– 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: 

  • We have only included active ingredients which have experienced a shortage since January 2015, so any effects of shortages before this have not been captured.
  • Calculating the ‘No-shortage estimated NHS spending’ is a challenging task that could have been affected by a range of events. We took the approach of calculating the cost per item during the month before the first shortage and multiplying that by the quantity for future months.
  • The prescribing data is released two months in arrears, which means we are not able to show the very latest effects.
  • The prescribing data is provided at strength-level, so there may be some data in the report which is related to pack-sizes that did not experience a shortage.




Company affiliations in developing this report: None