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Memo to Boris: Bulk Medicine Purchases Could Save the NHS Millions Annually
The UK’s excellent National Health Service could save millions of pounds annually if the UK government were to bulk purchase all medicine for the entire country and thereby obtain huge discounts from pharmaceutical manufacturers.
The NHS can save itself millions of pounds sterling per year by simply purchasing a year’s worth of medicines in advance, similar to what is done in Canada where the government of Canada, using their mass-purchasing power, negotiates massive discounts on medicines from multinational pharmaceutical corporations.
In Canada, each province operates its own provincial health service and pays the entire cost of it via provincial income tax, sales tax and other fees — but they couldn’t succeed without the huge price discounts that the federal government of Canada obtains from its medicine suppliers. Not only do Canada’s healthcare systems benefit from lower drug costs, but the Canadian military and Coast Guard also benefit from those lower prices.
It’s not the whole answer to solve all NHS spending problems all the time but it could be a good part of the answer.
As the NHS constantly struggles to meet the demands placed on it by attempting to treat everyone, all the time, no matter the disease, ailment or injury; Saving millions annually on medicine costs could allow NHS funding to be better spent on treatment for patients, instead of it being consumed by drug costs.
It’s not about purchasing low quality medicines, nor is it about payoffs or patronage.
It’s about deciding how much medicine to purchase (a year in advance) and thereby obtain competitive pricing from the legitimate pharmaceutical corporations in America and Europe which appreciate knowing (in advance) how much of each medicine to manufacture and (in the case of some medicines) they are willing to offer deep discounts (usually about 50% off the listed prices, but in certain cases those discounts can reach 80% off the list price) which can help healthcare providers to lower their costs.
Using the Mass Purchasing Power of the UK Government to Lower Medicine Costs
Of course, the NHS has almost certainly looked at this model in the past.
But ‘timing is everything’ they say, and in the midst of recession, austerity, or during times of political upheaval, it isn’t practical to divert millions of pounds to prepay an entire year’s worth of medicines, nor is it likely to be done without prior approval of the UK government.
However, once we move out of the Coronavirus crisis (but while there’s still plenty of well-deserved focus on the heroic NHS workers) it might be time to have a national conversation about bulk purchasing the UK’s entire annual medicinal requirements — including purchasing on behalf of all devolved territory NHS units and the UK military. The UK government would thereby become the sole wholesale purchaser and wholesale seller of medicines in the UK, even acting as the sole supplier to every wholesale medicinal distributor in the country.
It might take a bit of UK legislation for this to happen and some money, because for all it’s merits, you must still pay for an entire year’s worth of medicine in advance in order to qualify for those quite wonderful discounts.
Also, every NHS unit including NHS Scotland, NHS Wales, NHS Northern Ireland and NHS England, and the UK military and every pharmacy supplier would need to provide a list of medicines to the UK government a year in advance so they could form an accurate picture of the pending mass purchase and consequent deep discount.
Yes, it would take some work to calculate that list and perfect it over time. But if Canada (and certain other countries and militaries) can do it; Why not the UK?
The truth is that certain global healthcare systems benefit massively from volume discount medicine purchases and the UK government needs to act now to create the requisite legislation so each NHS unit can save millions, allow the UK military to save hundreds of thousands of pounds sterling, and allow pharmacies to lower their retail prices via significant cost saving on the wholesale price they pay their suppliers.
But other than the price — as everything else would remain the same — the UK must get organized so it can obtain those astonishing discounts and benefit as other healthcare systems benefit from bulk purchasing.
The NHS Will Save Multi-Millions on Medicine Costs
You’ve got to like that.
Ditto for the UK military and for retail pharmacies.
Therefore, I respectfully submit that the UK government pass legislation to create a National Medicines Purchasing Agency (or ministry) that should thenceforth operate as the sole purchaser for all (non-homeopathic) medicines for the entire UK, including on behalf of all NHS units, the UK military, and for suppliers to pharmacies UK-wide, and provide it with generous funding to accomplish the task.
The legislation should require the agency or ministry to create a continuously updated website that is robust enough that the public and medical professionals could find relevant information on every medicine sold in the country — including general information, dosages, contraindications, along with high quality images of each pill or tablet to help counter possible fraudulent imitation pills or tablets.
Further, I believe that such an agency should be set-up — not to earn a profit from reselling medicines, but to simply recover the cost of each medicine — and that should remain true whether the agency is selling to any NHS unit, to the UK military, or to pharmacy suppliers across the UK.
However, if other national healthcare systems wish to purchase surplus UK medicines, then perhaps that UK agency could offer them to other healthcare systems at cost-plus-ten-per-cent for example, or whatever seems reasonable. No favouritism, please. Just enough to maintain a zero deficit/zero profit annual budget within the national medicines purchasing agency.
Selling Medicine that is ‘Near To Expiry Date’ & Selling Other Surplus Medicine to the UK Foreign Aid Office in Lieu of Monetary Donations to Developing Nations
The UK is highly regarded globally for its foreign aid commitment of .7% of GDP. It’s one of the most generous foreign aid budgets in the world by percentage and compares well with larger countries even when measured in total currency amounts.
However, more can always be done.
And instead of dumping ‘near to expiry date’ medicines or other surplus medicine in a landfill or incinerator; By staying current with the expiry dates, the UK could boost its foreign aid spending by sending such surpluses to developing nations once those medications are down to 6-months remaining on their batch number expiry date.
Therefore, whatever those drugs have cost the UK government, by simply reallocating them to the Foreign Aid Office for transshipment to a developing nation along with a note to the Foreign Aid Office explaining how much the National Medicines Purchasing Agency (or ministry) paid for that pallet of medications, it’s a just way to increase the UK’s foreign aid budget by that exact amount. Or to top it up to .7% during lean years.
In either case, it won’t hurt to send a truckload or two of nearly outdated medicine (annually) to the developing nations that need them and include those donations as part of the UK’s foreign aid spending.
It’s a ‘Win-Win’ when you bulk purchase an entire country’s worth of pills annually and thereby receive astonishing discounts from multinational pharmaceuticals, it’s ‘Win-Win’ when each NHS unit never again runs short of medicine and only ever pays the deeply discounted wholesale price, it’s ‘Win-Win’ for pharmacy suppliers that benefit from a much lower wholesale price than they could ever hope to negotiate themselves, the UK military wins by having lower cost medicine for its personnel, and it’s a ‘Win-Win’ for the UK foreign aid budget/developing nations.
And all that, just by getting the UK organized on its total annual medicine purchase.
It’s Time for a Dedicated NHS Tax
As we begin to deal with the middle stage of the COVID-19 crisis, it’s time to relook how the UK funds its excellent National Health Service.
On that note, you may recall that I’ve said many times on this website that things ‘evolve’ but they don’t always ‘evolve’ to the best result. While each individual decision over the decades on behalf of the NHS was well-meant and likely the only logical choice at the time, were we to now create the NHS ‘from scratch’ in 2020, it would look much different than the National Health Service we see today.
For example, we might see more, but smaller Hospitals — instead of the fewer, but larger Hospitals built in the 19th and 20th-centuries. Also, NHS Hospitals might be located closer to areas where the highest annual concentrations of injuries occur, complete with NHS-only access to on-ramps and off-ramps to get Ambulances on and off the motorways more quickly. Also, helicopters sitting and ready to fly from the roof of each Hospital, every minute of the year. And more.
Obviously, there are plenty of ideas that should receive fair consideration because continuing to do things the way we’ve always done them isn’t good enough when it comes to the health of every UK citizen, resident and tourist.
To wit; Early on in the Coronavirus timeline it became known that enough Personal Protective Equipment (PPE) for NHS workers hadn’t been stockpiled and lives were thereby endangered. Who knows how many were endangered, but enough that the government must ensure it never happens again.
In Germany, the same thing occurred (not enough PPE’s on hand to deal with their COVID-19 crisis) until someone remembered that many years earlier a brilliant person in the German military had decided to stockpile millions of PPE’s — consequently, the German healthcare system had surplus PPE’s, even delivering some to the UK’s NHS. Impressive. Los Deutschland!
Thinking ahead like Germany did costs money. (But it costs more if you don’t think ahead) It also takes political will and perseverance. It speaks to the quality of government delivered or not delivered to the people by the politicians in each decade, and that’s the whole point, isn’t it? Either the politicians are up to the task, or they’re not. If they’re not, let’s hope they become unemployed at the next election.
Now, let’s not lay all that on Boris and his team, after all, he’s only been Prime Minister for 9-months and he’s had some rather large items to deal with… Brexit, a future trading relationship with the EU, his own serous bout with COVID-19, and more recently, a newborn son with his partner Carrie Symonds. Congratulations to Boris and Carrie!
So let’s cut Boris some slack, shall we?
Still, we should add momentum to the idea that we need to fund the NHS properly instead of expecting them to provide the best healthcare in the world without the funding to accomplish the task.
One Tax to Fund Them
It’s time for the UK to add 1% to the existing VAT — and every pound sterling of that 1% should go directly to the NHS without being touched by any level of government. In fact, new legislation should be created to make it illegal for anyone in government (even the Prime Minister or the country’s Head of State) to delay or divert any of that 1% VAT NHS funding with mandatory prison sentences for any person involved in interfering with the 1% VAT NHS revenue stream.
Without healthy citizens and a well-funded NHS the United Kingdom is a much-diminished country, therefore, NHS needs to be well-funded and that funding must remain untouchable by any UK politician.
In practical terms, it means each of the devolved territories and England need to enact their own 1% VAT and direct all the revenue collected within their own jurisdiction to their own NHS organization to form the baseline of their respective NHS funding. (Let’s call the proposed 1% VAT “primary funding” for their respective NHS organization)
“Secondary funding” would be allocated via the respective Northern Ireland, Scotland, Isle of Man, Wales, and England annual budgets and “tertiary funding” can be allocated by the UK government.
Why would the UK government want to provide tertiary NHS funding to each of the five jurisdictions?
In order for the central UK government to have any say in Scotland’s NHS (for example) the UK government would need to provide some funding towards Scotland’s NHS.
To illustrate this further; In Canada, healthcare is the exclusive domain of each province which raise their own revenues from a combination of provincial income tax and provincial sales tax. Consequently, nowhere in Canada must people pay healthcare premiums. Therefore, almost the entire cost of each provincial healthcare system is raised via provincial revenue. But the federal government of Canada also kicks-in additional healthcare funding for the provinces each year (representing about 6.5% of each provincial healthcare budget) to, (a) ensure uniformly high healthcare standards across the country, (b) to ensure that citizens and residents of all provinces are treated without delay if injured while visiting another province, (c) and to maintain an universal healthcare database so that out of province visitors can be treated without delay if they suddenly become ill or sustain injury.
Why would the five jurisdictions want to accept tertiary NHS funding from the UK government?
Remember, primary healthcare funding would come from each territory’s 1% NHS VAT (including England) but it might not be enough to cover the full cost of providing all the healthcare necessary for their own residents. Therefore, secondary funding for each territory’s NHS service would come from a combination of (‘provincial’) income and sales tax, while tertiary funding would be provided to each NHS unit (annually) by the UK central government in a sort of ‘top-up’ modality to meet 100% of the annual costs of each of the five NHS units.
In this way, no monthly or annual healthcare premiums would be paid by individuals or companies and each NHS unit would receive funding from their devolved government with supplementary funding courtesy of the UK government.
Three funding streams, and one stream arrives completely free of government interference. If you’re a healthcare professional or healthcare administrator you’ve got to like that!
- No healthcare premiums for individuals or companies — ever!
- PRIMARY NHS FUNDING: All the 1% VAT revenue collected in each territory would go directly to their own NHS unit (only) bypassing government control or restrictions, thereby raising significant revenue to fund their own NHS unit.
- SECONDARY NHS FUNDING: Each territory (Northern Ireland, Scotland, Wales, Isle of Man, England) would levy its own (‘provincial level’) income and sales taxes on their respective residents and use some of that revenue to help fund their own NHS unit.
- TERTIARY NHS FUNDING: By definition, the UK government collects (‘federal level’) taxes and some of this revenue can be used to ‘top-up’ the budget of each NHS unit. This top-up should never exceed 10% of the funding of any NHS unit and the exact percentage would be negotiated annually between the (‘provincial level’) territories bloc and the UK government.
Finally, a shout-out to today’s NHS heroes, who risk their lives every day to protect us from a killer virus. Thank You! for your professionalism, sacrifice and courage.
A MUST-READ for anyone wanting to understand why the UK should adopt Canada’s excellent healthcare funding model
- Canada’s Health Care System (Government of Canada website) click here.