Cash-strapped board warning over new medicine costs

A struggling NHS board has warned that the cost of unfunded new medicines presents a key risk to its financial sustainability.

NHS Ayrshire & Arran ‘has a history of not achieving savings targets’ and has carried forward £4.8m of unachieved savings from 2020/21, an independent audit said.

The health secretary, Humza Yousaf, told a parliamentary committee before Christmas that he “remains concerned” about the board, which remains at level 3 on the escalation framework

Ayrshire & Arran spent more than £1m on support from external consultants between 2017 and early 2020 but the most recent audit said ‘significant work’ was still needed to balance the books.

Mr Yousaf said: “We maintain a regular dialogue with NHS Ayrshire and Arran…we have put in place additional monitoring for that board and the other escalated boards to ensure that appropriate steps are taken in terms of cost improvement and efficiency in advance of 2022-23.

“I remain concerned about NHS Ayrshire and Arran and also about NHS Borders and NHS Highland.”

Additional financial reporting to the Scottish government, required under escalation measures, released following a freedom of information request by, reveals a £6m projected overspend on medicines for rare conditions is classified as a major risk.

NHS Ayrshire & Arran’s finance director told the board in November its funding allocation for these drugs would be £2.2m less than in 2020/21.

The board has placed underfunding of medicines covered by the New Medicines Fund as one of the top five risks it faces – stating that there is no mitigation it can take to reduce the impact.

The Chief Executive of NHS Ayrhsire & Arran, Claire Burden, told

“In 2021/22 the funding allocated to NHS Ayrshire & Arran from the New Medicines Fund was £3.6 million with any additional spend on new medicines being met from the Board’s general allocation uplift. 

“Whilst there are no direct mitigations to redress the financial shortfall this cost pressure is managed through system wide service improvement which focuses on better outcomes for patients whose care and interventions can be made less complex because of improvements in emerging new medicine regimes.”

The New Medicines Fund (NMF) was established as the Rare Conditions Medicines Fund in 2013 to cover the costs of medicines that were not being allowed through by the NHS gatekeeper, the Scottish Medicines Consortium, despite demand from clinicians.

The Scottish government says the scheme is funded from its share of the rebate paid to the UK government by the pharmaceutical industry via the Voluntary Scheme for Branded Pricing and Access that limits the amount the UK spends on branded medicines. Any extra spending above the agreed rate is given back by participating companies to be reinvested into health services.

But a reduction in central funding for medicines covered by the NMF has received increasing attention from finance directors in boards across Scotland.

Monitoring by shows Greater Glasgow and Clyde is expecting a reduction of £6.9m in its NMF allocation this financial year, while Lothian warned it would see £5m less.

Fife has seen a 37% reduction in new medicine funding from last year, with just £3.4m now allocated for rare conditions medicines prescribing.

A Scottish government spokesperson said: “We have consistently prioritised health spending and in 2022-23 will invest a further £387m (3.2%) in our frontline health boards. Our budget delivers the first step in ensuring frontline funding that directly supports patient services increases by at least £2.5bn by 2026-27.

“Within this, NHS Ayrshire and Arran will receive more than £20m of increased investment. This takes the board’s overall funding for 2022-23 to £806m, an increase of over 62% in cash terms from 2006-07.”

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