Dropping the F word.

Picture courtesy of Chat GPT. Thank you robot friends.

I recently was invited to give a talk. And I decided to drop the F word.

Yep, you’ve guessed correctly.

One of the quirky delights of healthcare in the NHS, is that most of the time, clinicians have almost no concept of the F-word. By that, I mean Finance. Money. For some reason, it feels quite a grubby thing to talk about for lots of reasons.

Firstly, we are British and it is very considered crude and uncouth to discuss that kind of thing.

Secondly, free at the point of access is a concept many people hold very close to their heart when it comes to healthcare. I for one, think free healthcare is a fundamentally brilliant thing. But there are some subtle differences to healthcare being free at the point of access, and for several reasons – including that I don’t know enough about this particular topic – am going to conveniently duck this can of worms and move onwards. But my point is that because we have free healthcare in the UK, people feel very uncomfortable thinking and talking about money with our service users.

When money is talked about in the context of healthcare, it is usually in a handful of contexts. It might be accompanied by tutting that staff don’t get paid enough, or to discuss the financial waste in the system. What we don’t do is tell people the cost of an ambulance call out, or that your pacemaker costs about £7500 or that your operation costs £1200/hour. There are problems with this. It can make people feel guilty, especially if they have chronic diseases. And there are lots of other slightly knotty problems associated with this. But it is feasible. We do this for overseas visitors in the UK, and there are moves to increase the use of PLICS (Patient-Level Information and Costing Systems) which is a tool (and importantly, some would argue a flawed system) of estimating patient costs per visit and per treatment. But these tools do exist.

Within the system, the most common way we talk about money it is about the lack of it and the need to save money. Efficiency savings, capital spending envelopes, budgetary constraints. The usual smorgasbord of ways of saying there's no money. Don’t spend any.

So where does industry fit in?

If I am honest, in the past few years my perspectives have changed quite a lot. When people representing industry used to come into the hospital to share information about new treatments, medicines, equipment or processes I used to be deeply cynical. Sure, I would eat their sandwiches and take their free pens, but I would know that they were only there to make money out of our patients, and line their pockets.

There are a few problems with this.

Firstly, industry makes stuff much better than the public sector. We need them, just as they need us. Patients are often surprised because the NHS App actually works. That is because whilst it is administered and overseen and led by a central team. It has to this point, mostly been built and delivered by industry partners.

Secondly, if industry does not make money from new ventures and products, there is a consequence. If something does not work or sell, the individuals in that team might well lose their jobs. People in the NHS sometimes joke about how hard it is to fire someone. Within industry, things happen much faster and the stability that an NHS “job for life” offers is a far cry from the relentless pace of change elsewhere. If hard decisions about loss-making ventures are not made correctly, not only can pockets of people lose their jobs – but entire businesses can fold. So, industry needs to make money, to pay people their wages so they can pay their rent. The corollary for the NHS Trusts is that for a long time, many have been relentlessly loss making entities.  

Thirdly, R&D processes take money. I’m going to circle back to this point later, because this is really thorny but really important. But if you don’t make money to reinvest into the business, you don’t end up with anything new.

Fourthly, is the fact that these people representing industry – be it a healthtech transformation analyst, a drug rep or a senior executive underneath their corporate Teams background and email address are still people. We can all afford to be kind. These people are doing their job and giving a free lunch to a bunch of people who not only get paid more – but also have unfathomable job security and minimal expectations to travel across the country, must chafe a little sometimes. Yes, ask questions. Challenge the evidence. Be sceptical. That is healthy and nothing wrong with that. But be kind.

And finally, these people are often experts in their field and you might be able to learn a lot. It might be through the lens of their product, but they tend to know a lot.

I said I was going to circle back to the R&D costs involved. According to the The Association of the British Pharmaceutical Industry (ABPI), it costs approximately £1.15 billion to bring a new drug to market, with 80% of compounds abandoned. Whichever way you look at this, it is a lot of money. The other side of the coin, is some work by Aris Angelis and colleagues that highlights amongst other things that of the money spent by the 15 biggest pharmaceutical companies, far less money (2/3) is spent on actual R&D compared to the costs of “selling, general, and administrative activities”. [I'll pop the links in the comments].

If you have what might be the cure for cancer, but can’t get the evidence, it doesn’t help anyone. If you don’t get it through regulatory approval, it also doesn’t help anyone. If you have regulatory approval, but nobody knows about it, it doesn’t help anyone. And if nobody buys it, it doesn’t help any patients. And so you need the administrative, the marketing and the sales costs, before you have helped a single person.

 But there are lots of things to untangle here. One that is worth examining is prices. Aris Angelis, PhD and colleagues highlight that based on US prices in 2008 the average yearly price of newly launched prescription drugs was $1400, and by 2021 it was over $150,000. You also can’t ignore the profits for some of these companies which are sometimes eye-watering.

The next side-issue, is that whilst the headline profits and CEO pay packages might make many feel uncomfortable – these are the profits that will drive our ISA growth and our pension pots. So, uncomfortable as many of us may find it, we are benefiting. 

What I have written is a massive over-simplification – and there are countless holes in my logic and arguments. In some arenas, the concept that the public pay twice – once for the R&D and again to pay for what they funded. Sometimes people talk about the “risks are socialised and rewards are privatised.” Again, this is an oversimplification but merits looking at closely. Perhaps not now. But for those interested, I will pop some links in the comments from both sides of the argument here, but I’d recommend Ben Goldacre’s “Bad Pharma” for those who are interested in one perspective, and “The Entrepreneurial State” by Mariana Mazzucato for another which are both far more informed and well researched than my musings.

Day to day, I spend quite a lot of my time in the #healthtech space, and this is very different in terms of scale, route to market and the R&D approach than that of Pharma. The costs are lower, the journey faster. This is really something to be part of because it means that the pace of change within digital therapeutics – with the regulatory approvals and safeguards of course – is immense and really very, very exciting. But nonetheless, every week or so, great people working for great and often impactful companies are being told that they are going to have to look for a new job.

What I am not implying is that you if you are involved in contract negotations on behalf of the NHS, is that you don’t need to push hard in price or contract negotiations. Of course not! If that is part of your job, then you will know that this is an important part of your job. As a tax payer, I want to know my taxes are being used to squeeze the last bit of value out of everything that is procured.  

But finance – the f-word. It is not a dirty word. We, and in that I include people who pay taxes and the public sector shouldn’t be offended if industry partners are making modest profits, because I genuinely think that this is part of the game. Because if the game is to make help more people live healthier and better lives, then I think this is a game I think we should be playing.

Words by me. Picture by AI. I try not to mix the two. I use a spellchecker sometimes, but any mistakes spelling-wise or otherwise are mine. I love feedback - good or bad so please let me know what you think.