A new study by the Scottish Medicines Consortium, the body that advises the NHS on which new drugs to buy, reveals that the entire system north of the border is in danger of being bankrupted by wild variations between what health boards budget for and what the medication eventually costs. In one case, the bill for a single drug turned out to be more than 10 times more than the original prediction, at £3.4m rather than the £300,000 allocated. Another instance involved a pharmaceutical firm over- estimating annual production, demand and supply costs to the tune of £18.4m. The problem appears to lie with the inability of health authorities to forecast accurately what they will need, coupled with their acceptance of the drug producers' own figures in the absence of anything better. These figures, the study found, while not necessarily inflated deliberately to boost commercial profits, were also often based on estimates apparently plucked from thin air rather than the product of thorough and rigorous cost analysis. The SMC's detailed examination of 20 projections found that one in four had major "numerical faults", while 85% failed to explain how patient uptake predictions were reached. There were also as many cases of under-estimation as over.

A new study by the Scottish Medicines Consortium, the body that advises the NHS on which new drugs to buy, reveals that the entire system north of the border is in danger of being bankrupted by wild variations between what health boards budget for and what the medication eventually costs. In one case, the bill for a single drug turned out to be more than 10 times more than the original prediction, at £3.4m rather than the £300,000 allocated. Another instance involved a pharmaceutical firm over- estimating annual production, demand and supply costs to the tune of £18.4m. The problem appears to lie with the inability of health authorities to forecast accurately what they will need, coupled with their acceptance of the drug producers' own figures in the absence of anything better. These figures, the study found, while not necessarily inflated deliberately to boost commercial profits, were also often based on estimates apparently plucked from thin air rather than the product of thorough and rigorous cost analysis. The SMC's detailed examination of 20 projections found that one in four had major "numerical faults", while 85% failed to explain how patient uptake predictions were reached. There were also as many cases of under-estimation as over.

The drugs manufacturers, for their part, complain that detailed costings are impossible because of the random nature of the business and the vagaries of medical choice. They claim there is no way of knowing how much of any specific new medicine the NHS will use, and that given the wide leeway open to everyone from GPs to hospital consultants in the choice of favourite treatments, forecasts are, of necessity, guess-timates rather than accurate estimates. As a result, the bill for prescription medicine has almost doubled in Scotland over the past decade, now verging on £1bn, which the service can ill afford when the other competing demands on its finances come in to the equation.

The NHS admits that it is "not good" at predicting the uptake of new pharmaceuticals and that the knock-on effect of soaring costs can sometimes mean that some treatments have to be restricted. This is not, officials insist, a decision taken on purely financial grounds, but can often include weighing the price of a particular new treatment per patient against the benefits or life-prolonging properties that prescribing it would confer. The Association of the British Pharmaceutical Industry in Scotland defends its own position by saying that its members always try to provide accurate guidance on costs to the NHS, but feel they are frustrated by lack of meaningful data on how soon new medicines are rolled out across Scotland after being approved by the SMC. In practice, this varies widely and is again largely dependent on doctors' personal preferences. The lack of information on which to base country-wide decisions is illustrated starkly by the finding that some drugs continue to be prescribed even after SMC recommendation for their use has been withdrawn.

Clearly, both sides have valid points in the argument. However, unless and until the NHS in all its forms, from GP surgeries to major hospitals, can come up with a common system to record and monitor prescribed drugs, there is no basis on which to make informed decisions on either costs to the customer or production levels for the manufacturers. Information, as the saying goes, is power. In this case, it is the key to cutting costs that may damage other parts of the health service by needlessly absorbing resources.