More health lost than gained from NHS spending on new medicines

Posted on Thursday 12 December 2024

The analysis, by researchers at the University of York, the London School of Economics (LSE), and Brown University, suggests that in England, between 2000 – 2020, new drugs delivered 3.75 million additional years of full health at a cost of £75 billion. However, redirecting that funding to existing NHS services could have potentially added 5 million years of full health.

This is a consequence of NICE’s cost-effectiveness threshold for new drugs, set between £20,000 and £30,000 per additional year of health, being higher than the NHS’s typical spend of £15,000 for the same outcome. 

This allows companies to charge prices that are higher than what the NHS pays to deliver similar health benefits using existing treatments and services. When expensive new drugs are used in the NHS, funds are redirected from treatments and services delivering better value for money and potentially greater health benefits.

Reform needed

Beth Woods, Senior Research Fellow at Centre for Health Economics at University of York, and one of the authors of the study, said: "This work shows that there is a need to reform pharmaceutical pricing policy in England to better serve the health needs of all patients served by the NHS.”

A recent agreement between the UK government and the pharmaceutical industry commits NICE to retaining its cost effectiveness threshold until 2029.

The researchers recommend that the trade-offs in funding decisions be more clearly acknowledged and communicated to patients and the public, particularly where prioritizing new drug recipients means others may miss out on vital care due to the resulting loss of funding in other areas of care.

Underinvestment

Huseyin Naci, Associate Professor of Health Policy at the London School of Economics and Political Science (LSE), said: “New drugs can be a lifeline for patients who have significant unmet clinical needs. However, innovative drugs are expensive, and their costs do not always justify the benefits they offer.

“After more than a decade of underinvestment in the NHS, it may no longer be justifiable to have a NICE threshold that doesn’t reflect the amount the NHS needs to spend to generate health. Lowering the threshold would allow the NHS to negotiate better prices for new medicines, taking into account not only the benefits to patients receiving these drugs but also the impact on other NHS users who may lose out due to resource reallocation.”

Population health

The research team evaluated the impact on population health of NICE’s recommendations for new drugs between 2000 – 2020. By using drug sales data, the researchers estimated how many patients received these drugs. They then compared the health benefits of these drugs to other treatments that could be funded with the same money to see their overall impact on population health.

Irene Papanicolas, Professor of Health Services, Policy and Practice at Brown University, said: “Our findings are reflective of the tight budget of the NHS. In this environment, offsetting funding from existing services to pay high prices for new drugs can more adversely affect population health than in health systems where there is greater budgetary flexibility.” 

The research is published in the journal, The Lancet.