Media Release

Paying for what works: new drug system could save NHS money and get medicines to patients faster

Changing how the NHS buys drugs could deliver better outcomes for patients and value for money, says a new report from the Social Market Foundation think tank.

The report, Outcomes-based reimbursement of medicines, argues that the NHS should adopt a new way of paying for drug treatments, based on whether or not treatments improve patients’ health. Adopting an outcomes-based system of purchasing medicines could result in better value for money because the government would only pay for what works.

This approach would also mean that new drugs could be made available to patients faster. Currently, the effectiveness of drugs is typically assessed before the treatments are made available to patients, which can be a time-consuming process. The report suggests that this process could be reversed, with the evidence gathering process on the effectiveness of drugs gathered in the field at the same time that patients have access to them, which could speed up patient access to new treatments.

Drawing on international experiences in countries such as Italy, lessons from other UK public services and the wider NHS reform agenda, the report recommends that:

  • New drugs that meet specific criteria – such as addressing ‘unmet need’ among patients – would be eligible to go through the new purchasing scheme and fast-tracked to patients.
  • The NHS and the manufacturer would agree the health outcomes that should be achieved and the basis on which the manufacturer would be paid if and / or when the drugs are successful.
  • The NHS should lead an exercise towards better outcomes measurement and data to enable performance to be tracked properly. This would be of wider benefit to NHS commissioning reforms.

Outcomes-based reimbursement of medicines was sponsored by Novartis Pharmaceuticals UK Ltd., a global healthcare company, but editorial responsibility for it lies with the Social Market Foundation.

The report addresses several of the challenges which the NHS is facing, including:

  • constrained budgets, with per capita spending on healthcare falling this decade;
  • the need to deliver £22bn in NHS efficiencies over five years;
  • the new NICE budget impact test and its £20 million threshold; and
  • the drive towards greater outcomes-based commissioning in NHS and social care services

Report author and SMF research director Nigel Keohane said:

“With pressure on the health budget growing, the NHS should adopt the principle of only paying for what works when it buys medicines. This would simultaneously drive better value for money and mean that patients could be given earlier access to new treatments.

“Given the NHS spends £17bn on medicines each year, the reforms would also steer manufacturers to develop innovative drugs that can make the largest improvements to patient health.”

The report is published as the health sector awaits the publication of the Government’s response to the Accelerated Access Review and the publication of Sir John Bell’s Life Sciences strategy.

“We know that our health system is incredibly stretched. The NHS is being asked to do more with less funding, and patients are, rightly, demanding swift access to the effective, innovative treatments, they deserve. We need a different approach so the health system is sustainable, delivering better economic value over the long-term, and ensuring better patient outcomes”, said Barak Palatchi, Oncology General Manager, Novartis UK & Ireland.

“We are working in partnership with the medical and patient communities to bring our science-based innovation and pioneering approach to deliver novel treatments to more people when they need them”, he continued.



Notes to editors

The Social Market Foundation (SMF) is an independent, non-partisan think tank. We believe that fair markets, complemented by open public services, increase prosperity and help people to live well. We conduct research and run events looking at a wide range of economic and social policy areas, focusing on economic prosperity, public services and consumer markets. The SMF is resolutely independent, and the range of backgrounds and opinions among our staff, trustees and advisory board reflects this.

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