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Spend on new drugs expected to drop

The drugs industry expects the NHS to cut its real terms spend on new medicines over the next three years - but it is warning that the slow adoption of new drugs could create avoidable costs.

Figures published this week by the Office for Health Economics on behalf of the Association of the British Pharmaceutical Industry show that overall spend on drugs is slowing, with the lowest growth coming in branded medicines.

The total UK spend on drugs - £13.6bn in 2011, of which £10bn is on branded medicines – accounts for 9.6 per cent of the total NHS budget.

The report says total UK spend on medicines increased on average 3.5 per cent a year between 2007 and 2011. It is expected to rise by 3.7 per cent annually until 2015.

However the growth rate for branded medicines slowed from an average of 3.6 per cent a year to 2.4 per cent in 2011. It is expected to grow by just 1.3 per cent a year up to 2015 – a real terms cut, and slower than the 2.5 per cent projected annual growth rate in the NHS budget.

ABPI chief executive Stephen Whitehead said this was not due to genuine efficiencies under the Department of Health’s quality, innovation, productivity and prevention programme.

He said: “QIPP is not about restricting expenditure on medicines – it’s about quality outcomes.” Mr Whitehead argued that a failure to spend money on new drugs would increase costs elsewhere in the system, such as in the form of hospital admissions among patients who could otherwise have been kept well at home.

Mr Whitehead said expiring patents would cut the costs of many common medicines, saving the NHS £3.4bn over three years.

Also, a “fundamental conservatism” among NHS managers meant that some commissioners were slow to adopt branded medicines newly approved by the National Institute for Health and Clinical Excellence.

Health minister Earl Howe said: “The forecast confirms that resources will be freed up over the coming years as a significant number of medicines come off patent. These funds will be available to spend on the most effective treatments - whether medicines or otherwise.

“Although it is not surprising for the industry to warn that spending on their own medicines may decline, we are determined to ensure patients continue to get access to the newest drugs at a price which represents value to them and to the taxpayer.”

Readers' comments (1)

  • With the impending loss of patents, it's no surprise that the drug bill will go down over the next few years - just as they did from December 2004. The drugs market is not subject to the same inflationary forces as other items of commerce, and hence it's a bit spurious to compare it to the rate of inflation, and for prescribers to expect "growth" whilst there are stll painless efficiencies to be made. Credit should be shared with medicines management teams: pharmacists are amognst the few professionals that have to prove their direct economic value in addition to their managerial ability.

    A good medicines management team should ensure robust and proactive processes are in place for managing the entry of new drugs - what they cannot do however, is materialise a clinical champion if there is little interest in adopting a new technology within the local health economy. If the wider system costs were considered, fully auditable, and an appropriate investment was re-directed into primary and secondary care drug budgets perhaps the drugs spend will finally stop being considered in isolation and recognised to be the valuable invest to save strategy it can be. We're doing things right, but as with everything, it's a case of "prove it" - so why not put some additional resource into counting the right things?

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