Select Committee on Health Memoranda

3.  NHS RESOURCES AND ACTIVITY

3.6  Expenditure on Prescribing

  3.6.1  Could the Department please update the information provided in table 3.6.1 response to last year's questionnaire regarding total NHS expenditure on pharmaceuticals for the past four years, including a breakdown by sector and by generic/branded drugs. [3.6.1]

  1.  Total NHS net expenditure on medicines and listed appliances in England in 2001-02 was £7,430 million. £5,707 million of this total relates to prescriptions dispensed in the community and £1,723 million relates to medicines supplied in a secondary care setting. In 2002-03 the total spent on prescriptions dispensed in the community is £6,334 (please note this is a provisional figure and has yet to be finalised).

  2.  In cash terms, total NHS net expenditure on medicines and listed appliances relating to prescriptions dispensed in the community in England in 2002-03 was £6,209 million (please note this is a provisional figure and has yet to be finalised). Cash figures for HCHS 2002-03 expenditure are not available.

  3.  Historical NHS Drug Bill expenditure figures, broken down by sector, for the financial years 1999-2000 to 2002-03 is provided in the table below:

Year(Cash)	Total NHS net expenditure relating to prescriptions dispensed in the community (£m)	Total NHS net expenditure relating to medicines supplied in a secondary care setting (£m)	Total NHS net expenditure on medicines and listed appliances (£m)
1999-2000	4,833	1,369	6,202
2000-01	5,161	N/A	N/A
2001-02	5,552	N/A	N/A
2002-03	6,209	N/A	N/A
Year (Resource)	Total NHS net expenditure relating to prescriptions dispensed in the community (£m)	Total NHS net expenditure relating to medicines supplied in a secondary care setting (£m)	Total NHS net expenditure on medicines and listed appliances (£m)
2000-01	5,158	1,530	6,688
2001-02	5,707	1,723	7,430
2002-03	6,344	NA	—

  4.  For prescriptions dispensed in the community in England, a breakdown between branded medicines, generic medicines, dressings and listed appliances for the financial years 1992-93 to 2002-03 is provided in Table 3.6.1. The table shows both the cost (expressed in terms of net ingredient cost) and the volume (number of prescription items) for each category. In 2002-03, branded drugs dispensed represent about 75% of the total net ingredient cost (including the cost of dressings and appliances). In 2002-03, the share of prescription items written generically was 74%, and the share of prescription items dispensed generically was 52%.

Table 3.6.1

NUMBER AND NET INGREDIENT COST OF GENERIC AND PROPRIETARY PRESCRIPTION ITEMS DISPENSED IN THE COMMUNITY 1992-93 TO 2002-03

England	Drugs dispensed generically		Drugs dispensed as proprietary		Dressings and Appliance
	NIC	Prescription items	NIC	Prescription items	NIC	Prescription items
Financial Year	(£m)	(m)	(£m)	(m)	(£m)	(m)
1992-93	305	149	2,449	267	173	13
1993-94	351	169	2,680	264	190	14
1994-95	402	186	2,881	262	205	14
1995-96	457	201	3,066	259	216	15
1996-97	516	214	3,328	258	228	15
1997-98	651	230	3,574	260	240	15
1998-99	703	240	3,845	261	251	15
1999-2000	1,049	254	4,116	265	270	15
2000-01	1,077	284	4,283	261	291	16
2001-02	1,046	299	4,919	276	316	17
2002-03	1,397	325	5,275	282	346	17
Notes: 1.Source: PCA, PPA, England. Figures are for prescription items dispensed by chemists and appliance contractors and dispensing doctors including items personally administered in England, for financial years April to March. Note that in addition to prescriptions written by GPs in England, this includes those written by nurses, dentists, hospital doctors, (and, up to March 1994, armed services doctors and dentists) provided they were dispensed in the community. Also included are prescriptions written in Wales, Scotland, Northern Ireland and the Isle of Man but dispensed in England. The data do not cover drugs dispensed in hospital or private prescriptions. Please note data for 2001-02 in the previous HSC was incorrect due to errors in Prescription Cost Analysis (PCA). The data has now been revised 2.The net ingredient cost (NIC) is the basic cost of a drug. This cost does not take account of discounts, dispensing costs, fees or prescription charge income. All figures are expressed at outturn prices. 3.Generic dispensing covers drugs that are prescribed and available generically and the dispenser is reimbursed at the Drug Tariff or generic price. It is possible in some circumstances for a branded drug or parallel import to be dispensed against the prescription. 4.The Department collects data on secondary care prescribing through NHS Trust and Health Authority financial returns. On an annual basis, these high level aggregate returns enable it to monitor the pressure faced by local NHS organisations and the aggregate cost to the NHS as a whole. More detailed information is available to Trusts at a local level from hospital pharmacy IT systems. This is primarily used to monitor local spending on pharmaceuticals together with adherence to local policies aimed at ensuring the cost effective use of medicines. 5."Pharmacy in the Future", the modernisation programme for pharmacy services in England made a commitment to implement a self-assessment tool for medicines management in NHS hospitals. The tool was developed by the Office of the Chief Pharmacist, at the Department of Health, with the support of the Regional Directors of Performance Management and Public Health and Regional Pharmaceutical Advisers. It was introduced to NHS Trust hospitals in England through a roll-out programme managed by the Regional Office (RO) network. 6.The self-assessment tool recognised that achieving clinical and cost-effective medicines use is an organisation-wide issue on which managers, prescribers and pharmacists need to work together. The self-assessment tool provided an opportunity for hospitals to examine their arrangements ahead of the Audit Commission's review of medicines management in Spring 2001. 7.Regional Offices organised meetings with Trusts in Autumn 2001 to ensure action plans were in place to improve performance. 8.The Audit Commission published their report "A Spoonful of Sugar" in December 2001. The report complements the Department's medicines management performance framework. 9.Work is in hand to develop the next stage of the framework. The next wave will focus on implementation of action plans and the greater use of automation and IT. The central aim is to ensure that clinicians, pharmacists and financial planners work more closely together across local health economies. 10.The second iteration of the Medicines Management Framework will provide a range of good practice standards against which the NHS can assess performance.The Framework is due in Autumn 2003.

  3.6.2  Could the Department please update the information provided in response to last year's questionnaire in Table 3.6.4 regarding the likely costs of NICE recommendations for the current financial year? [3.6.4]

  1.  The information requested is shown in Table 3.6.2.

  2.  The estimated full-year costs of all NICE appraisal guidance issued so far amount to some £545.2 million.

  3.  In some cases the financial impact on the NHS may build up gradually over a number of years, for instance where infrastructure changes are needed to put the recommendations into full effect.

  4.  In addition, there will be some costs arising out of appraisals due to be completed during the current year.

Table 3.6.2

ESTIMATED COSTS OF NICE GUIDANCE (As at 13 August 2003)

Title of guidance		Date of issue	Estimated full-year costs (England, £m)	Comment
Completed appraisals
1	Wisdom teeth	March 2000	-4.7
2	Hip replacement	April 2000	-7.6
3	Taxanes for ovarian cancer	May 2000	6.6
4	Coronary artery stents	May 2000	n/a
5	Liquid based cytology	June 2000	n/a
6	Taxanes for breast cancer	June 2000	15.1
7	Proton Pump Inhibitors	July 2000	-42.5
8	Hearing aids	July 2000	n/a
9	Rosiglitazone for Type II Diabetes	August 2000	0	Original estimate was 14.5, but this was in effect superseded by the later estimate for the two glitazones together in the pioglitazone appraisal.
10	Inhaler systems for under fives	August 2000	n/a
11	Implantable cardioverter defibrillators	September 2000	26	This assumes an offset of £15-20 million to gross costs of £45 million
12	Glycoprotein IIB/IIIA inhibitors	September 2000	28.6
13	Ritalin for ADHD.	October 2000	19.8	NICE made separate estimates of the year 1 drug and associated running costs, and of the cost of initial assessment of potentially eligible patients.
14	Ribivirin and interferon alpha for Hepatitis C.	October 2000	17.3	£55 million spread over three years to clear the prevalent cases, then reducing to £5 million pa.
15	Zanamivir for influenza	November 2000	6.6
16	Autologous cartilage transplantation in knee joints	December 2000	n/a
17	Laparoscopic surgery for colorectal cancer	January 2001	n/a
18	Laparoscopic surgery for inguinal hernia	December 2000	n/a
19	Donepezil, rivastigmine and glantamine for Alzheimer's	January 2001	39.7	This is the long-run annual cost-NICE expected a slow build-up over several years
20	Riluzole for motor neurone disease	January 2001	4.7
21	Pioglitazone for Type II diabetes	March 2001	-11.3	See comment on rosiglitazone above.
22	Orlistat for obesity	March 2001	9	£6 million for drug costs and £3-4 million for overheads
23	Temozolomide for brain cancer	April 2001	0.9
24	Difficult to heal surgical wounds	April 2001	n/a
25	Gemcitabine for pancreatic cancer	May 2001	1.8
26	Four drugs for non-small cell lung cancer	June 2001	9	These are the short-run costs-NICE comment that take-up may increase in the longer term.
27	Cox II for osteoarthritis and rheumatoid arthritis	July 2001	23.6
28	Topotecan for advanced ovarian cancer	August 2001	6.6
29	Fludarabine for B-cell chronic lymphocytic leukaemia	September 2001	0	Estimated to be broadly cost neutral—no detailed costings given.
30	Taxanes for breast cancer—review	September 2001	0	Earlier guidance unchanged
31	Sibutramine for obesity in adults	October 2001	18.1	Year 3 figure
32	Beta interferon and glatiramer for MS	January 2002	n/a
33	Three drugs for advanced colorectal cancer	March 2002	38.7	Upper bound (no lower bound given).
34	Trastuzumab for advanced breast cancer	March 2002	16
35	Etanercept for juvenile arthritis	March 2002	2.8
36	Etanercept and infliximab for rheumatoid arthritis	March 2002	59
37	Rituximab-non-Hodkin's lymphoma	March 2002		NICE do not attempt a quantative estimate, but information in the guidance suggests a figure of around £1m.
38	Inhaler Systems for children five-15 years	March 2002	0.9
39	Nicotine replacement therapy and Zyban	March 2002	38.7
40	Infliximab for Crohn's disease	May 2002	1.6	NICE estimated £2.5 million for the first year costs. They expected lower costs in subsequent years but did not quantify.
41	Routine anti-D prophylaxis	May 2002	3.8
42	Human growth hormone in children	May 2002	44.3	Upper bound (no lower bound given).
43	Atypical antipsychotics	June 2002	104.8
44	Metal on metal hip resurfacing	June 2002	1.9	NICE say cost is more likely to be at lower end of range.
45	Caelyx for advanced ovarian cancer	July 2002	2.9
46	Surgery for the morbidly obese	July 2002	12.7	This is long-run cost-NICE suggest £1.7 million in year 1.
47	Review of guidance for acute coronary syndromes (Glycoprotein IIb/IIIa inhibitor)	September 2002	0	Replacement of the September 2000 guidance with this revised guidance is not expected to increase costs to the NHS
48	Home verses hospital haemodialysis	September 2002	n/a
49	Ultrasound locating devices for placing central venous catheters	September 2002	n/a
50	Imatinib for chronic myeloid leukaemia	October 2002	13	Estimated increase in the first year is between £11.8 million and £15.8 million for England and Wales.
51	Computerised cognitive behaviour therapy	October 2002	0	Further research recommended.
52	Early thrombolysis treatment for myocardial infarction	October 2002	13	Estimated to be between £9 million-£19 million for the NHS in England and Wales
53	Long acting insulin analogues for diabetes	December 2002	15	Estimate on the high side—based on all potentially eligible patients switching to this treatment
54	Vinorelbine for breast cancer	December 2002	n/a
55	Review of paclitaxel for ovarian cancer	January 2003	0	Unlikely that additional costs to the NHS will result from this review.
56	Tension free vaginal tape	February 2003	n/a	Further research recommended.
57	Insulin pump therapy for diabetes	February 2003	4.95	There may also be further costs associated with training for staff
58	Zanamivir (review), amantadine and oseltamivir for influenza	February 2003	0	Cost impact depends on the severity of an outbreak in any given year. No anticipated increase over previous estimated figures—as savings/pressures balance out between the three drugs.
59	Electroconvulsive therapy	April 2003	n/a	Guidance recommends the use of ECT only in certain restricted circumstances.
60	Patient education models for diabetes	April 2003	2.5	Additional capital resources might be required of up to £19 million (cumulatively) by 2006-07 depending on the roll-out. A low estimate figure has been included for year 1.
61	Capecitabine and tegafur uracil for colorectal cancer	May 2003	1.3	Potential cost savings are wide-ranging (from £1.4 million to £20 million for England and Wales). Lower estimate included (adjusted for England only).
62	Capecitabine for breast cancer	May 2003	n/a	Expected savings were unable to be quantified
Total costs for all guidance to date			545.15
Notes: 1.All estimates are based on figures published in NICE's appraisal guidance. 2.Where the NICE estimate is given as a range, a central value (the mid-point of the range) is taken. 3.NICE estimates are given on an England and Wales basis. Where they are still on that basis (in the "comments" column) they are specified. To derive the financial estimate, they have been pro-rated to an England basis using appropriate population factors (Source: ONS and NICE guidance).

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Prepared 5 January 2004