What are the Practical Considerations for Outcome-Based Payment in the NHS?

Article by: Amanda Cole and Jon Sussex

Despite rigorous clinical trials uncertainty can still surround the effectiveness or cost-effectiveness of a new medicine, making it difficult to agree on a medicine’s price. One solution to avoid unduly delaying or restricting patients’ access is to link the medicine’s price to the outcomes it produces in a patient. If the treatment achieves good outcomes for the patient, then an agreed price for the medicine is paid to the manufacturer; but if treatment results in poor outcomes, the manufacturer receives a lower (or even zero) price.

The rationale for such ‘outcome-based payment (OBP)’ being used in the National Health Service (NHS) in England was described in a 2019 report by the Office of Health Economics, RAND Europe, King’s College London and Cancer Research UK. OBP can help the NHS, with its limited funds, to ensure that the money it spends on medicines is meeting the expectations that patients rightly have for their care.

The 2019 report identified the four types of outcomes that cancer patients consider most important: (1) survival; (2) disease progression, relapse or recurrence; (3) long-term, i.e. post-treatment, side effects; and (4) ability to return to normal activities of daily life. To take that previous work forwards, Cancer Research UK and Greater Manchester Health and Social Care Partnership commissioned a team from OHE, RAND Europe, University College London and University of Manchester to research the practicalities of using OBP for some cancer medicines in the NHS.

Through desk research on sources of outcome data, interviews with NHS staff, focus groups with patients, workshops with an expert Steering Group and simulation modelling of an outcome-based payment scheme, the study team has reached some important conclusions. These conclusions, and the evidence behind them, have just been published by Cancer Research UK in a new report: Making outcome-based payment a reality in the NHS. Phase two: practical considerations”.

The NHS already routinely collects some, but not all, of the important data about cancer treatment outcomes for patients that could usefully inform an outcome-based payment scheme for medicines. The Systemic Anti-Cancer Therapy (SACT) dataset, run by NHS Digital, includes patient outcomes relating to survival, disease progression and (short-term) treatment side effects. A realistic OBP scheme in the short-term could be based on survival, treatment duration and toxicity data captured through existing SACT data, supplemented by data from electronic health records and e-prescribing systems. In the longer-term, however, as recommended in the first report, OBP schemes could also include data on patients’ ability to return to normal activities and on long-term, post-treatment side effects. This requires collection of patient-reported outcome data. The current lack of a national dataset for these types of data is a critical barrier for an OBP scheme incorporating these outcomes.

There are also operational practicalities that must be overcome to implement OBP. It takes staff time to collect and manage data on patient-reported outcomes. Moreover, data collected in distinct datasets need to be linked together to provide a fuller picture of the outcomes for each patient, which requires a clear and robust framework for information governance.

Implementing OBP will require buy-in not only from patients but also from clinical staff, hospital managers and national NHS bodies. Ensuring these groups are aware of why the underpinning data should be collected and the benefit to patients is essential. Stakeholders that the study research team spoke to – including national and Trust-level NHS staff, patients, and industry – had a mostly positive outlook on the practical feasibility of OBP despite the data and other practical barriers identified. In our focus group, patients were supportive of an OBP approach on the condition they would know, and have control over, exactly how and why their data are being used.

Despite these barriers, OBP could offer a ‘win’ for patients, the NHS and industry. By modelling a hypothetical OBP scheme, the study demonstrated that OBP can reduce the financial risk to the NHS caused by clinical uncertainty, and therefore could enable coverage for medicines that may otherwise not be reimbursed. This means that OBP could offer patients a route to faster or more comprehensive access to treatments at a cost-effective price, thus benefiting the NHS, industry and – most importantly – patients.

Amanda Cole is Senior Principal Economist at the Office of Health Economics. Jon Sussex is Chief Economist at RAND Europe. They both collaborated on the OBP study.


Cole, A., Cubi-Molla, P., Elliott, R., Feast, A., Hocking, L., Lorgelly, P., Payne, K., Peek, N., Sim, D., Sussex, J., Zhang, K and Steuten, L., 2021. Making Outcome-Based Payment a Reality in the NHS. Phase 2: Practical Considerations. OHE, RAND Europe, UCL, University of Manchester and Cancer Research UK  Research Paper. Available here.

Related Research

Cole, A., Cubi-Molla, P., Pollard, J., Sim, D., Sullivan, R., Sussex, J. and Lorgelly, P., 2019. Making Outcome-Based Payment a Reality in the NHS. OHE, RAND Europe, KCL and Cancer Research UK Research Paper. Available at: https://www.ohe.org/publications/making-outcome-based-payment-reality-nhs



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