False economies: Why cheaper drugs are costing the NHS millions

For years, the NHS has clung to the belief that it can save its way out of a financial black hole. Nowhere is this more evident than in prescribing budgets, where scrutiny of drug costs often overshadows the real purpose of medicines: to improve patient outcomes and reduce pressure on frontline services. It’s time we recognised that medicines optimisation isn’t about cutting costs, it’s about making smart, outcome driven investments in patient care.

The illusion of prescribing ‘savings’

Across Integrated Care Boards and Health Boards, vast effort is invested in driving down the medicines bill, identifying cost saving switches, encouraging use of generics, and measuring success in pounds saved. But here’s the uncomfortable truth: most systems are still overspent, sometimes by hundreds of millions. What we rarely ask is this: what would the overspend have been if we had instead invested the entire prescribing budget in truly optimising medicines to deliver better patient outcomes?

The real cost of medicine isn’t the price of the prescription; it’s the cost of failing to get the most from the medicines we do prescribe. Every unnecessary GP appointment, every avoidable A&E attendance, every avoidable referral, and every non-elective hospital admission driven by poor adherence or suboptimal prescribing erodes any theoretical savings made on the prescribing line.

Cheap is only cheap if it works

Too often, “cost-effective prescribing” is interpreted simply as “cheaper drugs”. But prescribing a low-cost medicine that a patient doesn’t take properly, or that fails to control their condition, isn’t a saving. It’s a false economy.

Asthma: A case study in false savings

Take, for example, asthma. Despite repeated updates to national guidance, how many patients are still prescribed three or more Short Acting Beta Agonists (SABAs) in a year without a proper review? How many continue to receive high dose inhaled corticosteroids without addressing technique or adherence? How many costly hospital admissions could be avoided with a focus on genuinely optimising therapy?

Or consider diabetes. NICE now clearly recommends SGLT2 inhibitors as first-line therapy in patients with chronic heart failure or established atherosclerotic cardiovascular disease. They also suggest considering SGLT2 inhibitors for individuals at high risk of developing cardiovascular disease, if metformin is contraindicated or not tolerated. Yet we still see widespread use of sulfonylureas and outdated metformin monotherapy, even in patients who would benefit from newer, outcomes-driven therapies. Why? Because SGLT2s are “expensive”, but only if we fail to consider the downstream impact of better glucose control, weight management, renal protection, and cardiovascular outcomes.

Medicines as an investment in prevention

If we’re serious about shifting the NHS from a reactive, treatment-focused service to a proactive, prevention led model, we need to reframe how we think about medicines. Medicines are one of the most powerful tools we have, not just to treat illness, but to prevent deterioration, reduce risk, and avoid escalation of care.

Better prescribing, meaning the right molecule for the right patient at the right time, can help keep patients out of hospital, improve quality of life, reduce the burden on overstretched services, and ultimately reduce total system cost. But we only unlock that value when we see prescribing not as a cost centre, but as a strategic investment in better outcomes.

Concordance, compliance and the power of patient engagement

Medicines optimisation is not just about the clinician’s prescribing decision; it’s about the patient’s lived experience of their treatment. Are they taking the medicine as intended? Do they understand what it’s for? Do they feel involved in their treatment plan? Concordance and compliance are central to achieving the outcomes we want, and yet in many systems, we still treat medicines as transactional events rather than part of a dynamic care relationship.

To truly optimise medicines, we need to involve patients in their care. This means better education, clearer communication, structured medication reviews, and digital tools that support adherence. It also means investing in clinical pharmacists, practice based pharmacy teams, and community-based services that can engage patients where they are, before problems escalate into admissions or harm.

The opportunity cost of inaction

Every time we focus solely on cutting prescribing costs, we risk missing the bigger opportunity: preventing unnecessary demand elsewhere in the system. If the cost of a newer medicine is offset many times over by reductions in acute care usage, then not prescribing it is a net loss to the system, no matter what the prescribing line says.

Take Heart Failure as another example. SGLT2 inhibitors now have strong evidence in Heart Failure with reduced ejection fraction (HFrEF), reducing hospitalisations and improving survival. Yet uptake remains patchy. Patients remain on older therapies that may be cheaper per pill but are far more costly when considering total system impact. Why is this? Because the prescribing budget is ringfenced, while the admissions budget is someone else’s problem.

This siloed thinking is a barrier to true optimisation. We need to break down the artificial divides between “prescribing costs” and “hospital costs” and start thinking in terms of whole system impact. Medicines optimisation should be about making the system work better for patients, not protecting an arbitrary budget line.

From financial management to outcome management

A better approach to medicines is not about saving money but managing value. That means asking new questions:

• What health gain did we achieve from our medicines spend?
• How many avoidable admissions were prevented?
• How many patients achieved disease control?
• How much patient quality of life did we improve?

ICBs and Health Boards need to move from financial management of prescribing to outcome management of medicines. This involves better data, smarter analytics, and more integrated commissioning, but above all, it requires a cultural shift. Prescribing must stop being seen as a cost and start being seen as an enabler of transformation.

Making the case to invest

Of course, investing in newer or more effective medicines often means spending more per item. But if we can demonstrate that this investment reduces overall healthcare utilisation, we will have made a compelling business case. That requires linking prescribing choices to downstream outcomes, tracking non-elective admissions, emergency attendances, outpatient activity, and patient reported outcomes.

This is where pharmaceutical companies can also play a constructive role. The shift from “product push” to “outcome partnership” is already happening, and there is real scope for collaborative models that demonstrate the wider value of innovation, not just in efficacy, but in economic and operational terms.

Conclusion: Time for a smarter conversation

The NHS cannot cut its way out of its current financial position. But it might, just might, be able to prescribe its way out by choosing the right molecules, for the right patients, in the right way. Medicines optimisation should never be about doing less for patients. It should be about doing more, more effectively, more personally, and more strategically.

So here’s my take on what needs to happen next for this to work:

• ICBs: Start tracking medicine ROI at system level, not just item cost.
• Pharma: Focus more on outcomes data, not just access arguments.
• Clinicians: Push back when cost pressures undermine NICE guidance.
• Leaders: Fund pharmacists and adherence tools like they’re frontline care – because they are.

We must stop treating the prescribing budget as a place to find short term savings and start seeing it as a critical enabler of long term system sustainability. Because in the end, the only kind of “cheap” that truly saves money is the kind that improves outcomes, reduces demand, and empowers patients to live healthier lives.

It’s time to shift the conversation, from “how much can we save?” to “how much more can we achieve?”