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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
The debate around NICE's threshold for cost effectiveness has always been heated; recent theories add more fuel to the fire, writes Leela Barham.
The small matter of just what is the threshold for cost effectiveness has never been straightforward. It was never just a number, since it plays such an important role in influencing the recommendations of many; not just the UK’s National Institute for Health and Care Excellence (NICE) itself, but those agencies, hospitals, clinicians, and managers around the world who take a look at NICE guidance too.
The history of the threshold in the UK is one of first denying that one existed, to recognition formally that it did: but with a range from £20,000 to £30,000 ($30,850 to $46,280) per Quality Adjusted Life Year (QALY). That flexibility was added to with the provision of guidance to NICE committees that when a product is to treat a patient near the end of their life, they can allow a higher threshold - although technically through an uplift to the benefit side of the equation, but the effect is the same.
Industry has long argued that the threshold has been arbitrary. It’s certainly been a rule of thumb for some time, with little grounding in terms of what the NHS can afford (as the NHS budget has changed over time) but also in terms of what would be the best use of money (as the treatment options have changed too, some offering far more health gains than others). The latter - where the NHS might have to decide between competing options and should consider which offers the most bang for the buck in terms of health, known as opportunity cost - has dominated the debate.
Industry probably didn’t quite get its wish when empirical research funded by the National Institute for Health and Research and the Medical Research Council came out with an even lower threshold. That work, conducted by Karl Claxton from the Centre for Health Economics at the University of York and colleagues from Imperial and the Office of Health Economics (OHE) first suggested a best estimate of threshold as being around £18,000 ($27,770) in January 2013, by November 2013 they had revised it down to £13,000 ($20,000).
By December 2013 the Office for Health Economics came back with their critique. Put simply, the research needed to use big assumptions because of a lack of data so the best estimate wasn’t really good enough to be used.
The exchange of views has continued. Claxton and colleagues got a lot of coverage when the same work was published in the journal Health Technology Assessment in February 2015. The Guardian led with the headline “Patients suffer when NHS buys expensive new drugs”, the BBC with “NICE sets price too high for NHS medicines”, and the Financial Times said “Expensive drugs cost lives”. OHE took the opportunity to re-iterate their concerns. Claxton, never one to shy away from supporting his work, has hit back. His response suggests that the OHE view is not dispassionate and selective.
So just what should we make of this research? James Raftery, another leading health economist in the UK, has said that the threshold should not be lowered on the basis of Claxton and colleagues work. His reasoning is that the assumptions are too many and sweeping to be the basis of a policy change. Not only that, but the threshold might be less important than many think; NICE doesn’t say no that often on the basis of cost effectiveness. It’s commissioners in the NHS that really know the opportunity cost, Raftery argues and they need to join the debate. Andrew Dillon, Chief Executive of NICE, has commented too. Sounding more like an industry person, Dillon says that reducing the threshold to £13,000 would mean closing the door on most new treatments. He also says it’s not something that should just be left to the health economists.
Where there is agreement is the need for more research. (Who would have thought that those who get paid for doing research would want to do more?!)
For policy makers and politicians the message today is not clear, especially as anyone close to the real politics of the pharmaceutical industry in the UK will know that there are millions coming in from industry as part of the 2014 Pharmaceutical Price Regulation Scheme (PPRS). More than £4 bn ($6.2 bn) might flow back over the 5 years of the scheme (if companies stay in). That, surely, changes things?