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“2020health is an important and thoughtful contributor to the health debate”

Dr Sarah Wollaston MP, Chairman, Health Select Committee


Letter from the Department of Health to CEO’s

Price benchmarking and reducing non-pay spend






Dear CEO

Subject: Price benchmarking and reducing non-pay spend

In my letter of 22 February I referenced a Product Pricing Project which I want to pilot for the NHS. We have been working with the Foundation Trust Network to progress this and whilst we have had significant interest from trusts, I would still encourage you to get in touch with the FTN if you are interested in joining by emailing Liz Smith at or Mitali Begum at by 26th April 2011. You do not need to be a Foundation Trust to be involved.

The intention of the Product Pricing Project is to share pricing information on a small sample of products to illustrate comparisons with other trusts in the group. It will then be up to individual trusts to use this information to work together to establish why and how some trusts pay lower prices, and to challenge what they are paying.

Some good examples of widely used clinical products are listed below. However, those trusts included in the pilot will have an opportunity to comment on, add to and shape this list to a final list of 10 products.


You may be concerned that you have signed confidentiality agreements with some suppliers which do not permit you to disclose the price that you pay. You will need to consider each agreement individually, but I would encourage you to view the transparency of these prices as something which is in the interest of the public purse, and an issue on which the NHS should be publicly accountable. Pricing information in itself is not necessarily confidential, particularly where that information is either already in the public domain or there are public interest grounds for disclosing that information.
Improving the efficiency of the procurement of goods and services in the NHS is key to saving money so resources can be redirected to the front line. Leadership and commitment to change at trust level is needed to make this happen. However, I also recognise that there are system changes and national initiatives which need to be in place to create an environment where changes of this kind can flourish.

Whilst the National QIPP Procurement Workstream has a number of projects in place with this aim, the recent National Audit Office (NAO) report on the procurement of consumables in the NHS has made it clear that a more developed national strategy is needed, and that this needs to be done in conjunction with the NHS. We must be confident that we have done all that we can to ensure that procurement spend is as low as it can be so that every penny saved can be ploughed back into frontline services.

In addition to the invitation to join the Product Pricing Project, the Department of Health would like to invite Trust CEOs to join a workshop to:
· explore examples of best procurement practice and examine what the current barriers to further roll-out may be
· work with Peter Coates, Commercial Director, to shape what support the NHS needs to improve procurement to deliver efficiencies
· provide some practical steps to make immediate improvements to procurement at a local level

Where: Department of Health, New Kings Beam House, London
When: Tuesday 24th May 10.30am - 2pm
Who: Trust CEOs (foundation and non-foundation) and NEDs
Please contact Beth Loudon at the Procurement, Investment and Commercial Division on or Mitali Begum at if you are able to attend this session.

Jim Easton

National Director for Improvement and Efficiency