By Maisie Borrows Ahmad, Strategic Growth Lead, Dr Jonathan Pearson-Stuttard, Partner & Head of Health Analytics, Robert King, Consultant and Senior Health Economist, Steve Webb, Partner, Catrin Treharne, Principal and Health Economics Lead from LCP
Within the context of rising economic inactivity due to long-term sickness in the UK, and with Governments and payers increasingly seeking reassurance that investment in health is both affordable and represents good value for money, there has never been a more pressing need to explore how we appropriately value interventions that keep people well. Our discussion brought together stakeholders from the Pharmaceutical and Med Tech industries, HTA and policy to identify potential solutions.
Key themes
The treasury perspective: defining value beyond healthcare
A central challenge in securing investment for preventive and treatment-based interventions as well as patient access lies in demonstrating their financial return. According to the ISPOR Value Flower, there are 12 potential elements of value that broaden the view of value in healthcare beyond quality adjusted life-years (QALYs) and Net Costs. These include common but inconsistently used elements (productivity and family spillover) as well as ‘novel’ elements such as fear of contagion, value of hope and equity.
A frank discussion was had around the UK Treasury’s priorities, which ultimately centre around measurable fiscal outcomes - specifically increased tax revenues and reduced welfare benefits. However, Treasury might be concerned that extra ‘demand’ for interventions could drive up the unit cost, leading to some of the additional expenditure being ‘captured’ by providers. If an intervention produced overall fiscal benefits, Treasury would want to net off any ‘deadweight’ where provision which would have happened in any case now took place at a higher cost.
In addition, the Office for Budget Responsibility (OBR) has stringent requirements for evidencing fiscal benefits, with a high threshold for causality rather than correlation.
Speakers highlighted the need to articulate these benefits in terms that resonate with the fiscal issues of the day for policymakers. This includes demonstrating how specific medical interventions contribute to reducing economic inactivity, increasing tax revenues, and lowering welfare costs — all of which we know is possible from our previous work exploring incorporating fiscal savings into value assessments, and are key concerns for the Treasury.
Bridging the funding gap: A joint approach between DWP and DHSC
The recent emergence of obesity medications has illustrated a ‘gap’ in funding provision in the UK. For example, NICE recently approved Mounjaro (tirzepatide) as a clinically and cost-effective treatment for managing overweight and obesity. However, considering the estimated budget impact of providing access to the 3 million eligible patients in England, NHSE have requested a funding variation to vary the NICE funding mandate from the standard 3-month timeframe for patient access to 12 years. This illustrates an issue that is likely to happen more regularly in future with the growing burden of chronic conditions and the potential impact on economic outcomes.
One of the most compelling proposals discussed was the establishment of a dedicated funding stream or ‘spend to save’ initiative between the Department for Work and Pensions (DWP) and the Department of Health and Social Care (DHSC), an idea proposed in LCP’s paper from November 2024 – ‘Are we undervaluing measures to keep people well?’. This would need to overcome the traditional approach of budget siloes between different Government departments, but a joint approach would be critical to ensure key stakeholders realise the full financial benefits. This could be targeted at funding medical interventions that may otherwise have experienced an ‘access gap’ following NICE approval due to their significant budget impact. Crucially these should provide demonstrable fiscal benefits by enabling individuals to return or to stay in work.
However, this approach presents both financial and moral complexities.
Risk of price inflation: Whilst a separate funding stream would likely avoid driving up the price of ‘established products’, caution is needed for novel products in the future where there is no established price yet
Equity concerns: Prioritising treatments for the working-age population could create ethical dilemmas regarding access to medicines for non-working populations, such as pensioners, children, or people with disabilities. On the other hand, preventing children from becoming lifelong recipients of benefits, or preventing pensioners from receiving benefits which run for their full retirement would also have considerable payback, so this framework need not imply excluding people not currently in the labour force.
Balancing immediate costs with long-term gains: Treasury scepticism around front-loaded spending with long-term returns remains a challenge.
Despite these hurdles, there was strong consensus that these complexities can and should be addressed to unlock the broader economic benefits of health interventions. To move this forward, engaging with policymakers and key stakeholders such as NICE and the OBR to align interest and establish the right framework for deciding whether a medical intervention meets these criteria will be critical.
Targeting the right populations: who stands to benefit most?
Three distinct groups emerged in the discussion, each with different intervention needs:
Long-term sick individuals who are out of work and reliant on welfare support.
Short-term sick individuals at risk of long-term economic inactivity.
Those in employment but who are at risk of deteriorating health, reduced productivity and potential economic inactivity.
Evidently the needs of each group to support being economically active will vary, the disease mix is likely to vary and the benefits (i.e. who will benefit most helping these individuals get back to work) will vary. For example, a DWP-led ‘spend-to-save’ initiative could prioritise treatments that reduce reliance on welfare, while employer co-pay models could be explored to improve workplace health and productivity.
Enhancing the evidence base: The role of data and pilots
Building a strong evidence base is essential not only for enabling patients to experience the full value of healthcare interventions but also crucially to improve access via greater Treasury buy-in. The discussion underscored the need for:
Pilot projects that operate on a ‘pay-by-results’ model, where funding is contingent on demonstrated fiscal benefits. Policymakers could look to previous examples from the Work and Health programmes which successfully used performance-based funding to support individuals to return to work
Improved data linkages between DWP and health records to better track outcomes.
A clear framework for assessing return on investment (ROI) from health interventions.
Next steps: Moving towards policy action
Our discussion reinforced the need to shift the conversation around healthcare investment towards a more integrated view — one that considers not only clinical and cost-effectiveness but also broader economic and societal returns. By aligning incentives and creating funding structures that recognise the full value of health, we have an opportunity to drive both better health outcomes and stronger economic growth.
We look forward to continuing this work with our partners across government, the life sciences industry, and academia to build a healthcare system that truly values prevention and early intervention. If you would like to be part of this conversation, please do get in touch.
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