Medicines costs in Scotland

Duncan Watson

16 July 2017

The Scottish Medicines Consortium (SMC) decides whether new medicines ought to be routinely available for prescribing by the NHS in Scotland based on its assessment of the value for money of those new medicines. Medicines treating relatively common, non-end of life conditions must usually be below a certain price per extra year of perfect health they will give. But where a medicine is designed to treat a very rare, or end of life condition, the SMC adopts a different assessment of its value for money. Under these circumstances less weight is placed on the cost-effectiveness of the medicine and therefore more expensive medicines may be accepted for use in the NHS when treating these types of conditions.

This briefing sets out the background to the SMC’s approval process, and how the process differs between very rare or end of life conditions medicines and other medicines. It explains the calculations used in working out the cost and impact, and explains the approval route that can be taken where a medicine has not been accepted for use by the SMC. This background will be useful for healthcare finance professionals in Scotland since it provides the necessary context for assessing the financial risk to their health boards associated with future medicines approvals.

Medicines costs are a material part of all health boards’ budgets. This briefing shows how the proportion of health boards’ budgets spent on medicines has changed over time and can be extrapolated to future years based on these trends. Growth in medicines costs in hospital and community services is particularly high, at 10.2% and 19.8% per annum respectively on average over recent years. If growth continues at this rate then, given that it significantly outstrips the growth in healthcare funding in Scotland, an increasing proportion of healthcare expenditure will need to be on medicines, and savings will have to be found elsewhere.

This briefing examines a set of financial risks identified through our research that relate to medicines costs in Scotland. We note that as well as the general risk due to rising medicines costs there are some specific financial risks associated with very rare and end of life conditions medicines because of their relatively high cost and high acceptance rates.

In identifying financial risks the briefing will be valuable for finance professionals in their financial planning, and where mitigating actions are available, will be of support in reducing the likely impact of the risks.

Medicines costs in Scotland

July 2017 (PDF 651KB)

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