Report Reveals Record £17.2 Billion NHS Spending on Prescription Medicines in England

(IN BRIEF) According to an independent report, the cost of prescription medicines to the NHS in England reached a record high of £17.2 billion in the financial year 2021-2022. The report reveals that NHS spending on branded medicines has been increasing by over five percent annually since 2018, excluding COVID-19 vaccines and treatments. The rise in spending is largely attributed to increased expenditure on hospital-prescribed medicines, especially those for malignant disease and immunosuppression. The report also highlights concerns about the affordability of new medicines and discusses the Voluntary Scheme for Branded Medicines Pricing and Access (VPAS), which sets a cap on sales value. The pharmaceutical industry raises concerns about the limitations and delays in new medicine availability, but the report argues that the current system does not significantly impact industry investment in the UK.

(PRESS RELEASE) YORK, 23-Jan-2023 — /EuropaWire/ — New research conducted by a team at the University of York, a collegiate research university, in collaboration with the London School of Economics and Political Science (LSE) and the London School of Hygiene & Tropical Medicine (LSHTM), has unveiled that the total expenditure on prescription medicines by the NHS in England reached an unprecedented £17.2 billion during the 2021-2022 financial year.

The study, led by the University of York, demonstrates that since 2018, NHS spending on branded medicines has been steadily increasing by over five percent annually, excluding expenses related to COVID-19 vaccines and treatments.

One of the key drivers behind this growth is the augmented expenditure on hospital-prescribed medicines, which rose by 35 percent from £6.7 billion to £9.1 billion between 2018 and 2022.

Of particular note, medicines designated for malignant disease and immunosuppression, including cancer drugs, accounted for a staggering £904 million increase in the overall medicines bill since 2018, reflecting a notable 43 percent surge in spending on such medications.

Similarly, drugs targeting the respiratory system witnessed a significant £587 million growth in the medicines bill, representing an extraordinary 279 percent rise in expenditure for this category of medicines.

The report also highlights that a select few products were primarily responsible for the heightened spending across various drug categories. In the case of respiratory system disorders, the top three products alone contributed to a spending growth of £561 million between 2018 and 2022. In the context of malignant disease and immunosuppression, the top three products accounted for an increased expenditure of £333 million.

Dr James Lomas, from the University of York’s Department of Economics and Related Studies, said: “We have to face the reality that the NHS does not have unlimited resources and the more money we spend on medicines, the less money we have for other medicines, treatments and services that already offer significant health benefits in the NHS.”

Furthermore, the study uncovers evidence suggesting that many new medicines are excessively expensive in relation to the benefits they offer patients, even after considering potential cost savings.

Dr Huseyin Naci, Associate Professor of Health Policy at LSE, said: “NHS spending is exceeding predictions with relatively few medicines driving the growth in the medicines bill between 2018 – 2022.”

To regulate the sales value of branded medicines, the NHS operates under the Voluntary Scheme for Branded Medicines Pricing and Access (VPAS). The current scheme, set to conclude this year, establishes a cap on the total allowed sales value each year, with the cap increasing by a fixed rate of two percent annually. Sales exceeding this cap result in the government receiving rebates.

Concerns have been raised by the pharmaceutical industry, arguing that the current VPAS structure may impede or delay the availability of new medicines in the UK. They suggest potential negative consequences for the UK pharmaceutical industry and a reduction in the country’s contribution to global pharmaceutical innovation.

In response, the report counters these claims, stating that it would be unlikely and costly for pharmaceutical companies to forego launching their products in the UK, as the NHS has consistently proven to be a reliable market. The report points out that the Medicines and Healthcare products Regulatory Agency (MHRA) is one of the fastest regulators worldwide, and most new medicines evaluated by the National Institute for Health and Care Excellence (NICE) are recommended for use in the NHS. Additionally, the report highlights that new drugs are already exempt from VPAS for three years after their launch.

Contrary to assertions made by the pharmaceutical industry, the report finds no evidence indicating that the price paid by the NHS for medicines significantly drives pharmaceutical industry investment in the UK.

Beth Woods, from the University of York’s Centre for Health Economics, said: “Incentivising the development of new medicines is important, but the right balance needs to be struck given other NHS priorities – especially at a time when budgets are tight. Doing this requires sharing the value of medicines between providing rewards to the pharmaceutical industry and generating health benefits for patients in the NHS. The pharmaceutical industry is currently getting too big of a slice of the pie.”

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SOURCE: University of York