Quantifying the Financial Impact of UK Generic Pharmaceutical Shortages.

– By Greg Mills, Founder of Analytic Health

Generic pharmaceutical shortages have a large impact on the National Health Service (NHS) finances. During a shortage event the Department of Health and Social Care (DHSC) issue an amendment to the original reimbursement price (or drug tariff price), in what is known as the concessionary price.

It is clear to see what the additional spend is during a shortage event: if the price increases from £2 to £10 per pack, for 10 packs, for one month of shortage then there has been an £80 additional spend. However, the more interesting question is what happens after the shortage event; does the price immediately return to its pre-shortage rate? The answer is no, it takes many months, and 73% of the products included in our study are yet to return to the original price. The effect of a pharmaceutical shortage is long-lasting and has a longer-term financial impact.

We built a model to help quantify the impact of these price increases over time, which we made freely available here. The model includes all shortages since January 2015 and will be updated monthly as new prescribing and shortage data are made available.

Quantifying the Financial Impact of UK Generic Pharmaceutical Shortages
Figure 1. Showing the additional NHS spending on Chlorpromazine 25mg tablets due to a shortage event beginning in 2017 and the on-going financial effect.

In the example above you can see a snapshot of the report, focussing on a single product- Chlorpromazine 25mg tablets. The vertical dashed lines represent the start and end of the supply- shortage months. It is clear from this image that the Actual NHS costs soared from £30k per month to a peak of £760k during the second month of the shortage. To date, the financial impact of this shortage has been additional NHS spending of over £20 million, and three years since the end of the shortage, remains 22 times higher per month than the estimated value if the shortage had not occurred. 

These additional costs quickly rise for all 214 active ingredients included in the report to a cumulative additional spending total since 2015 of £2.5 billion or around £55 million per month (and continuing to grow).

Quantifying the Financial Impact of UK Generic Pharmaceutical Shortages
Figure 2. Showing the cumulative financial effect of generic pharmaceutical shortages since 2015, totalling almost £2.5 billion.

The financial impact of UK Generic Pharmaceutical Shortages is significant, it is a hugely important area for healthcare, and we welcome further research. If you have any questions or suggestions, please reach out and we will be happy to discuss further. 

At Analytic Health we work with a range of organisations to help them understand the pharmaceutical supply situation and provide access to Pharmly- the pharmaceutical market intelligence web application. We are also in the process of making the data used to create this report readily available, both via a web interface and a REST API.

There are certain points to be aware of when viewing this report: 




Company affiliations in developing this report: None

Empowering people with data.

People need information from data

The richest source of information in UK healthcare is the prescribing dataset. Understanding the medications prescribed, down to individual GP surgeries, can offer invaluable (anonymised) information which people use to shape regional health policies, monitor disease trends, and guide company portfolio strategies.

All this information is available, however, there is a catch; with over 20million rows of data released by the NHS every month – it is ‘somewhat’ inaccessible without a high-performance computing environment, a team of data scientists and a lot of time on your hands.

So, how can I get the data?

Previously, accessing prescribing data could go something like this…

“Downloading the file… hmm that’s taking some time. While I wait, I’ll try to install the data science software I need to view the data… ok let’s give it a go.”

*Some hours later*

“I can view some data! Now to check the trends- I just need to download 11 more files and I’ll be able to see trends over a year.”

*After manually downloading the 11 files*

“Ah, but that’s at the molecule level for England only, how can I check brand performance, just for tablets, across the whole of the UK?” ?

What’s the problem here?

Clearly, there is a problem here, and the problem is not the analyst, the account manager, or the data scientist. Every person has a unique skill set, and we add value to our team or project, in the best way we can. But we cannot be expected to do everything- I certainly do not manufacture my running shoes before I go out for a jog! So why should you spend your time gathering huge datasets from various places to get that piece of information you need?

How can we help?

At Analytic Health we have gone through the process above so that you and your teams don’t have to. After many years in roles across healthcare, our team has experienced it all, and that is exactly the reason we now so passionately make the information available to our clients.

With enriched datasets* and interactive visualisation tools, we let people do what they do best (which not even the most advanced technology can do) – feel empowered to collaborate with their colleagues while acting upon the information gained from data!

Above you can see part of the prescribing analysis view of our Pharmly web application.

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If you would like a demonstration of how we can help you, please contact us and we will happily arrange a call to discuss this with you in more depth.

Stay safe and stay empowered by data!

*the term enriched datasets here refers to cleaned data, merged with other sources, thereby adding value.