How much has generic prescribing and dispensing saved the NHS?

Our recent report, Better value in the NHS, includes changes to generic prescribing as an example of improved productivity. Over the past 40 years, the rising trend in cheaper generic medicines rather than proprietary or ‘branded’ drugs being prescribed and dispensed has improved productivity, saving the NHS billions of pounds and enabling millions more prescriptions to be dispensed.

Spending on primary care prescribing over this time has grown four-fold in real terms – from around £2 billion in 1976 to about £8 billion in 2013/14 (Figure 1). This partly reflects the growth in the volume of prescribed items overall – from 285 million in 1976 to just under 1 billion in 2013/14 (Figure 2). But it also reflects a change in the type of medicines prescribed and dispensed, and changes in their prices.

A key change has been the switch away from proprietary drugs still under patent to cheaper (but chemically identical) generic medicines produced once patents end.

NB: Totals exclude prescription for dressings and appliances

Sources: HSCIC 2014; Department of Health 2003, 1998, 1995; Department of Health and Social Security (DHSS) 1988.

An increasing volume of prescriptions are either prescribed by doctors generically - but dispensed by pharmacists as proprietary (or branded); or they are prescribed and dispensed generically. The number of prescription items prescribed and dispensed as proprietary has fallen by nearly a third in absolute terms since 1976 (Figure 2).

Sources: HSCIC 2014; Department of Health 2003, 1998, 1995; Department of Health and Social Security (DHSS) 1988.

The growth in the proportion of medicines prescribed and dispensed generically has had a profound impact on the productivity of the community prescribing budget over time.

One way of estimating this is to calculate how the real cost of prescribing would have changed if generic prescribing rates had remained at their 1976 levels, but with the actual changes in the total volume of items prescribed and the prices of generic and proprietary medicines. In other words, how much would the NHS have had to spend in 2013/14 to fund around 1 billion prescription items, assuming no growth in generic prescribing and dispensing?

The answer is that spending would have needed to increase eight-fold in real terms (rather than four-fold). Productivity (outputs divided by inputs, as measured by real spending) would have fallen by 56 per cent (instead of by 14 per cent) by 2013/14 (Figure 3).

The increase in actual productivity from 2005/6 onwards reflects not only increasing generic prescribing but the effects of a new Pharmaceutical Price Regulation Scheme that year, and the changes in the arrangements and prices for generic drugs.

Source: Better value in the NHS

In effect, and all other things being equal, increasing generic prescribing has saved the NHS around £7.1 billion since 1976 and allowed 490 million more items to be prescribed without an increase in total spending (Figure 4).

Source: Better value in the NHS

With generic prescribing rates averaging around 84 per cent, further improvements may be unlikely. However, a proportion of medicines, although prescribed generically, are still dispensed as proprietary; on average these medicines cost nearly seven times more than those prescribed and dispensed generically. This proportion of medicine now account for around 29 per cent of the total prescribing spend (compared to nearly half in 2004/5) so there may be room for further savings here. Moreover, despite high average rates of generic prescribing, there remains variation between general practices – which suggests some scope for increasing generic prescribing rates for some practices.

Assuming the trend for growth in prescribing overall continues, and that generic prescribing and dispensing increases to 90 per cent, all other things being equal, by 2023/4 this would allow a 51 per cent increase in total prescriptions for a 4.4 per cent increase in spending (Figure 5).

Source: Better value in the NHS

While it has taken time to achieve gains from the switch to generic prescribing, it has also taken a range of policies and actions – from generating and supporting a clinical culture that encourages generic prescribing and technological support to make generic prescribing easy to do, to benchmarking and advice through the collection and dissemination of detailed information on GP prescribing.