Phil White – Written evidence (HMS0016)
Public Services Committee, House of Lords.
Submission to the inquiry on Homecare Medicines Services.
I qualified as a pharmacist in 1989. Over the past 34 years I have worked in a wide variety of roles within pharmacy within both primary and secondary care, across 5 separate legislative jurisdictions of the British Isles. In the late- 1990’s I worked in a homecare dispensary, mainly providing peritoneal dialysis fluids to renal patients. In 2006 I started work within a specialist orthopaedic hospital, and became the Lead Pharmacist for Medicine in 2009 – which included responsibility for the rheumatology homecare service. I have managed NHS homecare services ever since, and am currently employed as Principal Pharmacist for Homecare and Prescribing Support within Aneurin Bevan University Health Board. I was Chair of the Welsh Homecare Medicines Committee from 2019 until May 2023, and sat as one of the Welsh regional representatives at the National Homecare Medicines Committee. I am currently a member of the Royal Pharmaceutical Society’s Task and Finish Group looking at reviewing and updating the Professional Standards for Homecare Services.
This submission is made on my own behalf. It should not be taken as representing the official views or opinions of my employer or any other NHS organisation.
Firstly, I would like to start by highlighting that so far, the Committee does not appear to have heard any submission on why these services have developed as they have; that is to say, what are the core reasons why the NHS has become so dependent upon this procurement route, and why are they increasing at a rate significantly above normal. It has not always been so. In 2007, Commercial Medicines Unit data estimated sales to be around £176 million [1]. In 2011 the spend in England was estimated to be around £800 million [1], £1.5 billion in 2016 [2], and the Public Services Committee have heard in response to Q23 that it currently stands around £4.1 billion. Assuming that the majority of homecare expenditure is on hospital procured medicines, this is at least 37½ per cent of all hospital medicines expenditure [3]. It is important to understand what is driving this growth.
Secondly, I would like to draw attention to the fact that patients have been placed at risk before. This situation patients are in today is not new, and the monitoring of service performance has been a core part of my job since 2006. In 2009, a homecare provider within the South of England failed, and growing awareness of homecare medicines services and the risk that these could present triggered Dr Keith Ridge, Chief Pharmaceutical Officer at the Department of Health, to invite Mark Hackett to lead a rapid review of Homecare Medicine Supply [1] in 2010. That work appeared to be prescient, since in 2013 Medco withdrew entirely from the homecare market. Attempting to absorb a sudden influx of patients where no spare capacity had been planned, many homecare providers experienced severe challenges. Healthcare at Home suffered a catastrophic service failure in 2014 which occurred partly as a result of a sudden influx of patients, and also IT failures. Consequently, NHS England issued a Patient Safety Alert in 2014 [4] requiring prompt action from all NHS Trusts and other NHS organisations procuring homecare services. It must appear to many that there has been little substantial change over the last 12 years.
It is my belief that it is not possible to adequately understand our present situation, and thereby to assess how change should be planned and effectively implemented, unless one is familiar with the history which has led us to this point. Whilst an understanding is not necessary for the practical day-to-day operation of the service, it does explain why we have such a complicated system, and this may help to identify historical strategic errors.
We begin with Stamp Act of 1783, which applied taxation to proprietary medicines. Whilst the original objective of the legislation in introducing the medicine stamp duty was undoubtedly a response to a social imperative to tax quack medicines rather than medicines in general [5], it ultimately became a means of revenue-raising. By 1815, taxation had been extended to cover “patent medicines”. An unintended consequence of the Stamp Acts was that proprietary medicines whose contents were not disclosed, but which were proffered for sale with claims of therapeutic efficacy, now bore a government stamp that signified, if not endorsement of the claims, at least acquiescence in them. The much-needed revenue from stamp duty had to be set against manifest profiteering by the manufacturers of proprietary medicines, harm to the public health and detriment to pharmacists [6].
In April 1940, Mr John Simon, then Chancellor of the Exchequer, proposed that Purchase Tax would be levied on luxury and other items. The purpose was two-fold: to raise revenue, and to reduce the wastage of raw materials. By these means, the raw materials could be diverted for use in the factories where war related items were being manufactured, and in turn move the labour force to same, stating that “we must be resolute in reducing consumption at home. It is the deliberate intention of such a tax as this to do so” [7]. Medicines, having previously been categorised as suitable for taxation, were therefore taxed unless specifically exempted, and “no goods marked with a trade mark should be so exempt” [8]. However, the application of this taxation was complex, and between 1940 and 1949 taxation on medicines ranged from 0% to 33¹∕₃%.
The desire to tax patent medicines, whilst attempting to exempt taxation on items conducive to public health, was the subject of many debates thereafter. Rather than deliver reform, the approach taken was to apply specific exemptions – an approach which was considered to be unnecessarily complex and inefficient. “So many prescriptions bear Purchase Tax today that the situation becomes confusing. Sometimes, the Minister of Health pays the tax, which is then returned to the Treasury, and it must be an unnecessarily costly business, as some of us would argue, that it should be imposed, on the one hand, and taken off, on the other. How expensive it is, I do not know, and what percentage of overhead charges is involved I cannot say, but it must be fairly considerable” [9].
In 1973 Value Added Tax replaced the purchase tax. From that point until 2020, taxation policy was not fully within the control of Parliament. The current rules and processes on the VAT liability of supplies of medication are detailed within the HMRC internal manual VATHLT6120, and VAT Notice 701/57. Medications dispensed to a patient within Primary Care (including Homecare) are eligible to be rated at 0%[*] , whilst medications dispensed within Secondary Care are not eligible for relief. This arrangement has on occasions been criticised as a ‘tax loophole’ [10], [11] which is openly exploited by the NHS, but is acknowledged as standard practice.
Despite general agreement that to tax drugs and medicines was to put a direct tax upon the promotion of good health or the avoidance of illness, a consistent and effective compromise remained elusive for one simple reason: that this approach assumed that patent medicines are, by virtue of the profit that they create, thereby not clinically effective in maintaining public health. Whilst this assumption may have been reasonable in 1783, it is no longer so today. The need for revenue set the precedent that medicines in general were luxury items, and policy since then has been to try and apply targeted exemptions where it is considered prudent to do so. Over the years there have been many conversations over reform. In August 2020 a consultation [12] was opened for reform of Section 41 of the UK VAT Act (1994), noting that it “is unduly complex, administratively burdensome and a barrier to effective financial planning”. The response submitted by the Royal Pharmaceutical Society stated: “If implemented, these changes could remove the financial impact that VAT causes when services are being commissioned and provided, allowing quality, safety and value to the patient to have a greater bearing on the overall decision. A system wide approach to VAT could also facilitate the relocation of some current secondary care services into primary care to be delivered at a more convenient access point for the patient. The current disparity in the treatment of VAT between the NHS and its independent contractor partners currently acts as a barrier to the movement of some of these services. Efficiencies, pressures and savings across a system will be managed differently” [13]. At present, meaningful change to medicines taxation remains elusive.
Having set the first foundation stone, that of taxation, I will now move onto the second, which is the structure of the NHS itself. It is a testament of the political acumen of Aneurin Bevan that the National Health Service was finally brought into being. Fundamentally, and central to his design, was the separation of Primary Care, accessed via the GP who would manage the long-term or chronic care of patients, and Secondary Care which would be responsible for Acute Care. Secondary Care was never originally intended to manage chronic conditions, but as the need to provide complex long-term care grew, GPs were increasingly asked to prescribe treatments recommended by hospital consultants. This changed in 1995, when the NHS Executive directed in EL(95)5[†] that District Health Authorities should provision high-tech homecare services directly, rather than relying upon GP services. These services represent the first instances of what we recognise today as “homecare”.
A few years later, the MHRA gave marketing approval to two biologic therapies used within rheumatology. Due to anticipated cost pressures, NICE were asked to appraise the cost-effectiveness of the products to determine whether they were suitable to be prescribed by the NHS. Whereas the MHRA ensures that all medicinal products meet the 3 fundamental pillars of quality, safety and efficacy, NICE produce evidence-based recommendations for health and care taking account of cost-effectiveness.
Once approval for the use of these medications funded by the NHS had been granted, the pharmaceutical industry needed to devise means to effectively promote their products and drive sales. The significant expense, and therefore the liability for VAT, was recognised as a challenge. Initially, there were two products on the market for use within rheumatology – Remicade® and Enbrel®. Whilst both products were priced in the region of £10,000 per patient per annum [14], the former was administered within the hospital setting, whilst the latter could be administered by the patient at home. This distinction was a gift for Wyeth Pharmaceuticals, who quickly identified the marketing potential. By commissioning a third-party dispensary service, hospital prescriptions could be dispensed without incurring for VAT. Effectively, this meant that Enbrel® was for practical purposes cheaper by £2,000 per patient per annum due the differential in taxation without any loss of profit to Wyeth. This not only helped to drive an increase in sales, but also gave access to detailed purchasing data which could be used to identify opportunities for future growth by targeting hospitals and consultants showing significant under- or over-spend.
Wyeth also identified a second valuable incentive to drive sales – the opportunity to free up NHS nursing time. Their market competitor Remicade® was complex to administer. It needed reconstitution, and IV administration in an out-patient setting. This required a skilled nurse, and also out-patient clinic capacity. In contrast, patients could be taught to self-administer Enbrel® at home. Better yet, through the provision of a homecare service funded directly by the manufacturer, the NHS would get a “free” nursing service where a qualified nurse employed through the homecare provider would attend the patient at home to provide direct patient care, and undertake the necessary patient training and competency assessment. Thus, with the introduction of this new and innovative service, we have our second step towards our situation today.
From this point, service growth was inevitable. It soon became the de facto route of supply for all new rheumatology drugs appraised and approved by NICE – and has led to an expectation by some within the NHS that all new high-cost therapies will be associated with a pharma-funded homecare service. Only recently has this expectation not been met.
The review of Hospital Pharmacy by Lord Carter of Coles, published in 2016, fundamentally changed the focus of hospital pharmacy services. “Trusts that have not currently outsourced their outpatient dispensing services should ensure their HPTP plans include a review of these services and have a plan in place for improving productivity and efficiency, including consideration of alternative supply routes, such as homecare providers or community pharmacies” [15]. There is a necessary economical imperative to use homecare and other primary care dispensing contractors for the supply of medicines to patients, since whilst overall drug expenditure has been increasing at a rate 5 per cent per year, hospital prescribing has grown by around 12 per cent a year on average since 2010/11 [16] .
In summary, we can now understand why homecare has increased at an exponential rate, and see the critical drivers which have been behind this growth:
In 2003, the Department of Health set out a comprehensive programme for reform of the complaints management system, making sure that information about complaints and their causes became an integral part of the system that assures safe, high quality care, which is constantly improving [17]. In 2013, Department of Health and Social Care published the Berwick review into patient safety, stating “When responsibility is diffused, it is not clearly owned: with too many in charge, no-one is” [18]. It also recommended that “All leaders concerned with NHS healthcare – political, regulatory, governance, executive, clinical and advocacy – should place quality of care in general, and patient safety in particular, at the top of their priorities for investment, inquiry, improvement, regular reporting, encouragement and support”. Shortly afterwards, the Rt. Hon Ann Clwyd MP and Professor Tricia Hart published a review of the complaints system [19]. It reported the NHS Confederation as saying “We have serious concerns that following the NHS reforms the complaints system has become more difficult to navigate and risks leaving patients confused about who to complain to”. Complex systems continue to fail patients. If complaints are not being managed effectively, and resolved adequately, then we will fail to deliver meaningful service improvement.
Another concern, raised by a former Chief Medical Officer for England, highlighted that progress to ensure that supplies of all homecare therapies were recorded through the hospital pharmacy had still not been achieved, which “seriously compromises the validity of large scale pharmacovigilance studies in the post-licensing phases of these medications” [2]. Even today, whilst recognising that significant improvement has been delivered since 2018, we are still not 100% compliant with this requirement, particularly in regards to the high-tech and CMU-procured services such as Home Parenteral Nutrition, immunoglobulin, and renal replacement therapies. Additionally, “drugs prescribed through the homecare route are not regularly captured in general practitioner records”. IT systems still inhibit effective collection and sharing of data at high-level.
All organisations are expected to have implemented measures which minimise risks and potential risk of harm to patients, and to report relevant patient safety incidents, including those reported by patients, to the National Reporting and Learning System [4]. If there is a disconnect between anecdotal reports of harm from patients, and direct objective evidence from local and national monitoring systems, then there is a need to comprehensively review and reform these processes to ensure that they are fit for purpose.
The Commission for Healthcare Audit and Inspection, also known as the Healthcare Commission was created in 2004. It was responsible for assessing standards of care provided by the NHS. Its responsibilities were taken over by the Care Quality Commission in 2009. The Committee have heard evidence from Sarah Billington that CQC also assess standards of nursing care provided by 10 homecare providers – yet it is unclear whether enforcement action should be raised against the nursing provider[§], or against the NHS organisation responsible for instigating the service. This lack of clarity is highlighted by the response: “From the patient’s perspective, they are patients of the acute trust. They are patients of the hospital”. What was not identified at the time, and may need to be, is who these patients belong to from the perspective of the Government, or NHS England.
In 2014, Dr Keith Ridge, Chief Pharmaceutical Officer, released a report outlining the findings and recommendations of the Review of Specialist Pharmacy Services (SPS) in England [20]. It stated that: “NHS England has now accepted responsibility for commissioning specialist pharmacy services”. This included homecare services. This ultimately led to the formation of the National Homecare Medicines Committee to act as the national focus, and to support and advise the NHS on matters relating to homecare medicine services [21], ensuring robust commissioning of new services. SPS are not, however, responsible for enforcing contracts. These are signed between providers and individual NHS commissioners, and there is consensus that it is the NHS organisation implementing a homecare service [4], and their respective Chief Pharmacist [1], [22], who are responsible and accountable. What is unclear, and in the opinion of the author needs urgent review, are the governance arrangements pertaining to the provision of associated nursing care. We are not only providing a delivery to home medicines service, but also personal care involving a qualified health care professional. It is not uncommon for medication to be delivered to a patient, but not to be administered due to a failure within the nursing service. This aspect will not fall under the remit of the pharmacy service, and there does not currently appear to be any ownership of this service element. At both local and national levels, homecare within pharmacy is generally considered to be a matter of procurement – and more focus is given to purchasing and finance aspects rather than to delivering clinical care.
The introduction and growth of Pharma-Funded Homecare services introduces an additional complexity which has not been sufficiently recognised and addressed – regarding the ultimate commissioner of the service. In response to Q23, Dr Rick Greville stated that providers “are funded either by the marketing authorisation holders 70% to 80% of the time”, and “are contracted indirectly on behalf of the NHS”. This provides an indication of the extent of the influence of the pharmaceutical companies in providing care.
All NHS-Funded homecare medicines services (whether involving nursing services or otherwise) are commissioned, contracted, and funded directly by the NHS. Contracts may include clauses to be invoked during periods of service failure, or when invoices may be disputed. At all times, the contractor and NHS are bound by a single contract. In contrast, with Pharma-Funded services, the NHS is only purchasing the medication to be supplied. All other costs, including dispensing, delivery, provision of nursing care, and associated ancillary items[**], are borne by the pharmaceutical company – who hold a separate contract with the homecare provider. These contracts are commercially confidential, and the NHS has no sight of, or control over, their contents. It is not uncommon for patients to migrate from one provider to another, simply because the pharmaceutical company has made a unilateral commercial decision. Whereas a NHS-funded service may be awarded to any dispensing provider, a pharma-funded service may have only one, and the NHS cannot use an alternative provider even if service quality is poor. This raises questions over how these services are managed, and who has ultimate control when failings occur. No one can serve two masters. Where the correct product is supplied to a patient two weeks after it was actually required, or where a nurse fails to attend, should a complaint be directed to the NHS organisation, to the homecare contractor, or to the pharmaceutical company? We should ask the question: where would legal liability lie if the patient suffered serious harm due to a service failure? The answer to this, if it can be answered at all, may help to ensure that reform, if considered necessary, is effectively implemented.
July 2023
[1] M. Hackett, ‘Homecare Medicines “Towards a Vision for the Future”’, Nov. 2011. [Online]. Available: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/213112/111201-Homecare-Medicines-Towards-a-Vision-for-the-Future2.pdf
[2] A. Matthews, L. J. Donaldson, S. J. Evans, and S. M. Langan, ‘Safety of medicines delivered by homecare companies’, BMJ, vol. 361, p. k2201, May 2018, doi: 10.1136/bmj.k2201.
[3] ‘Handbook for Homecare Services in England’. Royal Pharmaceutical Society, May 2014. [Online]. Available: https://www.rpharms.com/Portals/0/RPS%20document%20library/Open%20access/Professional%20standards/Professional%20standards%20for%20Homecare%20services/homecare-services-handbook.pdf
[4] NHS England, ‘Patient safety alert: Minimising risks of omitted and delayed medicines for patients receiving homecare services’. Apr. 10, 2014. Accessed: Jun. 26, 2023. [Online]. Available: https://www.england.nhs.uk/wp-content/uploads/2019/12/psa-omitted-delayed-meds.pdf
[5] C. Stebbings, ‘Tax and Quacks: The Policy of the Eighteenth Century Medicine Stamp Duty’, in Studies in the History of Tax Law, Volume 6, J. Tiley, Ed., in Wellcome Trust–Funded Monographs and Book Chapters. Oxford (UK): Hart Publishing, 2013. Accessed: Jun. 24, 2023. [Online]. Available: http://www.ncbi.nlm.nih.gov/books/NBK293691/
[6] R. E. Ferner and J. K. Aronson, ‘Medicines legislation and regulation in the United Kingdom 1500-2020’, British Journal of Clinical Pharmacology, vol. 89, no. 1, pp. 80–92, 2023, doi: 10.1111/bcp.15497.
[7] ‘Purchase Tax’. Hansard, HC Deb. vol 360 cc74-86, Apr. 23, 1940. Accessed: Jun. 24, 2023. [Online]. Available: https://api.parliament.uk/historic-hansard/commons/1940/apr/23/purchase-tax
[8] ‘Purchase Tax (Drugs and Medicines)’. HC Deb. vol 460 cc1457-9, Jan. 31, 1949. [Online]. Available: https://api.parliament.uk/historic-hansard/commons/1949/jan/31/purchase-tax-drugs-and-medicines#column_1458
[9] ‘Finance Bill. Schedule 1. (Substantive changes in purchase tax rates, etc.)’. HC Deb. vol 588 cc1101-247, May 20, 1958. [Online]. Available: https://api.parliament.uk/historic-hansard/commons/1958/may/20/schedule-1-substantive-changes-in
[10] ‘Tax quirk allows NHS pharmacies to avoid VAT’, Croner-i: Accountancy Daily, Mar. 06, 2013. https://www.accountancydaily.co/tax-quirk-allows-nhs-pharmacies-avoid-vat#:~:text=A%20tax%20loophole%20is%20allowing,lucrative%20income%20stream%20worth%20millions
[11] ‘Revealed: the VAT loophole driving NHS pharmacy services into hands of private sector’, The Independent, Jul. 23, 2014. https://www.independent.co.uk/news/business/news/revealed-the-vat-loophole-driving-nhs-pharmacy-services-into-hands-of-private-sector-9622064.html
[12] HM Treasury, ‘VAT and the Public Sector: Reform to VAT Refund Rules’. Aug. 27, 2020. [Online]. Available: https://www.gov.uk/government/publications/vat-and-the-public-sector-reform-to-vat-refund-rules
[13] Royal Pharmaceutical Society, ‘VAT and the Public Sector: Reform to VAT refund rules. Royal Pharmaceutical Society response’. [Online]. Available: https://www.rpharms.com/Portals/0/RPS%20document%20library/Open%20access/Consultations/Nov%202020/VAT%20refund%20refrom%20RPS%20response%20final.pdf?ver=2020-12-11-095312-007
[14] ‘Drug “a £300m drain on NHS”’, The future of the NHS: special report, Jun. 18, 2000. https://www.theguardian.com/uk/2000/jun/18/robinmckie.theobserver
[15] Lord Carter of Coles, ‘Operational productivity and performance in English NHS acute hospitals: Unwarranted variations.’, Department of Health, An independent report, Feb. 2016. [Online]. Available: https://www.gov.uk/government/publications/productivity-in-nhs-hospitals
[16] L. Ewbank, K. Sullivan, H. McKenna, and D. Omojomolo, ‘The rising cost of medicines to the NHS: what’s the story?’, The King’s Fund, Apr. 2018. [Online]. Available: https://www.kingsfund.org.uk/publications/rising-cost-medicines-nhs
[17] Department of Health, ‘NHS complaints reform: making things right’. Apr. 2003.
[18] National Advisory Group on the Safety of Patients in England, ‘A promise to learn– a commitment to act: Improving the Safety of Patients in England’, Aug. 2013. [Online]. Available: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/226703/Berwick_Report.pdf
[19] ‘A Review of the NHS Hospitals Complaints System. Putting Patients Back in the Picture.’ Department of Health and Social Care, Oct. 28, 2013. [Online]. Available: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/255615/NHS_complaints_accessible.pdf
[20] NHS England, ‘The Review of Specialist Pharmacy Services in England’. May 28, 2014. [Online]. Available: https://www.england.nhs.uk/wp-content/uploads/2014/05/sps-final-rep-28-05-14.pdf
[21] J. Kelly, ‘National Homecare Medicines Committee: Terms of Reference’. Apr. 23, 2016. [Online]. Available: https://www.sps.nhs.uk/wp-content/uploads/2018/04/ToR-NHMC-March-2018-2.docx
[22] Royal Pharmaceutical Society, ‘Professional Standards for Homecare Services in England’. Royal Pharmaceutical Society, Sep. 2013. [Online]. Available: https://www.rpharms.com/Portals/0/RPS%20document%20library/Open%20access/Professional%20standards/Professional%20standards%20for%20Homecare%20services/homecare-standards-final-sept-13.pdf
[*]It is important to note here that VAT is levied at a rate of 0%, rather than the item being exempt from VAT altogether. This imposes significant additional complexity, workload, and inefficiency.
[†] Included as an Appendix within the Hackett Report.
[‡] Including a significant increase in patients as a direct response to the Covid pandemic.
[§] which may be a sub-contracted party to the main homecare service provider.
[**] e.g. needles, syringes and sharps bins. Occasionally hiring of equipment such as infusion pumps, depending on service requirements.