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Outcomes-based reimbursement of medicines

This report describes the benefits of introducing an outcomes-based model for drug purchasing as a mechanism to address the affordability challenge, to reduce risks within the NHS and to improve outcomes for patients.

This would apply the principle of the NHS only paying for what works. The report describes how such a scheme could be introduced and the design challenges to be overcome.

The NHS is facing huge challenges on three fronts: its budget is constrained, with per capita spending on healthcare falling; demand is growing as a consequence of demographic pressures and rising co-morbidities; and, the reform agenda towards personalised, outcomes-based care is gathering pace. Transforming how care is commissioned and provided, whilst delivering better value for money are the over-riding purposes as the NHS pursues efficiencies of £22bn over five years.

Yet, how we procure medicines is too often left out of the equation. This is despite the £16.8 billion that is spent each year on treatments, the importance that patients attach to prompt access to effective treatments and the opportunities for innovation. Reform-orientated initiatives such as the Cancer Drugs Fund and the Accelerated Access Review have pointed towards a path of change, but the principal policy reaction has been one of cost control. Pro-innovation industrial policy that seeks to maximise the contribution of the Life Sciences sector is pitted against healthcare policies designed to meet funding constraints. Continue to follow this road and we sacrifice long-term value for short-term control. This will harm patient outcomes and damage the UK economy, undermining investment in the health economy which accounts for a fifth of R&D spending. Instead, the NHS and medicines procurement must re-focus on value for money over the longer-term.

To this end, this paper assesses the potential benefits of introducing outcomes-based reimbursement for drugs as an alternative approach to funding medicines and sets out how it could be pursued. We conclude that this could be an important reform for the new Government to pursue as it takes forward recommendations through the Accelerated Access Review.

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Kathryn Petrie
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Nigel Keohane
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