UK: Is Value Based Assessment the New Value Based Pricing?

January 26, 2014
Guest Blogger

Pharmaceutical Executive

The initial proposals for Value Based Pricing (VBP) in the UK have evolved into something very different. There is now a focus on Value Based Assessment (VBA).

The initial proposals for Value Based Pricing (VBP) in the UK have evolved into something very different.  There is now a focus on Value Based Assessment (VBA), which is really a focus on adding just two factors to the usual methods of assessing new medicines: Burden of Illness (BoI) and Wider Societal Benefits (WSBs).

The National Institute for Health and Care Excellence (NICE) has set out its proposals in a January 2014 Board Paper. The paper sets out a little more on how NICE could go about implementing VBA, and the changes that they’d like to make to the Guide to the Methods of Technology Appraisals to deliver it.

NICE is trying to move away from the initial ideas developed by the Department of Health (DH) on WSBs.  They don’t seem to like the idea of focusing on production and consumption. And who can blame them – it’s a tough sell when it could have meant prioritorizing medicines for the middle aged  – rather than the young or elderly.  Instead they are proposing to use absolute or proportional shortfall as a measure of Wider Societal Impact (WSI).  They’ll work out what the reduction in QALYs is with a disease versus without the disease: in the absolute case over a whole lifetime, in the relative case, over the remaining years of life.  But the concern of ageism remains as NICE themselves admit: they say “any approach to wider societal benefit will inevitably take age into account to some degree”.

BoI might largely follow DH proposals, calculating the total QALYs lost with a condition versus QALYs you’d expect without the condition.  This might be eminently measurable but it just doesn’t feel like it could ever capture the real burden of illness to patients and carers.

But for many there will be good news amongst the technical jargon.  NICE isn’t suggesting using a ‘calculator’ and applying QALY weights using fixed rules. Instead, Appraisal Committees will still use their judgement, now they’ll have a couple of extra calculations to inform them is all.

Less welcome for industry might be the intention of NICE to remove references in the Guide to the £20,000 to £30,000 cost per QALY range and instead just quote the £20,000.  Whilst technically consistent, that hardly seems to chime with the spirit of the PPRS commitment to keep the basic cost effectiveness range the same. And NICE is also proposing to set a limit on the overall impact of BoI and WSBs: they’ll not be able to increase the weight placed on QALYs by more than 2.5. Nor will many like the addition of considering a ‘step change’ when considering innovation.

The missing P in VBP
The NICE Board Paper also notes that the Department of Health “does not intend to set an acceptable price, or after a NICE appraisal, formally state that a particular price has been accepted”.  Based on the 2014 PPRS, companies will be free to set the price of their new medicines as they wish, within the overall confines of profit control and take their changes on a +ve or –ve NICE appraisal.

NICE will consult on their proposals for implementing VBA in the coming months.  And you can be sure that many will be responding: we’ve already seen media coverage and concern from both industry and patients on what this will really mean.

And although VBP as originally set out bears little relation to what’s happening now, it’s worth going back to the original goal: “to improve NHS patients’ access to effective and innovative drugs by ensuring that they are available at a price that reflects the value they bring”.

Will NICE’s proposed changes really help make that happen?

Leela Barham is an independent health economist. You can access website here and contact her at leels@btinternet.com

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