This OHE Briefing outlines the NHS ownership debate through the lens of economics. The aim of the Briefing is to improve understanding of how economics can or cannot help to resolve the question of whether the private ownership of health care provision is good or bad. The economics literature that informs this overview includes: the theory of the organisation of production; theories of behaviour and motivation and the role of incentives and payments in influencing decisions.
This OHE Consulting Report reviews “Measurement of Medicines Expenditure in the Context of the 2014-18 PPRS.” The project was funded by the ABPI.
For the year 2015/16, the Treasury reported growth in Government funded healthcare expenditure in the UK of 4.0% whilst NHS Digital reported medicines expenditure growth for the English National Health Service (NHS) for the same period at 8.0%. However, NHS Digital reported much reduced medicines expenditure growth for England of 3.5% for 2016/17, suggesting a complex underlying picture. NHS Digital growth rates are at list price as NHS Digital is not able to take account of rates of discount obtained by the NHS, which our analysis suggests are increasing, or of the rebate payments for branded drugs under the 2014-18 Pharmaceutical Price Regulation Scheme (PPRS).
It is important to stress that we are analysing data to understand trends since 2014. This work does not allow us to make any predictions about future trends.
In 2018, the NHS turns 70. This OHE Consulting Report demonstrates the contribution and impact of medicines to the health economy in the UK throughout the history of the NHS. Through interviews with experts we identified a shortlist of the most important medicines to have been brought to market, and from a review of the literature and evidence base we attempt to quantify the benefits of these key medicines in terms of health and economic outcomes.
Hernandez-Villafuerte, K., Zamora, B. and Towse, A.
This OHE Research paper by Karla Hernandez-Villafuerte, (German Cancer Research Center, DKFZ), Bernarda Zamora (OHE) and Adrian Towse (OHE) sets out a research agenda proposing new approaches in three areas to improve understanding of supply side opportunity costs for the English NHS. A subsequent paper will set out the authors research findings.
Berdud, M., Garau, M., Neri, M., O'Neill, P., Sampson, C., and Towse, A.
Using a multidisciplinary methodological approach combining a theoretical economic framework with uptake/market share analyses by country and interviews, this OHE research concludes that: (i) IP incentives for R&D may have encouraged a high degree of in-class competition of DAAs close to the first entrant launch; (ii) in-class competition had a positive impact on uptake and adoption of DAAs in the top-5 European countries and; (iii) although in-class competition is a necessary condition for early adoption and fast uptake of innovative medicines, it is not sufficient as there are other factors related to the performance of the new technology, characteristics of the healthcare system and political factors which can have an effect.
The high cost of drugs for rare diseases (‘orphan drugs’) has generated considerable debate. While there is debate in the economic literature over whether a premium should be paid for ‘rarity’, these drugs are reimbursed with high prices in many countries. The question then arises as to what should be a reasonable price for an orphan drug?
Cole, A., Towse, A., Lorgelly, P., and Sullivan, R.
The current system of a single price per medicine means that, for multi-indication medicines, the relationship between price and “value” can vary substantially. In this OHE Research paper, we consider: What are the economic implications of an alternative to single-price payments for pharmaceuticals? In particular, what are the implications for: payer budgets, patient access, and the incentives for innovation?
Cubi-Molla, P., Mott, D., Shah, K., Herdman, M., Summers, Y. and Devlin, N.
Cancer survival rates have improved dramatically in recent decades due in part to pharmaceutical advances, with a growing range of increasingly effective and targeted medicines being developed, such as immunotherapies. In the economic modelling of such treatments, the question arises of which utilities should be assigned to patients who show a long-term, durable response.
In recent critiques of economic models in this area by the National Institute for Health and Care Excellence (NICE), the idea that long-term cancer survivors (LTCS) who have received such treatments could report quality of life (QoL) scores which are similar to, or higher than, those of equivalent general population samples has not been viewed as credible. This literature review examines whether there is evidence to support the assumption that the QoL of LTCS can be similar to that of age/sex-matched population samples.
This OHE Consulting Report reviews “Estimated costs of production and potential prices of medicines for the World Health Organization Essential Medicines List” (Hill et al., 2018) in which the authors argue for “greater transparency in drug pricing” and propose generating estimates of the cost of manufacturing essential medicines to inform negotiations on drug pricing.
The notion that the price of a medicine should be linked in some way to value it generates for patients and the health system is generally accepted. Yet, how can this be achieved, when increasingly medicines are being developed that derive patient benefit across many different indications? Indication-based pricing (IBP) has been proposed as a way to tackle this issue, permitting price to vary according to indication and – critically – according to value.