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NHS spend on new drugs set to fall over next three years

Preliminary forecast from Office of Health Economics sparks industry alarm

Caroline White

Monday, 02 July 2012

The NHS spend on new drugs is set to fall over the next three years, a preliminary forecast from the Office of Health Economics suggests.

The research, which was commissioned by the industry trade body, the Association of the British Pharmaceutical Industry (ABPI), comes as industry prepares to negotiate the next medicines pricing scheme with the government.

The figures indicate that the total NHS spend on medicines is “well under control,” while expenditure on new branded medicines is set to shrink in real terms and as a proportion of the healthcare budget over the next three years.

​This will slow the speed at which patients can access new treatments compared with the rest of Europe, argues the APBI.

The research found that while the total amount spent on the NHS is set to rise by 2.5 per cent a year between 2011 and 2015, spending on new proprietary medicines will rise by just 1.3 per cent annually.

There will be a slight increase in the growth of the total amount spent on medicines annually from 3.5 per cent (the figure for 2007 – 2011) to 3.7 per cent a year, up to 2015, largely prompted by an increase in the proportion spent on generic drugs, the figures show.

And they also suggest that in three years’ time medicines launched between 2012 and 2015 will account for less than 2 per cent of total spend on medicines.

The expiry of patent exclusivity for medicines over the next three years will lop £3.4bn off the drugs budget, the report suggests.

Stephen Whitehead, Chief Executive of the ABPI commented that brand drug prices in the UK were already among the lowest in Europe and that the UK spent less than one per cent of GDP on drugs—almost half the average for major pharmaceutical markets.

“But I am deeply concerned that these savings are not being reinvested back into the system because these figures show our spending on the newest and most advanced medicines is declining in real terms. This spells bad news for the discovery of new life saving medicines and ultimately the health and well-being of UK patients,” he said.

“We have to stop thinking of medicines as a cost and see them for what they are – an investment. An investment in the future of medical research, an investment that reduces expensive hospital stays and unnecessary visits to GPs, an investment in the UK economy and—most importantly—an investment in people’s health.

A seminar briefing from the Office of Health Economics, published last month, which analysed the reasons behind a fall in the average number of new drugs launched annually since 2000, pinpointed the need to target more complex and difficult diseases.

It also suggested dramatic changes in scientific knowledge and in R&D approaches, and substantial changes in both the regulatory and marketing climates were also to blame.

Health Minister Lord Howe said: "Our actions are already ensuring that patients get access to the most innovative medicines where appropriate, both through the policies in the NHS innovation review and through the £650 million Cancer Drugs Fund."

He added: "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."

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