Briefing – Tenders and brokerage in the NHS

Tenders

The use of tenders for the provision of goods and services is a standard and well established procurement practice used by NHS customers to secure value-for-money. This includes tendering for the supply of medicines. Whilst initially reserved for hospital medicines often at the end of their patent life, tender processes are now being more widely applied to procure medicines much earlier on in their patent life during the period that companies are recovering the costs of researching, developing and manufacturing those medicines.

The Pharmaceutical Price Regulation Scheme (PPRS) 2009 Agreement governs what is and is not permitted. In particular, PPRS section 3.4 states:

“The PPRS is the UK-wide price regulation scheme for branded prescription medicines supplied to the NHS. It applies across the four nations of the UK. The UK Health Departments do not support additional or alternative initiatives by health authorities in respect of the pricing of such supplies in primary care. Subject to any future decisions of the UK or devolved parliaments, assemblies or ministers to adopt a different policy with regard to the pricing of branded prescription medicines, the Health Departments will do all they can to ensure that the scheme is fully implemented and sustained throughout the NHS during the lifetime of the scheme.”

ABPI policy does not support tendering initiated by the NHS for branded medicines in primary or secondary care, subject to procurement legislation.

This is because such tenders can restrict the availability of medicines which in turn can:

  • present a risk to patient safety, because not all medicines suit all patients
  • curtail individual clinician choice, with prescribing being driven by cost factors, rather than individual patient’s needs
  • undermine ongoing investments in innovation
  • lead to 'therapeutic tendering' contrary to the requirements of the Public Contracts Regulations 2006.

The recent trend of national and regional tendering for cancer medicines that have recently been launched and are relatively early on in their product lifecycle is not supported.

However, it remains at the discretion of companies to work with local NHS organisations as best suits their commercial interests, including having the flexibility to offer discounts for medicines.

Section 6.45 of the current PPRS Agreement makes clear that:

“Pharmaceutical companies may continue to offer schemes or discounts to the local NHS outside NICE appraisals as long as these do not contravene any aspect of the PPRS, but decisions on whether to participate in such schemes and the terms on which they are offered are matters for the relevant pharmaceutical companies and the local NHS.”

Brokers

Increasingly, third party suppliers and consultancies are being relied upon in order to broker discussions and progress tendering for medicines in both primary and secondary care.

The ABPI believes that the engagement and use of such third parties may:

  • interfere with the ability of pharmaceutical companies to develop direct, dynamic and sustainable key customer relationships in the reformed NHS
  • limit the speed of progress on the development of direct strategic partnerships and joint working projects and initiatives between pharmaceutical companies and NHS organisations
  • reinforce a perception of pharmaceutical companies as commodity providers of products only rather than long term value-adding partners in healthcare delivery
  • increase the rate of commercial “value extraction” from the medicines supply chain which limits the ability of pharmaceutical companies to generate acceptable returns on investments
  • in the longer term limit the ability of the pharmaceutical industry to invest in future research and development into innovative medicines. ABPI members should have due regard to the above issues when considering the use of broker services.

ABPI members should have due regard to the above issues when considering the use of broker services.

Download the ABPI's full briefing paper – Tenders and brokerage in the NHS (PDF, 58KB)

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