Commissioners forecast £174m underspend

Board papers in April showing month 11 figures showed a year-end forecast overspend of £616m for CCGs. At month 9, the CCG forecast overspend stood at £351m. NHS England chief financial officer Paul Baumann (pictured) said the impact of generic drug pricing pressures was responsible for the deterioration in CCG finances. When this pressure was excluded, the underlying CCG position was a £300m-£400m deficit before non-recurrent costs and mitigations.

The increased generic drugs costs can be attributed to a greater number of category M medicines granted price concessions. Category M drugs are generics that are generally readily available – their price is reviewed regularly by the Department of Health and Social Care, based on market information, such as volumes and the prices of products sold. However, sometimes the drugs are not readily available at the price set by the Department and price concessions are granted, increasing the cost to the NHS.

Around 25 concessions are normally in place, but in October last year there were 81 and the cost for that month was more than £57m. This exceeded the total annual cost in 2015/16 and 2016/17, though the cost has fallen since last October, as steps have been taken to tackle the issue.

Mr Baumann said the CCG overspend was offset by underspends of £243m in direct commissioning, £515m in NHS England running and central programme costs and almost £32m in technical and ringfenced adjustments. The figures do not include the risk reserve of £560m.

He noted that most of the mitigations would not be available again in 2018/19, as they were non-recurrent.

A more sustainable solution to CCG overspends was needed. The new commissioner sustainability fund was designed to achieve this.

No national contingency funds will be held in 2018/19, as an extra £650m has been allocated to the provider sustainability fund (formerly the sustainability and transformation fund).