This article was published on healthandcare.scot

A special multi-million pound fund to meet additional costs of specialist medicines for Scotland’s NHS boards was cut by more than a third last year, with local chief executives raising concerns that their drug budgets will go into the red.

Following a freedom of information request from healthandcare.scot, the Scottish government confirmed that the New Medicines Fund (NMF) was reduced from £80m a year in both 2019-20 and 2020-21, to £50m in the year just ended.

The government says the change was a return to normal budgeting, after ministers had injected an additional £30m in 2020, the first year of the pandemic.

Earlier this year, we reported that a series of boards were struggling without the additional money from central government.

Last November, NHS Ayrshire and Arran’s finance director told colleagues they projected a £6 million overspend on medicines for rare conditions. Meanwhile, the board of NHS Greater Glasgow and Clyde were told there was a £6.9 million reduction in allocated funding, while NHS Lothian said it would see £5m less.

As they start a new financial year, some NHS boards are already raising concerns about staying within their budgets.

The New Medicines Fund

In 2013, then Health Secretary, Alex Neil ordered the creation of a Rare Conditions Medicines Fund to cover the cost of medicines for rare diseases affecting fewer than 1 in 2000 people.

This fund was replaced in October 2014 by the New Medicines Fund (NMF), expanding to help meet the cost of orphan, ultra-orphan and end-of-life drugs for patients.

Since 2014, the money for the fund has come from Scotland’s share of a UK scheme known as VPAS. This scheme limits the costs of branded medicines to the NHS by requiring that participating pharmaceutical companies taking part to rebate their income above an agreed threshold.

A Scottish government spokesperson told us:

“In 2020-21, the Scottish Government provided an additional £30 million through the New Medicines Fund to support health board financial stability during the pandemic but returned to the usual arrangement of matching the Voluntary Scheme for Branded Medicines Pricing and Access (VPAS) the following year."

The Scottish government added that the amount of money generated from the scheme dropped unexpectedly in 2020 compared with 2019.

At the start of financial year 2020-21, the government says, NHS boards were advised to plan for a share of £80m from the NMF based on forecasts from the UK government. However, later in 2020-21 the forecast was reviewed and reduced to £50m based on figures of the actual payments against allowable sales.

The Scottish government statement says it provided additional funding to support NHS Boards, which had budgeted on the basis of the £80m anticipated allocation originally advised.

In the end, it says, final receipts from the UK government were £50m.  

The government spokesperson added:

“We remain committed to making all funding from the VPAS rebate available to NHS boards through the New Medicines Fund over the lifetime of the scheme.”

Funding challenges

Just days into the new financial year, one NHS board is flagging concerns about balancing the books and the resources it will have to spend on medicines.

NHS Lanarkshire’s financial plan 2022-23 predicts there will be a gap of £24.254m between core funding and the cost of delivering core services at the start of the year. This is forecast to grow by over £7m in the next year, to £31.845m due to inflation, energy price rises, and the cost of new drugs.

In the plan, Lanarkshire’s Director of Finance states:

“The rapid rise in expenditure in new drugs has been a major contributor to the brought forward underlying financial gap. SG have recognised that this year and have provided £6.662m additional funding for new medicines in year.

“Taken together with the 2% allocation uplift, the additional in-year pressure from the hospital drugs forecast above is £4.472m.”

The Scottish government says the NMF remains available to support those drugs approved by the Scottish Medicines Consortium (SMC), or in cases where the medicine is not approved by the SMC, for treatment agreed on a ‘case-by-case’ basis. Here, clinicians make special applications through so-called PACS Tier One and PACS Tier Two procedures on behalf of individual patients.

In its freedom of information response, the government says the NMF is intended to ensure that funding availability is not a barrier to implementation of policy to increase access to new medicines. They add that, since its establishment, access to end-of-life, orphan and ultra-orphan medicines has increased markedly.

The size of the NMF for 2022/23 is not yet known. The government says in its freedom of information response that funding estimates are still to be finalised.