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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 email@example.com
NICE and NHSE have been grappling with the issue of affordability. It’s not a new challenge, but with the advent of new treatments that are both cost effective and unaffordable, something has to be done. Leela Barham reports.
Affordability: An unpopular NICE and NHSE approach
The National Institute for Health and Care Excellence (NICE) and NHS England (NHSE)-a key health technology assessment agency and the payer for specialized medicines in England respectively-have been grappling with the issue of affordability. It’s not a new challenge, but with the advent of new treatments that are both cost effective and unaffordable, something has to be done.
Pressing ahead with unpopular changes
NICE and NHSE had tabled their proposals back in October 2016. They ran a formal consultation, ending on the 13 January 2017. Now the results are in-as set out in NICE Board Papers-and despite many negative responses as well as many ‘maybe’s’ (see figure 1), NICE and NHSE aim to press ahead with changes planned from April 2017.
Figure 1: Stakeholder responses to consultation questions
The key changes
NICE has confirmed, and also note that this is agreed with NHSE, that the agencies will:
Details will also be worked up should a new medicine be commissioned by Clinical Commissioning Groups (CCGs), who are responsible for paying for all other drugs that are not considered specialised. NHSE will be able to undertake commercial discussions on the CCG’s behalf if they too breach the budget impact test.
Fast Track Appraisal
A fast track will be introduced for those medicines that are below £10,000 ($12,200) per Quality Adjusted Life Year (QALY). Although there is an argument that the fast track was to act as a counterweight to the potential lengthier approach under the budget impact test, NICE points out that it might help them cope with a rise in the number of new medicines that they need to appraise.
NICE also discusses the potential for commercial conversations with NHSE even for these highly cost-effective new medicines, although presumably only where they might also breach the budget impact test. Here too NICE resources are mentioned, as NICE plans to establish a team to support these commercial conversations. They also say that they will need to build enough senior capacity to be able to make the judgements needed to determine if the evidence is good enough when these decisions will need to be made more quickly under the fast track process.
The FTA process will also be available where the new medicine is of comparable costs and benefits to an already approved medicine, and so the FTA will ‘absorb’ a previously tabled Abbreviated Technology Appraisal (ATA) process.
Automatic funding for Highly Specialized Technologies with a cost per QALY of £100,000
HSTs, or ultra-orphans, have not had a formal threshold for cost-effectiveness. NICE proposed that those that were less than £100,000 ($121,980) cost per QALY would be automatically funded, although this would not necessarily have been a limit, as otherwise they could be considered under the usual approach of NHSE to specialised services. It’s a complicated process, but the Clinical Priorities Advisory Group (CPAG) plays a key role.
Despite concerns raised by stakeholders NICE and NHSE about both the £100,000 and too heavy a focus on QALYs for treatments for very rare conditions, this will be implemented. It will however be adapted allowing for greater weight to be added to the QALYs, at the discretion of the NICE appraisal committee. With a maximum weight available of 3, that means that NICE might say yes if the cost per QALY is at or below £300,000 ($365,9340 (just where did that number come from?!). This will please some-some companies, some patients, some clinicians – but will likely be a cause of concern to others especially health economists. Assuming no extra money is to come into the NHS, it implies a sacrifice of health for other patients. It certainly doesn’t appear to be evidence based with no reference to citizen, public, patient or anyone else’s preferences and the research that exists on such a tricky issue.
What will change is the intention for those HSTs with a cost per QALY above £100,000 going through the usual NHSE processes. NICE says that, “few consultees considered that migrating topics that NICE is unable to recommend into the CPAG process has merit”.
The ‘magic’ number for the budget impact test
A key area of disagreement is the choice of number that will trigger a commercial discussion. NICE and NHSE is sticking with their choice of £20 million ($24,395, 600) despite many stakeholders pointing out it had no real rationale. The Association of the British Pharmaceutical Industry (ABPI) had suggested £100 million ($121, 978,000), which may or may not have had any better rationale than the NICE number.
NICE, and NHSE, seem to have dodged the issue of just how they came about the £20 million number. They easily dismiss the £100 million suggested by the ABPI because it would “materially fail to provide NHS with the tools it needs to pursue the orderly management of its budgets”. (As an aside, it’s a stretch to believe that NHSE has managed it’s budgets in anything like an orderly way as highlighted by the National Audit Office in their investigation of the NHSE approach to specialised commissioning). They support their £20 million by saying that no-one came up with a better idea.
It seems a missed opportunity to have not considered a more principled and transparent approach-for example the Institute for Clinical Effectiveness Review (ICER) in the US has a budget impact threshold informed by growth in the economy and other adjustments-that could be applied instead of a retrospective and opaque calculation that NICE and NHSE have used. Even aside from trying to come up with a better way to calculate the threshold, would be a process for updating as NHS funding changes over time.
The £100,000 cost per QALY for HSTs
Just as the £20 million budget impact test number doesn’t seem to have a grounding, nor does the £100,000 or even the weightings that NICE is proposing for QALYs.
Respondents to the consultation pointed out none of the existing HSTs approved would have been near the £100,000 per QALY. NICE thinks that the weightings could have helped. Of course, NICE could have actually re-visited the decisions using their new weightings so that they could definitively know and also illustrate how the weightings can actually be applied.
Review in three years
The changes will come into force from April 2017. NICE also say that they will review the changes in three years. That said, perhaps industry could put pressure for a faster review, especially if they link NICE methods to the renegotiation of the Pharmaceutical Price Regulation Scheme (PPRS). The current PPRS is due to end in December 2018. Not only that, but there are the ambitions for life sciences that are being developed as part of a sector deal within the UK’s industrial strategy. Expect much discussion on whether the right balance between affordability and patient access has been struck.
Leela Barham is providing input as a subject matter expert into medicines pricing policy development with a UK government client and for the duration of her involvement in that project, she is restricted on what she can write about.