09 November 2001
But figures from the Prescription Pricing Authority (PPA) suggest that this has failed to ease the burden on the NHS, which is heading for a massive £400m overspend this year.
The situation has arisen for two reasons. The first is that forecasting data last year underestimated the 'out-turn' drugs expenditure – the expected total spending on drugs for the year. This led to the 2001/02 baseline [pre-inflation] drugs budgets for primary care groups and trusts being set too low.
The second reason is that prescription rates were much higher than expected, largely because of efforts to meet targets in the national service frameworks (NSFs), the government-set standards of treatment for coronary heart disease and mental health.
If this analysis of the PPA's figures is correct, the NHS as a whole faces an overspend of 8% on primary care prescribing. While all parts of the country are affected, the Northwest of England is understood to account for a quarter, or £100m, of the overspend.
The figures do not take into account any contingency funds set aside by primary care trusts and health authorities for unforeseen expenses. But the sheer scale of the problem is alarming, especially at a time when ministers have made it clear that overspends in general will not be tolerated.
One PCT finance director says inaccurate forecasts last year meant his trust's baseline budget was already 1–2% short of last year's actual expenditure. To compound this, figures up to August suggest that NHS drugs expenditure will grow by 10% this year, at least 2% higher than departmental estimates during this year's round of discussions on service and financial frameworks. Even with an 8% uplift to the
drugs budget, this has left the trust liable to an overspend of up to 4%.
Other NHS bodies are in an even worse position. The clear line from the Department of Health this year was that, while drug spending could rise by 8%, they should strive to make 2% efficiency savings. As a result, many primary care groups and PCTs have had perhaps just a 6% increase, again based on a baseline budget that was in fact lower than last year's total spending. Some face projected overspends of up to 15%.
The NSFs are the main cause of the increase in costs. A recent report from the PPA identified that even last year the framework on heart disease had led to 'a large increase in cardiovascular prescribing. This NSF is likely to remain an important driver for growth over the next few years.'
The PPA report also warned that the framework for diabetes and the removal of nicotine replacement products from the prescription black list were likely to 'further increase prescription volume'. As recommendations from the National Institute for Clinical Excellence kick in, growth in drugs spending is expected to rise further.
Dr Chris James, vice-chairman of the NHS Alliance, says GPs and PCTs are facing stark choices between prescribing or delivering other services, and between prescribing for national directives or for other areas. 'We are almost getting down to a rationing debate,' he says. 'The prescribing budget is the biggest budget risk to a primary care organisation. There is very little inherent control.'
The government this week refused to take any responsibility for the overspends, suggesting that enough money was put in general allocations and that local health bodies knew how drugs budgets were increasing.
In a statement to Public Finance, the Department of Health says: 'Health authorities and PCT prescribing budgets are not determined centrally. Every year health authorities and PCTs receive total annual budgets. It is for health authorities, in partnership with PCGs/PCTs and other local stakeholders, to determine how they use their funds, including how much they spend on prescribing.
'The primary care drugs bill has grown by around 8% a year recently and this is taken into account when overall annual budgets are made to the NHS. Expenditure this year appears to be growing at a similar rate.'
The irony is that this increase in expenditure should be good news, not something that puts the department on the defensive. It reflects the increased prescribing of certain drugs called for by the various NSFs (statins, for instance, which lower fatty acid levels and help combat heart disease), which should surely be welcomed. But as one finance director puts it: 'It is simply not affordable.'
PCT managers should be putting all their energies into new developments and investing to save projects that help modernise the service. Instead, as so often in the past, they are being forced to put modernisation to one side and concentrate their efforts on firefighting another budget overspend.
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