The issue
Now more than ever, publicly funded health systems like the NHS face difficult decisions about how and where to spend their increasingly stretched budgets.
How much can public health systems afford to pay for the health benefits offered by new pharmaceuticals? This question is central to many of the resource allocation decisions that managers working in health systems must make.
The research
York economists have been able to estimate the relationship between NHS spending and measured improvements in health by linking data showing expenditure by programmes of care, or disease areas, with mortality outcome data.
Our research has provided methods for evaluating whether a drug is expected to be a cost-effective use of NHS resources and how certain this assessment is likely to be. Our estimates of 'health opportunity costs' - the health that could have been gained if resources spent on new treatments had been available to offer effective treatments to other patients - revealed that the threshold at which drugs are approved for NHS adoption is too high.
We have also developed methods of assessing whether generating additional evidence is a valuable expenditure. These methods can be applied to decisions of whether to fund further research activities, or whether to delay widespread adoption of a pharmaceutical or health technology until additional evidence is available.
The outcome
Estimates of health opportunity costs produced at York are now used by the UK's Department of Health and Social Care to inform all impact assessments it conducts. They were also used to negotiate the substantial rebates which pharmaceutical manufacturers have paid the NHS since 2014.
Our health opportunity cost estimates informed the reform of the Cancer Drugs Fund, a fund for new cancer treatments introduced in 2011 which York research found to be poor value. They have also influenced how new vaccines are commissioned. This work has had a direct impact on pharmaceutical pricing in Norway and Canada.
York research on low and middle income countries led the World Health Organization and the World Bank to change how they make recommendations about the cost-effectiveness of healthcare interventions. Our work has informed prioritisation at the Bill and Melinda Gates Foundation and directly supported Malawi's Ministry of Health in developing a health benefits package to allocate scarce resources to key healthcare interventions.
