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Leela Barham is a freelance health economist and policy expert. She has published in peer-reviewed journals and presented at national and international conferences. She has provided advice to the Department of Health and Social Care on policy on pricing of branded medicines to inform the negotiation of a successor to the UK’s Pharmaceutical Price Regulation Scheme (PPRS), the Voluntary Scheme for Branded Medicines Pricing and Access (VPAS), as well as worked with patient groups, the NHS, pharmaceutical companies and many others internationally on the economics of healthcare and pharmaceuticals. Contact Leela on firstname.lastname@example.org
The Association of the British Pharmaceutical Industry (ABPI) has sought permission for a Judicial Review (JR) of the National Institute for Health and Care Excellence’s (NICE) unpopular changes to tackle drug affordability. But it’s not just NICE who’s to blame for the affordability issue.
The changes that have caused so much controversy are in two areas; the first is the prospect of delaying access new medicines even if they are deemed cost effective. This could happen if they breach a budget impact of £20 million ($26 m) a year in any of the first three financial years post launch. The second is the changes to the approach to Highly Specialized Technologies (HSTs) - ultra-orphans - with a new threshold of up to £300,000 ($392,180) cost per Quality Adjusted Life Year (QALY).
The reason that these are controversial are manifold. Here are just some of them.
The budget impact test puts patients (and their clinicians who advocate on their behalf) in the middle: between the “system” (NICE and NHSE) and companies. It will be patients whose health might decline while they wait for a deal to be struck if a drug is cost effective but breaches the budget impact test.
As for the changes to HSTs, there are likely to be ultra-orphans that will never be near even the £300,000 cost per QALY threshold – assuming they can tick the boxes to achieve the highest multiplier – so the concern here is that this will choke off access to some of these expensive drugs that address unmet health needs of those with a very rare disease. For some, paying more is seen as inefficient as more health could come from buying more, less expensive care. For others, it’s simply a way of showing compassion and an acceptable trade-off. Whatever your view, the proposals are light (that’s being charitable) on any evidence to support the HST threshold, multipliers, or are the trade-offs inherent in them.
Adding in further affordability measures layers on to those already in the system for drugs. This includes the Pharmaceutical Price Regulation Scheme (PPRS) rebates that amounted to £1.87 bn ($2.44 bn) by the end of March 2017. These are paid by companies to the Department of Health (DH). It also includes price cuts under the Statutory Scheme for Branded Medicines for those companies who choose not to be in the PPRS, although not all companies cut prices, having already offered discounts as part of procurements by the NHS.
The very presence of NICE is also likely to induce discounting through Patient Access Schemes (PAS), which are a function of the cost per QALY threshold set. Companies must surely be mindful of the threshold when they consider pricing decisions in the UK. The budget impact test could therefore lead to another discount, on top of one given to achieve a NICE yes.
For those in industry, it might well feel like drugs are being targeted and not other areas of spend. Whether that’s fair or not is open to interpretation; there’s potential to be gaming on both sides with the potential for setting higher starting prices as well as saying no to induce bigger discounts). It is perhaps understandable that some companies are irked by the very notable absence of any mention of the PPRS and PPRS rebates in the consultation on the changes. Despite the 2014 PPRS effectively setting a cap on the vast amount spent on branded medicines, it is not seen as enough. This is despite the share of spend on all medicines being the same in 2015/16 as it was 2010/11 once you take into include PPRS rebates, according to Government figures.
The ABPI has taken the first step in the legal process for a JR. Details on just what grounds they are seeking permission for a JR aren’t explicitly stated on their press release, and they aren’t commenting further. It may take a few months to hear if they will be given permission for the JR.
The ABPI has taken aim squarely at NICE. The trouble is that NICE is just one part of the jigsaw that explains why the changes were tabled in the first place. Leslie Galloway, Chair of the Ethical Medicines Industry Group (EMIG) points out that, “this is simply isolating NICE. NICE is actually a strength for the UK.”
NICE itself had pointed out how a key component of the changes – the choice of £20 million for the budget impact test - had been chosen by NHSE, not NICE. The ABPI suggested £100million for the budget impact test, so it seems that, in part, it was a decision by NHSE that may have led to the ABPI Board decision to seek a JR.
NHSE is clearly a major architect of the changes. Their own board minutes of their discussion in March 2017 acknowledges that the consultation, whilst nominally led by NICE, was a “joint consultation.” They also say that the Specialized Services Commissioning Committee endorsed the changes, on behalf of the NHSE board.
Even beyond NICE and NHSE though, what is affordable is not just a question of current allocations to the NHS but political decisions about how much to put into the NHS, which in turn are informed by the not so small matter of the state of the economy. Of course the NHS needs to stay within it’s means, but it’s means are not determined by NHSE as the main payer for specialised drugs, nor by NICE who can only advise on how to try to get the best bang from the buck. How much to give the NHS is a decision made by Ministers, in turn influenced by voters (or at least they perception of what voters want).
Nicholas Timmins from the Kings Fund has suggested that it should be Ministers, not NHSE that should decide on the affordability of new cost-effective treatments. It is certainly Ministers who will likely be hearing from the CEOs of pharma. It may well be that both Secretary of State for Health, Jeremy Hunt, and Parliamentary Under Secretary of State for Health, Lord O’Shaughnessy, are relieved that they met with a raft of companies – Merck, Pfizer, BMS, J&J, Lilly, Celgene, Roche, Novartis, UCB Pharma, Gilead, AZ, Shire, GSK – in January and February, before the changes were formally confirmed in March 2017. If those meetings were happening now, perhaps the conversations would have been different?
Of course, companies need to do their bit too, by being reasonable in their price setting. Part of the problem is that we don’t know the real price being paid for many drugs – be that in the UK or further afield – because of the presence of confidential discounts (there are good reasons for this though that stem from mitigating actions taken by payers in international reference pricing, as well as companies seeking to maximize profit). Telling people, ‘trust us within industry to have set reasonable real prices’, seems optimistic at best, unrealistic at worst. Plus it’s hard to know if the price is reasonable when there is vociferous debate on how much it costs to bring a drug to market, although we can all assume it’s a lot.
The focus on NICE may be because it is in the NICE legislation that there seems to be – although I am no lawyer – room to challenge NICE. The National Institute for Health and Care Excellence (Constitution and Functions) and the Health and Social Care Information Centre (Functions) Regulations 2013 state that:
“7.(2) NICE must specify in a technology appraisal recommendation the period within which the recommendation in paragraph (1)(b) should be complied with.
(3) The period in paragraph (2) must be a period that begins on the date the recommendation is published by NICE and ends on the date 3 months from that date, unless paragraph (4) applies.
(4) In the circumstances described in paragraph (5), if NICE considers it appropriate, NICE must specify a longer period.
(5) The circumstances referred to in paragraphs (4) and (11) are –
(a) the health technology cannot be appropriately administered until –
(i) training is
(ii) certain health service infrastructure requirements including goods, materials or other facilities, are in place; or
(iii) other appropriate health services resources, including staff, are in place; or
(b) the health technology is not yet available in England.”
Cutting through the legalese and in my layman terms – which have no legal standing - this suggests that the 90 day funding period to support positively appraised drugs – this is the bit that the NICE and NHSE proposals might extend or phase in access – can only be amended on specific grounds. It’s the interpretation of these that may could be under scrutiny because not having enough money could be seen by some as stretching the interpretation of the use of the word ‘resources’ in (5) (iii).
For HSTs, perhaps there is some question mark over whether the adoption of quite different proposals – albeit more generous by moving from a £100,000 cost per QALY threshold, to a potential £300,000 cost per QALY threshold but with multipliers that some fear will never apply – might not have met the requirement for NICE to consult on the actual change. It could also breach the patient right to drugs and treatments that have been recommended by NICE for use in the NHS under the NHS Constitution.
NICE has a general duty under Health and Social Care Act 2012 to not only have regard to the degree of need of persons for health services or social care in England, but also regard to the desirability of promoting innovation (233 in the Act). NHSE too has some specific responsibilities in relation to innovation; 13K in the Health and Social Care Act 2012 sets out a duty to promote innovation. Presumably though, these are difficult to challenge since the duties are likely to be interpreted in terms of innovation in the most broadest sense. It may well be hard – even if a firmly held belief amongst some in industry – that the changes do little to promote innovation in drugs, and may even potentially harm incentives to bring innovations to the UK.
NHSE has also survived a related legal challenge. The Hepatitis C Trust – acting alone despite accusations that the pharma industry were behind it – challenged NHSE on their decision to phase in access to new hepatitis C treatments. These are the very example of drugs that are both cost effective and particularly difficult to afford given the combination of high price and high patient volumes. The High Court didn’t grant permission for a JR because it found that a monthly run rate – phased access – is not arbitrary but a legitimate way to give effect to NICE positive guidance. It’s the only time that an NHSE request for a delay to implement positive NICE guidance has been granted; then it was a 2 month extension, and it was not granted on the basis of not having enough money.
The ABPI have told me that it might take perhaps 2 months to hear back if they will have permission for the JR, although it may take a little longer. More than a few will be waiting to see how it plays out.