance budgets, which means transferring services out from an acute setting. Therefore, close contact with both providers and commissioners will be increasingly important in this changing environment.

Opportunities for New Technologies

It is to hoped that a move away from local formularies will boost adoption of some new technologies, which can then be commissioned nationally. This will inevitably be accelerated if these new technologies lead to fewer outpatient (OP) visits, or if outcomes can be digitally linked to wearables or older digital technologies for remote monitoring. If we can monitor rates of change remotely, this will align with both digital and community objectives. Finally in this scenario, there is additional value if professionals in both acute and community care can see the same data. The same principles potentially apply to the increased use of virtual wards and same-day emergency care (SDEC).

As set out above, it may be that adoption can be accelerated by linking new technologies to measurable agreed key performance indicators, not just by point of delivery (virtual ward, A&E, outpatient, SDEC) but by diagnosis or intervention. Using a hypothetical scenario: Would adoption of Medicine A for cardiac disease enable increased virtual ward transfer for patients with atrial fibrillation? If so, how can we capture these results, and how does reduced inpatient cost get linked to medicine price? Is it spread over an extended time, or does it get linked to potential changes in tariffs such as year-of-care payments? Is it possible to link to an agreed volume of patients rather than attendance or admission so that patients being treated on a virtual ward can be included, and or priced differentially?

The Future: New Connections and Managing Cost Outcomes

Overall, the message is one of significant change. The NHS remains a system that is rules-based, but, at present, without full clarity on what these rules are. However, there are very clear indications of the direction of travel.

There are clearly new connections to be made. Rather than every company trying to talk meaningfully to different NHS partners, the obvious solution is to utilise the HINs so that the same message can be discussed clearly and only once. The HINs are set up to include commercial partners, NHS, local government, and academia, and I think will provide the right space to be truly innovative.

Costs will need to be contained, especially in areas that have previously received the £2.2 billion support funding. Without this funding, changes will be needed to reduce costs or transfer the spend to “innovation”, “improved outcomes”, or “care closer to home”. For any of these transfers to succeed, improvements in population health within a neighbourhood will need to be demonstrated.

There is a desire for the centre to be more agile in the future, and for care to be driven by improved local population outcomes. This raises the question of whether Pharma colleagues can form more formal local ties with the newly emerging Commissioners, and contribute in innovative ways to the 5-year strategic plans for financial viability. It may be advantageous to align pharmaceutical interventions not just with the disease, but with the disease in a specified neighbourhood, so that data and analysis are not averaged, but more granular. Again, this is too much for each Trust and each company, but does, I think fit fully into the current and future remit of each HIN, which should drive adoption across different neighbourhoods.

This may mean that the cost of treatment can be linked to more specific health outcomes, even patient satisfaction. Going forward, I can foresee a world where payments may include contractual terms with cost penalties if patients believe their experience was unsatisfactory. Sharing those data could be a powerful way for HINs to highlight the value across a longer pathway, such as addressing obesity interventions that allow people to work and travel more, and contributing to the local economy rather than focusing on percentage weight loss in a fixed time period.

Conclusions: Funding in the 10-Year Plan

Principally, cost will remain paramount in the short-term. The 10-Year Plan has ambitious messages on change, encouraging innovation, but no identification of additional funding. It does, however, recognise that value in the form of improved outcomes is the goal that must be rewarded and funded.

Current suboptimal practice, often presented as financial imbalance, must be eliminated. Strategic neighbourhood financially sustainable plans must be produced. I suspect that these plans will be more credible if the impact of improved outcomes can be mapped to show realisable cost reductions across various points of delivery. Additionally, it will be useful to show how the outcomes can be linked to year-of-care payments for patients.

I firmly believe that colleagues who can demonstrate both short-term and longer term metrics for measuring and improving outcomes will be best placed to take advantage of the ambitious changes. I also believe that HINs are key to nurturing data sharing, driving innovation, and spreading adoption. The metrics must be measurable and linked to payments over some period of time; this will rely on mature relationships that HINs can foster. As such, new strategic partnerships will need to be formed, and current relationships built upon. All parties within the NHS in England must be increasingly agile, including commercial partners.

The immediate focus is on cost containment and financial discipline, but HINs can drive innovation that demonstrates that value exceeds cost. It is imperative that we move away from comparing some elements in a pathway, and strive to maximise value for the patient across the whole pathway. This is dependent on new approaches – we cannot expect new results from old ways of working.

We would like to thank Patrick for sharing his perspectives in this article. If you’d like to reflect further on any of the points raised or would like support with your market access strategy, get in touch today: email evidence@petauri.com