Prescribing Costs in Hospitals and the Community 2018 - 2019

This report presents summary figures relating to medicine costs at list price in hospitals and in the community in England for 2018/19, and the recent growth in use since 2014/15. The report aims to show the relative use of medicines in hospitals and in primary care and the wider health economy.

All costs given in this report are medicine costs at list price before any discounts. Where hospital and total costs are stated throughout the report the figures refer to estimated costs at list price.

Cost at list price is the basic cost of a drug excluding VAT and is not necessarily the price the NHS paid. It does not take account of any contract prices or discounts, dispensing costs, fees or prescription charges income, so the amount the NHS paid will be different.

A public consultation was carried out by NHS Digital in the summer of 2019 on its prescribing outputs. It was looking to align outputs with the NHS Business Services Authority data releases and expanding and increasing the usability of prescribing data as new data sources become available. Respondents to the consultation welcomed the move to new data sources for the Prescribing Costs in Hospitals and the Community publication so that the data more accurately reflects the true cost of medicines to the NHS to determine the true scale of spend and growth.

The aim over the coming years is to transition the report to new data sources that are becoming available. The primary care prescribing component is now sourced from the NHS BSA’s new data warehouse which brings a number of data improvements, the main one being that prescribing by dentists will also be included to ensure the whole of primary care prescribing is captured in the costs. The HPAI data set from IQVIA will continue to be used for secondary care reporting of estimated costs, however, additional contextual information on actual medicine costs from Rx-Info’s Define data, which is now available across all NHS providers in England, will be included for the first time in future publications. A transitional insight report will be published in the Spring of 2020 comparing the two sets of figures on cost and the relevant data sources.

Data for hospital use of medicines is provided by IQVIA (previously known as QuintilesIMS and formerly IMS Health), who collect data on issues from pharmacies in the majority of hospitals in England and apply costs to this data using the Drug Tariff and standard price lists. Therefore all costs given in this report are medicine costs at list price, also known as Net Ingredient Cost (NIC) in Primary Care – this is the basic price of a drug excluding VAT and is not necessarily the price the NHS paid.

The costs presented in this report do not take account of any local, regional or national contract prices. Hospitals especially are often able to access NHS-negotiated contract prices for medicines. Additionally, some medicines that have been appraised by NICE are recommended for use in the NHS if the medicine is provided with a discount agreed in a Patient Access Scheme (PAS) or a commercial access agreement. These discounted prices are commercially sensitive so are not publicly available, however, they can be significant for specific types of drugs. For drugs dispensed in the community, there are also discounts available, which are particularly significant for generic medicines. This allows pharmacies to earn a margin, which is subsequently taken into account as part of their funding through the community pharmacy contractual framework – circa £800m of margin earned on medicines contributes to the provision of pharmaceutical service.

The proportion of NICE approved medicines with an agreed PAS has been increasing over time, adding to the total discounts available. The proportion with a PAS for 2016 (38 of 75 NICE appraised medicines) was roughly twice that of 2015 (18 of 58 NICE appraised medicines).

As a result, the total amount the NHS paid for medicines will be lower than reported in this publication and costs for some specific medicines could have a greater difference to the price paid. Also, as the number of products attracting significant discounts can change over time, as can the level of discounts, the rates of growth estimates are also affected. The costs identified estimate the medicines acquisition costs; they do not include pharmacy infrastructure or supply costs. Cost changes have not been adjusted for inflation.

IQVIA updates historic data as they receive revised figures from individual hospitals. The figures in this report may therefore differ from figures published previously.

The data for medicines prescribed and dispensed in the community is provided by NHS Prescription Services, a division of the NHS Business Services Authority, which is responsible for reimbursing those who dispense prescriptions. It relates to what was prescribed in England, and then dispensed in the community, whether that was in England, or elsewhere in the United Kingdom. 

Where hospital and total costs are stated throughout the report, the figures refer to estimated costs at list price, due to the methods used to collate data on hospital medicine use.

Further details on the methods of supply and data collection for all data included in this report are provided in Sources and definitions.