HSJ’s round-up of the day’s must read stories
- Today’s must know: ‘No spare money’ to break contracts impasse, commissioners warn
- Today’s talking point: This needless battle over NHS finances endangers its future
- Today’s must listen: Podcast – ‘Patient experience and patient safety start from different places’
- Today’s risk: Rise in drug imports reduces pharma industry money to NHS
With only a few working hours left for clinical commissioning groups to meet the deadline to make “reasonable” contract offers to all of their providers for 2016-17, the chief executive of NHS Clinical Commissioners said on Friday that she had doubts that all would be able to do so.
Commissioners were told earlier this week that all those who had yet to issue contract offers needed to do so by the end of Friday. Commissioners that had made offers that did not appear to be a “reasonable basis for negotiation” were given the same deadline to come up with more acceptable numbers.
The revised deadline was issued after system leaders noted that “very few” contracts had been agreed by the start of the financial year.
There are high stakes involved, because NHS Improvement is keen to see all trusts nail down contracts that can support the delivery of their “control total” financial targets for 2016-17 – and these are the linchpin of the plan to get the provider sector back in the black.
But as NHSCC chief executive Julie Wood told HSJ, commissioners are also under huge pressure, and have a long list of must-dos to deliver with the funding growth they received for this year. “When you looked at all of the pre-commitments [for that money], it disappeared almost before you started. Which meant there’s no spare money in the system to close down contracts,” she warned.
She suspects that there may be significant numbers of contracts still unsigned beyond the recently revised deadlines.
Drug scheme diagnosis
In February the Treasury transferred £205m to the Department of Health to plug a gap in its finances caused by a shortfall in the pharmaceutical price regulation scheme.
Under the PPRS, if NHS spending on branded medicines exceeds an “allowed” growth rate then industry pays the difference back to the DH.
It turns out bumper growth in the first year of the scheme led to a significant overestimate of future growth and PPRS income.
When growth actually turned out to be much lower than expected in 2015-16, the PPRS payment dropped and the Treasury was forced to cough up.
The slowdown was caused by a number of factors, including a 35 per cent increase in “parallel imports” from the continent which took sales away from the British companies in the scheme.
The increase was mainly down to a strong pound making imports cheap. However, if the pound continues to weaken against the euro because of Brexit jitters, we could see this trend reversing, resulting in increased sales of UK drugs and more money being returned to the NHS through the PPRS. Will this be enlisted into Brexiteers’ arguments about leaving Europe to “save the NHS”?
The main takeaway from all of this is that the PPRS is a highly complex scheme, which is influenced by a number of external factors. The DH and the NHS should therefore be cautious when budgeting on the basis of future PPRS income, or the Treasury might be receiving more unwelcome calls.