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Drug cost challenge to healthcare budget

PA Consulting Group The Guardian, page 37
4 September 2009

Your report (The NHS risks bankruptcy from a soaring drugs bill, 29 August) provides insight into the upheaval the industry will face. Healthcare costs rise with age, while the ability to pay, post-retirement, diminishes, imposing increasing costs. Drugs represent about 10% of total NHS spending. Pharmaceutical companies get paid for their products whether they cure the individual patient or not, their model being to sell as much chemical as possible. Increasingly, it is technologically possible and economically desirable to single out patients where the treatment is working and to identify those where it is not, with the prospect of reimbursement. The first drug where this model was adopted was Velcade, a treatment for bone cancer. The National Institute for Health and Clinical Excellence says: "The manufacturer rebates the full cost of bortezomib for people who, after a maximum of four cycles of treatment, have less than a partial response."

A challenge for the healthcare provider is in the choice of treatments available. The clinical evidence of efficacy can be ambiguous and the costs of competing therapies can vary substantially. For example, there are many drugs which will alleviate rheumatoid arthritis. But they range in cost from under £50 a year for an older treatment like methotrexate, to over £10,000 a year for some of the more recent therapies. Potentially the patient will be taking the therapy for life.

The move towards better treatment selection and payment by results in individual patients will mean collecting and analysing data about therapies. The drug companies will have to forge partnerships with organisations across the spectrum from the big IT companies and telecoms providers to diagnostics companies and beyond. If the they do not, then many new entrants are waiting in the wings, and the drug makers will be displaced to second- or third-tier providers within the industry supply chain.

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