Soon after winning the May 1997 general election the new Labour government suspended entry into the fundholding scheme and began a debate on replacement commissioning models for the NHS (NHSE, 1997). After seven months in office, the new administration announced plans to replace the Conservative government’s reforms in England in the White Paper,The New NHS: Modern, Dependable (DoH, 1997). In keeping with Labour’s pre- election promises, the White Paper stated that, at the end of 1998/99, both the NHS internal market and the fundholding scheme would be abolished. In their place an integrated care framework would be introduced, which would separate the planning of hospital services from their provision. Under these arrangements, 500 Primary Care Groups (PCGs), each serving a population of approximately 100 000 people, were established from April 1999 onwards (these subsequently became 300 Primary Care Trusts (PCTs) in April 2003).
Under the new arrangements for the NHS, the Labour government’s White Paper announced that each PCG would be allocated a cash-limited budget for hospital and community health services, prescribing and general practice infrastructure for the patients that they serve. Once established, the document stated that the groups would be expected to subdivide their allocations amongst local practices in the form of indicative budgets that cover all of the
aforementioned services. However, in the short-term, the White Paper announced that ‘every practice will have a prescribing budget, as most do now’
(DoH 1997, Chapter 5, p. 8). The practice-level budgets allocated by PCGs were similar to those assigned under the fundholding scheme. Indeed, The New NHSWhite Paper announced that the ‘Government wants to keep what has worked about fundholding, but discard what has not’ (p. 33). As a result, PCGs were left to determine, for themselves, what aspects of the fundholding scheme should be employed when devising their local, practice-level budget schemes.
Although Labour’s plans allowed fundholding to be abolished without, in principle, discarding the effective aspects of the scheme, the absence of an independent evaluation meant that conclusive evidence on what aspects of the initiative actually worked was not available to the government or PCGs.
Indeed, little evidence was produced on whether the fundholding budget itself, the extra resources given to participating practices, or the difference in property rights assigned to non-fundholding practices determined the outcomes observed amongst the scheme’s incumbents. Moreover, it was not clear whether the types of practices that elected to join the scheme influenced its effects, or whether fundholding would have been equally effective amongst all practices.
It is possible to interpret The New NHSas an attempt to re-establish trust with the medical profession and configure a new policy community. Two aspects stand out, the repeated emphasis on the need for ‘cooperation’ with the medical profession, and second, the commitment that a Labour government would not change the PCG structures for at least ten years. This commitment to policy stability in the primary care sector is a basic requirement for the re- establishment of trust between the government and the BMA after the turbulence of the 1990s. Alongside this commitment to a policy ‘lock-in’ is the signal of a more evidence-based approach to policymaking. For example, the White Paper states that there will be piloting and a proper evaluation of Primary Care Trusts before their universal application.
However, to build trust takes time and other parts of the White Paper explicitly limited clinical autonomy, for example the National Institute for Clinical Excellence (NICE) and the national performance frameworks. The subsequent path of the health care policy system is not the subject of this chapter, but in the 1999 Labour Party conference there was an organized message that the government believed the ‘forces of conservatism’ were hindering the modernization of public services, and that staff in those services were part of the problem. Despite the 2000 NHS Plan and record increases in NHS funding, contemporary health politics have taken place in a context of frequent ministerial frustration, sometimes expressed publicly, at the failure of the health care system to show demonstrable improvements on various output
measures revealing that a high-trust, closed policy community has not coalesced in this policy space.
SUMMARY
This chapter has set out the history of the GP fundholding scheme as an example of policy dynamics after policy communities collapse and where the government has an ambition for substantial policy change. The absence of trust between the major interests means that policy tends to be formulated without valid or reliable evidence on the effects and cost-effectiveness of existing initiatives and any proposed new initiatives. In this sense, the 1991 NHS reforms were not a victory for the new public sector management at the expense of clinical autonomy, but rather marked the beginning of a period of turbulence in health care policy between 1991 and 1997 (and subsequently).
The GP fundholding scheme is a case study in how health care policy in the 1990s was driven by folk theorems and political competition; health care problems and policy solutions were learned or constructed in the interaction of agents in the policy system. In this sense of policy learning, the problem situation is constructed in the interactions between agents; policy problems, policy solutions and the criteria of ‘success’ are bargained and different attempts are made to constitute institutions within the policy system.
The structured narrative in the chapter is inconclusive on the question of whether the period 1991–97 was an aberration in the style of health care policymaking. The existence of a publicly funded and publicly owned NHS had seemed to afford doctors a privileged position relative to other groups.
Many of the institutionalized forms of access for the medical profession of the policy community era have remained. However, Ham (1999, p. 1092) notes the Labour government’s ‘… apparent willingness to challenge the power of its traditional support base in the trade unions and entrenched interests of the health professionals, including doctors’. The 15 years since the break up of the post-war health care policy paradigm have been marked by a fluid dynamics of shifting balances and patterns of influence and values within the NHS, without a particular policy paradigm becoming institutionalized.
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The tendency of doctors to overprescribe medicines because they do not bear the cost of the decision to prescribe, and the monopoly that pharmaceutical companies enjoy in the production of certain medicines under patent, are both long-standing justifications for pharmaceutical public policy to regulate the price of medicines (Bloom and Van Reenen, 1998). All OECD countries have some form of regulation of the pharmaceutical industry and mechanisms to control public expenditure on medicines. These policies have been under budgetary pressure in most countries since the 1980s due to the combination of an ageing population and technological development. NHS expenditure on prescription medicines increased by almost 10 per cent per annum during the 1990s (OHE, 2002). This fiscal pressure has produced a series of policy dynamics that exemplify how policy processes are as much about choosing between different reasons for action or different values, as they are about how to achieve particular values in isolation. This insight complements the point made in the theoretical section of the book: a dynamic perspective raises serious doubts about the instrumental, parametric version of rationality that exists in rational choice theory by challenging the notion of a straightforward policy ‘choice’.
Public policy towards pharmaceuticals can be divided into those aimed at influencing the demand for medicines, chiefly to increase the sensitivity of GPs to the cost of medicines, and those aimed at regulating the supply side, the price paid for medicines by public authorities. In the UK, since the mid 1980s there have been a series of initiatives to influence GP-prescribing behaviour. On the supply side, the Pharmaceutical Price Regulation Scheme (PPRS) is an agreement between the pharmaceutical industry and the government that has been renegotiated roughly every six years since 1957; the latest agreement came into force on 1 January 2005. The PPRS is unique in the EU pharmaceutical policy area in regulating drug company profits rather than prices directly, although relatively small one-off reductions in the average price of the portfolio of drugs supplied by a company to the NHS were agreed in 1993, 1999 and 2005.
The PPRS has a dual identity; it is both an industrial policy to support pharmaceutical companies and the mechanism by which the NHS procures drugs. There is an ineluctable conflict between those two identities. They represent different values or rationalities for public policy that are directly
contradictory: the support of a research and development (R&D) intensive, high value-added successful industry versus maximizing the health benefits of a finite amount of public expenditure in the health care system. It is through policies and policy paradigms that basic values are enacted and institutionalized in the policy system. This chapter provides a structured narrative of the dynamics of this conflict of values since 1957 when the Voluntary Price Regulation Scheme (VPRS), which subsequently became the PPRS in 1978, was first introduced. The narrative reveals how multiple rationalities have become institutionalized in the pharmaceutical policy system and that pharmaceutical policy overall is complex and inconsistent.