Where Does the NHS Medicines Budget Go? Inside the £19.9 Billion Spend in 2024

In the 2023–24 financial year, the NHS in England spent a staggering £19.9 billion on medicines, medical devices, and related supplies. ¹ That’s nearly £20 billion of public money directed toward treating a vast array of conditions-from asthma, diabetes, and high blood pressure to rare cancers, autoimmune diseases, and genetic disorders. This enormous figure reflects how dependent modern healthcare has become on pharmaceuticals and advanced therapeutics.

Importantly, this figure represents gross spending, before accounting for rebates or industry discounts. Once rebates-negotiated with manufacturers-are factored in, the NHS expects to recover around £3.5 billion in 2025. ² Nevertheless, the full £19.9 billion is used in budget planning and forecasting to reflect the actual costs of treatment provision.

How Big Is This Compared to the Whole NHS Budget?

To grasp the scale, consider that the NHS in England had a total revenue budget of £177.9 billion in 2023–24. ⁴ Salaries and medicine costs alone consumed over 94% of this daily spending-showing that almost all NHS funds go to “people or pills.”

With an ageing population, more chronic diseases, and growing demand for high-tech care, NHS spending is projected to rise by around 3% per year, reaching £232 billion by 2028–29. ^5,6 Medicines are expected to remain one of the fastest-growing areas of expenditure.

What Does the NHS Spend Drug Money On?

That £19.9 billion isn’t spent on just a few blockbuster drugs-it’s distributed across thousands of different treatments.

• At the low-cost, high-volume end: medications like paracetamol, statins, and metformin are inexpensive per dose but prescribed to millions.
• At the high-cost end: are specialist treatments such as:
• Chemotherapy drugs for cancer
• Biologics for conditions like rheumatoid arthritis
• Gene therapies for rare genetic disorders
• Blood products for haemophilia
• Monoclonal antibodies and immunoglobulins

One striking example: wound dressings and stoma supplies alone cost £1.36 billion in 2024. ¹ These items are essential for many patients but rarely discussed in debates about NHS costs.

There are also hidden costs, including:

• VAT on hospital-dispensed drugs
• Dispensing and delivery fees
• Stockholding and logistics ³

Together, these extra costs push the real price of medicine provision far beyond the list price.

How Does the NHS Control Medicine Prices?

To manage these rising costs, the NHS has a long-standing agreement with the pharmaceutical industry: the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG). Under this deal, branded drug manufacturers must pay back a percentage of their revenue-currently around 23%. ²

In 2025, the VPAG is expected to return £3.5 billion to the NHS, with £2.8 billion going directly to NHS England. ⁷ These rebates help sustain access to expensive but necessary treatments.

Still, not everyone is happy. The pharmaceutical industry argues that these caps reduce their profits and discourage R&D investment. ⁸ Some warn they may reduce UK-based research or clinical trials if conditions don’t improve. ⁹

The Growing Debate: Are These Medicines Worth the Cost?

Some critics ask whether we’re getting the best value. A 2024 Lancet study estimated that new drugs delivered 3.8 million quality-adjusted life years (QALYs) to NHS patients-but at a cost of £75 billion over the last decade. ¹⁰

That’s a significant health return, but some argue alternative spending-on mental health, social care, or public health-might offer more bang for the buck. In a system with finite funds, every high-cost drug potentially means less money for other services.

How Is the NHS Trying to Make Drug Spending Smarter?

To respond to these pressures, the NHS and government are focusing on several strategies:

1. Targeted Reinvestment

Funds are being reallocated to underserved regions and communities with worse health outcomes. This ensures smarter, need-based spending.

2. Staffing Reforms

Efforts to reduce dependence on agency staff and improve workforce planning are saving money that can be redirected toward patient care and medication access.

3. Digital Health Investment

A £10 billion commitment to digital transformation includes:

• Electronic prescribing
• Integrated patient records
• Better data tools to guide procurement decisions ⁹

These innovations aim to cut waste and improve treatment decisions.

A Different Vision for the Future

What if we took a different approach altogether?

We believe the NHS should invest more heavily in natural and manual therapies, such as physiotherapy, osteopathy, cognitive behavioural therapy (CBT), counselling, and health coaching. These approaches help patients make meaningful lifestyle changes-often reducing the need for long-term medication.

We should also rethink prescribing practices. Imagine if, instead of giving a 19-year-old antidepressants as a first-line treatment, GPs offered exercise programmes, therapy, or social support first. For this to work, GPs would need longer appointment times and more support themselves.

Drugs absolutely have a role in healthcare-but that role should come after natural, lifestyle-based interventions have been tried.

References

1. ABPI (2025). Understanding NHS medicines spending in England.
   https://www.abpi.org.uk/media-centre/news/2025/understanding-nhs-medicines-spending-in-england
2. ABPI (2025). VPAG rebates expected at £3.5 billion in 2025.
   https://www.abpi.org.uk/media/news/2025/vpag-rebate-growth-forecast/
3. Pharmaphorum (2025). NHS medicines spending in England in greater focus.
   https://pharmaphorum.com/news/nhs-medicines-spending-in-england-in-greater-focus
4. The King’s Fund (2024). The NHS budget and how it has changed.
   https://www.kingsfund.org.uk/projects/nhs-in-a-nutshell/nhs-budget
5. The Health Foundation (2025). Spending Review 2025: Priorities for health.
   https://www.health.org.uk/publications/long-reads/spending-review-2025-priorities-for-health
6. NHS Confederation (2025). Spending Review 2025: What you need to know.
   https://www.nhsconfed.org/articles/spending-review-2025-what-you-need-know
7. Pharmaphorum (2025). VPAG rebates: £2.8 billion to NHS England.
   https://pharmaphorum.com/news/vpag-rebates-boost-nhs-england-budget
8. Reuters (2025). NHS and Treasury clash over medicine bill to placate Trump.
   https://www.reuters.com/business/healthcare-pharmaceuticals/nhs-treasury-medicine-budget-trump-2025-05-28
9. Financial Times (2025). Big pharma warns ministers over NHS drug stand-off.
   https://www.ft.com/content/pharma-nhs-pricing-stand-off-2025 (may require subscription)
10. The Lancet / Pharmaceutical Journal (2024). Approval of new NHS drugs results in population health ‘trade-offs’. https://www.pharmaceutical-journal.com/news-and-analysis/news/lancet-study-on-nhs-drug-approvals-and-health-trade-offs/