It is clear that the NHS is under mounting pressure to improve the quality of services provided to patients, while delivering significant efficiency savings at the same time. As there is not an infinite budget for the NHS it is widely accepted that spend must be kept under control.


This week, a series of announcements highlighted the ongoing challenges that the NHS faces in how it manages its expenditure effectively.

First, the House of Commons Health Committee published the latest in its series of annual reports into public expenditure on health and care services, in which it examined the NHS’s performance in meeting the £20 billion efficiency challenge.1 The Committee found that NHS organisations are still seeking short term ‘fixes’ rather than making transformative changes to services and developing integrated services. The Committee reported that cutting down on drug expenditure is one of a number of crude ways in which savings have been achieved to date. 

This point was amplified today when the Public Accounts Committee published its own report on the progress that the NHS is making in achieving efficiency savings.2 In a similar vein, the Committee expressed clear concern that savings are being achieved by rationing patients' access to certain treatments.  

But if the Department of Health is expected to underspend against its 2012-13 expenditure limit by £2.2 billion, as was shown in the Budget on Wednesday, then this calls into question why treatments and medicines are being rationed on cost grounds. Expenditure control must not impact on the quality of services and outcomes achieved for patients.

It is important to remember that the medicines budget is under control.  In 2011, the overall spend on medicines represented 9.6% of total UK-wide NHS expenditure while branded medicines represented 7.5% of total UK-wide NHS expenditure.3 Looking ahead, analysis suggests that expenditure on branded medicines as a percentage of total NHS expenditure will continue to fall from 7.8% per year in 2007 to an estimated 7.2% per year by 2015.4 In addition, in England, research shows that the NHS is projected to save £2.8 billion cumulatively from 2012 to 2015, due to medicines losing their patent exclusivity, meaning that they can be prescribed more cheaply in generic form.5

It is clear that medicines have not been the significant driver of growth in NHS expenditure in England in recent years. Salaries and pensions, energy bills and the costs of running the NHS estate have all seen steep rises.6 7 8  Targeting medicines for further cuts is not the answer to achieving the efficiencies that the NHS is seeking. Many other areas of expenditure should be scrutinised in much greater detail to ensure that savings are delivered in areas where costs can be contained and real efficiencies can be delivered. If further cuts are made to the medicines budget this is likely to lead to poorer patient access to treatments in the NHS and ultimately, could lead to worse outcomes for patients.

Stephen Whitehead
ABPI Chief Executive


  1. House of Commons Health Committee, Public expenditure on health and care services, Eleventh Report of Session 2012–13, March 2013
  2. House of Commons Public Accounts Committee, Department of Health: progress in making NHS efficiency savings, Thirty-ninth Report of Session 2012–13. March 2012
  3. Office of Health Economics (OHE), UK NHS medicines bill projection 2012 – 2015, analysis for the ABPI, June 2012
  4. OHE, UK NHS medicines bill projection 2012 – 2015, analysis for the ABPI, June 2012
  5. OHE, UK NHS medicines bill projection 2012 – 2015. Results – Four Nations, October 2012
  6. Department of Health, Hospital Estates and Facilities Statistics, October 2012
  7. Department of Health, Departmental Report 2009, June 2009
  8. The Information Centre for Health and Social Care, NHS Staff Earnings, estimates - January 2012 to March 2012, June 2012
Print this page icon Print this page
Please choose the subject of your enquiry from the list below:
Code to enter for submitting the form
Enter the above code here:
Can't read? Try different words.