Bloomberg

(Bloomberg) -- England is reopening its Cancer Drugs Fund with a crafty solution to rein in the overspending that blighted its predecessor: make drugmakers pay.

Under new rules, if the fund exceeds its 340 million-pound ($450 million) budget -- as it’s done in the past, overshooting by 37 percent in the final year before the revamp -- pharmaceutical manufacturers will pick up the tab. And there’s no cap on that bill.

The reformed fund opened for new applications Friday after a four-month shutdown. Like its forerunner, it’s meant to pay for therapies that aren’t deemed cost-effective enough for routine use across England, where cancer survival rates lag those of other developed countries. But with new rules devised to protect the National Health Service’s strained finances, it’s treading a fine line between holding pharma companies accountable and alienating them.

The new system “feels to me extremely high risk and not particularly effective,” David Montgomery, cancer medical director for Pfizer Inc.’s U.K. unit, said in an interview. That’s because it could amount to an “uncontrolled price cut on top of what will already be good value for money.”

Not For Free

Pfizer, cancer market leader Roche Holding AG and others already offer rebates and discounts on their cancer medicines via England’s Pharmaceutical Price Regulation Scheme and patient access programs in order to win coverage for their products.

“We’re not in the market of giving medicines away for free,” Montgomery said, calling it “too simplistic” to keep pushing down prices. “That would be my point of no return.”

The NHS, which helps manage the fund, is struggling to make ends meet. It faces a 10 billion-pound annual deficit by 2020 and may fail to meet its 22 billion-pound savings goal, according to a report released in May by the Chartered Institute of Public Finance and Accountancy. The changes to the drugs fund are part of a broader effort to tighten the state-run health service’s purse-strings.

No Wiggle Room

“We do need a system that manages the budget effectively,” said Emlyn Samuel, a senior policy manager at Cancer Research UK, a charity that raises funds to pursue new therapies. “I think we all realize the financial constraints that the NHS is under and we do have to work within the confines of that.”

So far, the five-year-old fund has helped over 95,000 patients who otherwise would not have received the newest medicines. In its latest reincarnation, it says it will deliver the fastest cancer treatment approval in Europe.

All the drugmakers whose products are backed by the fund will share proportional responsibility for the cost overruns under the new rules. The joint liability combined with the lack of spending caps is a concern, according to Basel, Switzerland-based Roche.

“Say another company introduces a huge blockbuster medicine that retails at a very high price and we end up having hundreds of millions of pounds of overspend -- that’s a really unpredictable thing,” Deborah Lancaster, a director at Roche U.K., said in a telephone interview. “There aren’t many industries where you don’t know what your fellow industry members are doing and yet you could be liable for any overspend caused by the other person.”

Not So NICE

That’s not the only controversy. The National Institute for Health and Care Excellence, the country’s health-cost adviser, will appraise new cancer therapies expected to receive marketing approval, extending the reach of an assessment system that’s irked pharmaceutical companies and charities in the past.

The fund initially was created precisely to circumvent NICE’s rejections and give patients access to innovative medicines that didn’t meet the agency’s rigid assessment criteria, according to a letter 15 cancer charities wrote to then-Prime Minister David Cameron in May.

“The Cancer Drugs Fund was introduced as a way of making medicines available to patients at a time when there was a recognition that NICE methodology didn’t work terribly well,” Pfizer’s Montgomery said. There is a “great degree of concern that the new CDF isn’t actually going to make things better,” he said. Instead, it may “make things worse.”

This month, NICE backed the use of Pfizer’s Bosulif for people with chronic myeloid leukemia, three years after first rejecting it. In the interim, patients had access to the drug through the Cancer Drugs Fund.

“We must, as a matter of urgency, address the challenge they have in assessing the real clinical value of cancer treatments,” Richard Erwin, Roche’s U.K. general manager, said in an e-mailed statement. Otherwise, “this could mean that thousands more cancer patients are denied medicines their doctors believe could be effective in their treatment.”

To contact the reporter on this story: John Ainger in London at jainger@bloomberg.net. To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Chitra Somayaji at csomayaji@bloomberg.net, Marthe Fourcade, Kristen Hallam

©2016 Bloomberg L.P.

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