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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
Leela Barham looks at the potential cost to industry of the National Institute for Health and Care Excellence's plans to charge for TAs.
The National Institute for Health and Care Excellence (NICE) in the UK has been exploring the idea of charging the pharmaceutical industry for Technology Appraisals (TAs). NICE, just like the NHS that it serves, is being squeezed and being asked to do more, for less. With cuts in funding for NICE a reality, one option is to charge the pharmaceutical industry – and the medical device industry – for TAs.
The discussion has so far been limited without setting out the fees that would be charged. NICE has now set out what those fees are (Figure 1), and they are significant not only in absolute terms, but also relative to the fees that are charged by other Health Technology Assessment (HTA) agencies in Australia and Canada (see figure 2). That reflects, in part, the decision by NICE to charge for 100% of the costs, whereas in Canada industry contributes around 40% of the cost. The fees won’t necessarily be one off either: NICE will charge the company the full cost again if the NICE Guidance Executive decides that the published guidance needs to be updated. On the up side, companies won’t have to pay for appeals, whereas they do have to pay for independent review in Australia.
NICE published 47 TAs from April 2015 to March 2016, and one HST. If NICE keeps up that work rate the contribution of industry – even assuming the cheapest fee of £142,000 ($190,000) for a STA or HST – will amount to over £6 million ($8m) a year. NICE’s budget for the same period was £75.7 ($101m) million.
Companies will need to pay too if they want to be considered for the cancer drugs fund (CDF) – a ring fenced managed access fund – as well as a reassessment under the CDF. They’ll pay too for managed access arrangement (MAA) or commercial access agreement (CAA) outside of the CDF. Engaging with NICE is going to be expensive.
NICE’s costs are based on the direct costs of producing TAs – excluding the cost of External Review Group (ERGs) who are independent academic units that critique company submissions – as well as corporate overheads.
The charges won’t differ according to company size: the only variation will be for the potential for smaller companies to pay in installments.
Companies can choose not to pay; the penalty appears to be that NICE will terminate the appraisal or withdraw existing guidance in the case of an update. This needs some explaining: afterall, the idea of NICE doing it’s job is to help the NHS make difficult decisions and by virtue of the company not paying, it might be even harder for the NHS to do that. Plus it may suit some companies too: 26 recommendations have not been made to date due to company non-submissions. Will this go up in light of the fees?
NICE is consulting industry associations and asking for views by the 30 September 2016. So far, the Association of the British Pharmaceutical Industry (ABPI) says that they won’t accept fees without reform of NICE. NICE sees it differently: pointing out in their consultation document that, “the introduction of charges will not have an effect on NICE’s methods or processes.” Although it does also say that, “the establishment of a direct financial relationship will bring with it an obligation for NICE’s already high standards of responsiveness to be more explicitly set out as part of the contractual relationship between NICE and its payers.” There’s no mention of any performance related element to the fees. In Canada, companies can get a partial refund if CADTH doesn’t produce a timely recommendation.
The fees are due to come in from the 2017/18 financial year, subject to agreement from the Department of Health (as NICE’s sponsoring Government department) as well as Her Majesty’s Treasury. Changes to NICE’s regulations need to go through Parliament too. That means that there are quite a few hoops to get through before NICE is due to start charging from May 2017. Changes may also be made as the long awaited Accelerated Access Review (AAR) – an independent review of speeding up adoption of innovation across the NHS in England – should also cover charging by NICE too.