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Business Monitor International (Daily News) | 2013-10-03 Newspaper | Word Count: 1298 words Government Invests &pound,250mn In Proton Beam Therapy Facilities

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Espicom View: The overhaul of the healthcare system in April 2013 means m edical d evice manufacturers have had to make changes in the way they do busi ness with the NHS, especially with the abolishment of the PCTs and introduction of CCGs, who now determine what to buy and who to buy it from. The focus, more e mphatically than before, is on efficiency, but there is no reason to be pessimis tic yet, in fact the opposite is true , this despite new hurdles to procurement strategy. In August 2013, the UK Government announced funding of GBP250mn (US$385mn) to bu ild two new proton beam therapy facilities, one in the Christie NHS Foundation T rust in Manchester and the other at the University College London Hospitals NHS Foundation Trust in London. The NHS currently sends those needing proton beam th erapy to the US but from 2018 it will be offered to up to 1,500 cancer patients at these hospitals. Proton beam therapy is a form of radiotherapy that uses charged particles instea d of X-rays to deliver a dose of radiotherapy for patients. It can be a more eff ective form of treatment than conventional radiotherapy because it directs the r adiotherapy more precisely with minimal damage to surrounding tissue. Evidence i s growing that protons can be effective in treating a number of cancers, in part icular children and young people with brain tumours, for whom proton beam therap y appears to produce fewer side effects such as secondary cancers, growth deform ity, hearing loss and learning difficulties. The thing that makes this announcement particularly significant is firstly its t imeliness, and also the commitment to invest in innovative, cutting edge technol ogy, especially considering the same government reformed the NHS the same year, in April 2013, and announced it plans to make efficiency savings of GBP20bn (US$ 31bn) by 2015. At first glance, GBP250mn (US$385mn) is merely a fraction of the government's pl anned efficiency savings, and is also a small part of the total size of the UK m edical device market, which is estimated at GBP6,426mn (US$9,896mn) in 2013, but what makes this development significant is that a common complaint by the medic al device industry, when it comes to reimbursement policies in a number of count ries, is the preference of keeping reimbursement rates low; in many cases lower technology items of a cheaper costs are quite often given the same reimbursement rate of newer, innovative technologies that undoubtedly involve more R&D an d investment to produce.

New Opportunities With Overhaul In Supply Chain Management With over 80% of total health spending in the UK coming from the government, the restructuring of the NHS under the Health and Social Care Act in April 2013 saw the abolishment of Primary Care Trusts, which have been replaced by Clinical Co mmissioning Groups (CCGs) and the establishment of NHS England. The CCGs will no w perform many of the functions of PCTs as well as other functions previously un dertaken by the Department of Health. All GP practices now come under a CCG and the groups also include other health professionals, such as nurses. The medical device industry are still adjusting to this changes, as the structur e of the supply chain has now been changed but it is precisely these new supply chain routes and partnerships that could provide the best opportunities for grow th. Although the focus has been on efficiency, these CCGs are in charge of their own budgets, which are allocated by the government annually. For the 2013-2014 peri od, the NHS England has a budget of GBP95.6bn (US$147.1bn). Of this total, GBP65 .6bn (US$100.9bn) has been allocated to local health economy commissioners, that is CCGs and local authorities. It is also worth noting that while opportunities exists for capital equipment in vestment in medical devices, the focus on efficiency is nothing new in the NHS based on latest statistics from the OECD for example, the UK has one of the low est rates for major medical devices in Western Europe. In 2011 for example UK al so operated 551 CT scanner units in 2011, equal to a rate of 8.9 per million pop ulation. This rate is similar to Israel (9.0 per million population) but lower t han other countries in the region like France (12.5) or Denmark (29.3). The focus has traditionally been on keeping costs low, but even for a mature med ical device market like the UK, there are still opportunities and gaps to be fil led, and this is fuelling investment in major medical device equipment, especial ly considering the comparatively low rate of medical device equipment compared t o most countries in Western Europe. Perhaps more importantly for industry, is th at the government is willing to invest in innovative medical device technologies at the expense of short term savings, if the benefits of such investments could be sold or justified in the long run. Solid Growth Ahead UK Medical Device Mark et (US$mn), 2008-2018 BMI Espicom projects the UK medical device market will exp and at a solid 7.3% US dollar CAGR in the 2013-2018 period, although in pounds s terling the CAGR will be lower at 4.2%. This should see the market rise from an estimated US$9,895.9mn (GBP6,425.9mn) in 2013 to US$14,083.1mn (GBP7,889.7mn) in 2018. In per capita terms, spending will rise from US$157 (GBP102) in 2013 to U S$217 (GBP121) in 2018. All categories are expected to perform strongly during t he forecast period, led by diagnostic imaging and consumables, which are project ed to expand by CAGRs of 8.6% and 8.1% respectively. New Hurdles In Procurement Strategy It is however worth noting that medical device manufacturers will however face n ew hurdles in procurement strategy; the Department of Health (DoH) plans provide NHS trusts with guidance on procurement <<<standards>>>, to help measure how ef fective their procurement compares with other trusts. It also plans to: Encourage NHS trusts to use <<<GS1>>> bar-coding, a system th at makes it easier to find the best prices and switch suppliers if necessary. & bull;Require NHS trusts to publish details of contracts worth over GBP10,000 (US $15,385). Another development, as part of the reform of the UK's National Health Service ( NHS) under the Health and Social Care Act of 2012, the National Institute for He

alth and Clinical Excellence became the National Institute for Health and Care E xcellence (NICE) in April 2013, and has officially begun a major new programme o f work to bring guidance and <<<standards>>> to the social care sector. The inst itute will still be known under the acronym NICE, but the new name is intended t o reflect the changes to its role which now also covers social care. NICE's aim is to improve outcomes for people using the NHS and other public heal th and social care services. It does this by: 1) Producing evidence-based guidance and advice for health, public health and so cial care practitioners. 2) Developing quality <<<standards>>> and performance metrics for those providin g and commissioning health, public health and social care services. 3) Providing a range of information services for commissioners, practitioners an d managers across the spectrum of health and social care. Role NICE plays in influencing the type of medical devices bought by the NHS This gives NICE an important role in influencing the type and kind of medical de vices &amp; supplies that are bought by the NHS. The category of evidence based guidance (Point 1) that has a direct impact on medical device procurement is Tec hnology Appraisals, which assesses the clinical and cost effectiveness of health technologies, such as new and existing pharmaceutical and biopharmaceutical pro ducts, procedures, medical devices and diagnostic agents. The aim is to provide NHS patients with the most clinically and cost effective treatments that are ava ilable in England and Wales. Despite these changes, BMI Espicom believes the impact on the industry profit m argins will still largely depend on how well and closely medical device companie s work with the new NHS bodies, as this will determine how the budgets will be s pent.

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