CRI report: A growing disease burden, universal healthcare coverage, and good access to healthcare facilities provide the necessary momentum for the growth of the UK healthcare market; but increasing use of generics and government cost-cutting measures to reduce expenditure are restricting growth.
The pharmaceutical market in the UK was worth approximately $24 billion in 2012 and is projected to reach approximately $31.7 billion by 2020 at a Compound Annual Growth Rate (OTCPK:CAGR) of 3.5% (OECD, 2011). The segments that dominated the market in 2012 were Central Nervous System (NYSE:CNS) drugs, cardiovascular drugs, and respiratory system drugs. The UK is one of the most profitable healthcare markets among the European Union (NYSEARCA:EU) member states. CountryFocus: Healthcare, Regulatory and Reimbursement Landscape - UK
The prevalence of hypertension has increased from 7.4 million in 2010-2011 to 7.6 million in 2011-2012. The prevalence of depression in people above 18 years of age increased from 4.8 million in 2010-2011 to 5.1 million in 2011-2012. In 2012, the prevalence of diabetes in England increased by 4.5% from 2011. The government has allocated funds to encourage R&D and has implemented campaigns to enhance the prevention and treatment of chronic diseases such as cancer and diabetes.
The UK provides public healthcare to all citizens, approximately 63.2 million people. The National Health Service (NYSEMKT:NHS) is responsible for the public healthcare sector of the UK. The NHS is the one of the world's largest healthcare system and provides a wide range of healthcare services to the entire population, such as routine treatments for long-term conditions, transplants, emergency treatment, antenatal screening, and end-of-life care, but charges for dental and optical services. Healthcare coverage is free at the point of need, and funding comes from taxation and is granted to the Department of Health (DH) (NHS, 2013a). CountryFocus: Healthcare, Regulatory and Reimbursement Landscape - UK
Increasing generic substitution and cost-cutting measures adopted by the government and the NHS have on the other hand had a negative impact on market growth. Price cuts have led to market decline. The UK's government introduced price cuts on branded medicines of 3.9% in 2009 and 1.9% in 2010 to reduce NHS expenditure (DH, 2008). In 2013, the DH announced plans to cut drug prices by 10-20% on approximately 10% of branded medicines not covered by the voluntary Pharmaceutical Price Regulation Scheme (PPRS) (DH, 2013). Generic substitution by pharmacists was implemented by the NHS in 2009 and has reduced the overall value of the pharmaceutical market.
The medical device market was worth approximately $12 billion in 2012, placing the UK fourth in Europe after Germany, France, and Italy. The market is projected to reach approximately $17.5 billion by 2020 at a CAGR of 4.8%. CountryFocus: Healthcare, Regulatory and Reimbursement Landscape - UK
In 2012, the major segments of the medical device market in terms of share were ophthalmic devices ($1.4 billion), orthopedic devices ($1.4 billion), wound care management ($1.1 billion), cardiovascular devices ($1.1 billion) and drug delivery devices ($1 billion).
With the availability of reimbursement, advances in medical technology, and growing disease awareness enabling early diagnosis, the medical device market in the UK is expected to grow significantly in the future.
Directive 2007/47/EC amended both the Medical Devices and Active Implantable Medical Devices Directives, and a revision of this Directive came into force in 2010 in order to improve and strengthen regulations.
Well-defined and transparent patent protection and regulatory procedures for pharmaceutical products and medical devices are the salient features of UK's healthcare system. CountryFocus: Healthcare, Regulatory and Reimbursement Landscape - UK
The Medicines and Healthcare products Regulatory Agency (MHRA) regulates pharmaceutical products and medical devices. It is an executive agency of the DH and authorizes the approval of medicines and medical devices. Its roles include assessing the quality, safety and efficacy of medicines, and it also operates post-marketing surveillance to investigate and monitor adverse effects. Additionally, it issues export certificates on behalf of the DH.
The MHRA includes the National Institute for Biological Standards and Control (NIBSC) and the Clinical Practice Research Datalink (CPRD). NIBSC assures the quality of biological medicines and CPRD improves the way clinical trials of innovative medicines are undertaken. MHRA monitors and ensures compliance with statutory obligations relating to pharmaceuticals and medical devices through inspection and taking enforcement action if necessary.
The MHRA also regulates clinical trials for pharmaceuticals and medical devices. Applications for clinical trial authorization are assessed by scientific, pharmaceutical and medical staff at the MHRA. It also operates proactive compliance programs for medical devices.
In the UK, the Intellectual Property Office (NYSEARCA:IPO) is the government body responsible for intellectual property rights. UK patent law provides protection throughout the UK for 20 years.
Structural reforms in the healthcare system, sufficient infrastructure, easily accessible healthcare facilities and a straightforward reimbursement process ensure a positive healthcare landscape in the UK. CountryFocus: Healthcare, Regulatory and Reimbursement Landscape - UK
The NHS is one of the world's largest healthcare systems. It is publicly funded and provides healthcare services to the entire population. It underwent several structural changes in April 2013, through which the government created Clinical Commissioning Groups (CCGs) and Public Health England (PHE) in order to improve patient access to the healthcare services. CCGs can commission any service provider, such as NHS hospitals, social enterprises, or private-sector providers that meet NHS standards and costs restrictions.
The NHS employs approximately 1.7 million people, including, 40,000 General Practitioners (GPs), 370,000 nurses, 17,000 ambulance staff, and 105,000 hospital and community health service medical and dental staff. According to the Commonwealth Fund, in 2010, the NHS was rated as the best healthcare system in terms of efficiency, effective care and cost, and the second best for patient equality and safety compared to six other countries (Australia, Canada, Germany, Netherlands, New Zealand and the US) (NHS, 2013a).
The NHS provides healthcare services free of cost, with the exception of dental and optical services and some prescriptions. It provides a wide range of healthcare services, including general treatment, vaccination, and advice on health problems, prescriptions, and examinations. It has a budget of approximately £108.9 billion ($171.2 billion) for 2012-2013, up from £105 billion ($167.3 billion) in 2011-2012 (Harker, 2012).
The government's resourceful healthcare policies and incentives for pharmaceutical R&D programs are expected to boost the growth of the healthcare market.
The government is taking steps to modernize the NHS to offer better healthcare services for UK citizens. It has accepted recommendations from the NHS Future Forum for modernization, including giving more commissioning powers to GPs and involving doctors and nurses in care commissioning. CountryFocus: Healthcare, Regulatory and Reimbursement Landscape - UK
In 2013, government allocated £50m ($79m) to adapt wards and care homes for people suffering from dementia and increased funding for dementia research to approximately £66 billion ($105.2 billion) by 2013. The government also planned to fund a £300m ($478.1m) program to build or renovate housing for people with long-term conditions, including dementia (DH, 2013b).
In 2011, the government established the Cancer Drugs Fund, into which it plans to release £200m ($320m) annually until 2013 to improve patient access to cancer drugs (DH, 2012c).
It has also allotted £800m ($1.28 billion) to enhancing R&D of groundbreaking medicines and treatment over the 2011-2016 period (DH, 2011).
In 2013, the government planned to reduce corporation tax to from 24% to 21% in 2014 and further to 20% in 2015 in order to attract foreign investment in the UK (HM Treasury, 2013a).
High expenditure on public healthcare, ongoing eurozone crisis, high government debt, increase in the unemployment rate, and a consistent decline in foreign direct investment has negatively impacted the overall performance of the UK economy.
The UK has a huge budget deficit, ranked the third largest in Europe. The status of public finances is poor. Government net debt increased to 82.8% of Gross Domestic Product (NYSEMKT:GDP) in 2012 from 63.2% in 2009 (IMF, 2013). At the end of March 2013, public sector net debt was £1.19 billion ($1.87 billion), equivalent to 75.2% of GDP. Unemployment increased to 8% in 2012 from 5.2% in 2009 (IMF, 2013). Foreign Direct Investment (NYSE:FDI) in the UK in 2011 was approximately $36.2 billion, a decline of approximately $25 billion from 2010 levels due to the global economic downturn (The World Bank, 2013c).
The UK government has stated that funding allocated to the NHS will rise slowly in the 2011-2016 period.
The EU is the major trading partner of the UK. Approximately 50% of the UK's exports go to the EU countries. The ongoing eurozone crisis will impact negatively on the demand for the UK's goods and services. CountryFocus: Healthcare, Regulatory and Reimbursement Landscape - UK
In order to rebalance the economy the government has developed a National Infrastructure Plan with investment in critical infrastructure projects, and has also taken steps to attract major new private sector investment to the UK. It has also introduced a tough austerity program and has decided to implement massive cuts in public spending in order to reduce the deficit by 2015.