Competition

Jon Sussex was a keynote speaker at the Capita conference on competition in health care held in June, where the audience was primarily from the NHS. Jon’s presentation summarised the state of provider competition in the NHS to date as well as national and international evidence about the impact of competition on quality.

OHE’s Jon Sussex has studied and written extensively on competition in the NHS. He was a member of the OHE Commission on Competition in the NHS and rapporteur of its 2012 report. We asked him to comment on the latest NHS competition regulations. Last week the UK’s coalition government published a revised draft of regulations to govern competition among providers of health care funded by the NHS in England.

OHE’s research and consulting captures a range of key issues that affect how health care systems are organised and how decisions are made within them. For example, how far to incorporate competition in the provision of NHS-funded health care in England was the focus of the OHE Commission on Competition, which published its report in January 2012.

The role of competition in the NHS is again in the news. Sir David Nicholson, Chief Executive of both the NHS in England and the NHS Commissioning Board, voiced his concern at a Royal College of General Practitioners conference last week, saying: “It [competition] is very effective when it is used as a rifle shot to deal with specific issues rather than a carpet bombing”. We agree.

The Office of Health Economics (OHE) has just released the report of its Commission on Competition in the NHS, which recommends careful expansion of competition between providers of NHS-funded health care in England.

Competition in the NHS is viewed as if it must either be for everything the NHS provides to patients or for nothing. Neither extreme is likely to produce the most socially beneficial outcome. To examine the appropriate role of competition in the NHS, the OHE has established an expert Commission on Competition, expected to produce a report by year's end.

Jon Sussex, Deputy Director of the OHE, researches incentives and competition in UK health services. In July, he presented findings on ‘Payment by Results’ to the Health and Social Care Conference held by the Association of Chief Executives of Voluntary Organisations.

Europe already has some experience with the impact of biosimilars on pricing, including a price war in Germany for EPOs. Whether that experience will be repeated, however, depends on a number of factors, including the originator's pricing strategy and reservations by payers and physicians about potential risks.

Virtually all models forecast that price competition will be less intense and price declines modest in comparison to the generics model. Many models, however, miss or underestimate factors and trends that push the biosimilars market in the other direction. These include, for example, sources of supply with lower variable costs, profit incentives for entry, participation of major pharma companies and an increase in comfort levels over time.

This is the second in our series of posts based on the OHE seminar on biosimilars and summarises the remarks of Prof Bengt Jönsson of the Stockholm School of Economics.

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