Medical advisory body “NICE” should not spend too much time valuing drugs.

The UK National Institute for Health and Care Excellence (“NICE”) is currently holding a public consultation over its proposals for evaluating drugs. Drugs that are approved by NICE automatically become available for doctors to prescribe under the NHS throughout England and Wales, although local Clinical Commissioning Groups run largely by GPs are free to make other products available. In the light of the pricing scheme negotiated between the Department of Health and the drug industry (“2014 PPRS”) a strong case can be made for NICE to put more resources into focussing on which specific drugs represent the best medical option and less resources into complex economic assessments.

NICE should continue its present, very valuable, principal activities of evaluating non-drug medical procedures and products such as surgical operations and methods of diagnosis as well as making recommendations relevant to public health. The Institute’s work is internationally respected for the quality of its recommendations on a wide range of medical issues and plays a major and growing role in informing and educating doctors, other healthcare professionals and policymakers. Only a small proportion of NICE’s work relates to advice on drugs. However, well researched, unbiased opinions help to stimulate discussion, recognition and acceptance of medical advances amongst doctors. Such work is always welcome on both drugs and other treatments because of the limited amount of independent analysis.

Whilst most of NICE’s work is to be commended, the Institute is in danger of putting a lot of effort into assessing the value of drugs out of proportion to the benefit. My recommendations are:

  1. NICE should aim to avoid repeating work already carried out by regulatory bodies.

All newly marketed drugs are believed to be of potential benefit to someone. If they were not, they would not get approval through the Medicines and Healthcare products Regulatory Agency (MHRA) in the UK and from similar overseas bodies such as the FDA in the USA. There is no need therefore for NICE to give a medical opinion on whether a drug should be available for any particular use or not. The MHRA decides for what uses drugs are approved.

  1.  NICE’s proposed work on the financial value of drugs should be reduced because it will be of less importance under the 2014 PPRS.

NICE does not protect the NHS drug bill because this is effectively determined by a scheme (the”PPRS“) negotiated between the drug industry and the Department of Health. The scheme currently provides that the total NHS bill for branded medicines will grow as follows in each of the coming five years:

2014   2015   2016   2017    2018

0%      0%      1.8%   1.8%    1.9%

If sales exceed the above targets the industry will pay a full rebate with companies each contributing a proportion relating to their sales.

The only purpose served by NICE finding that a drug is too expensive is to protect the rest of the drug industry from having to pay an excessive rebate. This protection does not justify all the effort to which NICE proposes to go.

  1. Rebates received by the Government under the 2014 PPRS should be reflected in the budgets of Clinical Commissioning Groups so that they do not restrict the availability of drugs unnecessarily.

Clinical Commissioning Groups established under the Health and Social Care Act 2012 are the most important, direct controllers of NHS funds used to finance drugs. The benefit of having a national policy over drug prescribing and pricing is limited if the benefits are not passed on at a local level.

  1. The most important, general decisions to be taken over NICE’s methodology for assessing drugs are political, philosophical or ethical.

NICE’s evaluation of drugs involves looking at the difference between how much longer a patient would live with the drug compared with previously available therapy. An adjustment is made to reflect the quality of life in each year. This approach involves the concept of a “QALY” (Quality Adjusted Life Year). If, for example, a patient taking a drug was expected to be in perfect health for the rest of his life and to live ten years but without the drug he would live only six years with half the quality of life, the drug would cause an increase in QALY of (10 – 6/2) = 7. Academics and economists differ enormously about how much a QALY is worth and what adjustment factors should be applied for quality of life under different circumstances but the Government and the drug industry have agreed that for the coming five years a QALY will have a minimum value of £20,000. In the example earlier in this paragraph the gain in QALY is 7 and is therefore considered to be worth at least £140,000. Assuming that the drug has to be taken for the rest of the patient’s life, the product is therefore worth more than £14,000 per annum. The basic idea is that NICE would recommend against the drug if it was priced too far above £14,000 per annum.

The QALY system in its simplest form has had many drawbacks. The most obvious were a lack of consensus over how much a QALY is worth, how much adjustment is appropriate for quality of life in different circumstances and how much benefit a new drug really has. The MHRA will approve a drug when it is convinced that some patients will benefit from its availability and that it is sufficiently safe. The MHRA does not need to know exactly how great the benefit is and indeed may not find out the full picture until the drug has been in widespread use for several years.

Another disadvantage of the simplest QALY methodologies is the lack of allowance for benefits to people other than the patient, for example, carers, employers and health professionals. The value based on the basic QALY of £20,000 can be given a discretionary boost by a factor of up to 2.5 (i.e. to a maximum of £50,000 per QALY) to take account of factors not adequately represented in the basic £20,000 QALY.

The QALY system is perhaps the most honest way of valuing a drug intellectually but can only lead to controversy because of the unavoidable subjective element and variations between patients. The simplest systems also have a bias against the elderly and people with a short life expectancy because they have fewer remaining QALYs. NICE recommends considering a “Proportionate QALY” system, under which the value of a drug would be assessed not by the absolute increase in QALY but by the percentage increase. NICE would consider the position using both methods. This methodology helps the elderly and terminally ill but the two systems support a radically different list of recommended drugs.

Many other possible approaches involving QALYs exist. For example, a “Fair Innings QALY” has been considered where the increase in QALY is calculated as a percentage if the patient’s expected whole lifetime QALY.  A large number of alternative systems could easily be devised. Value-based assessment is not a precise science. Much of the published work is no more than a selection of subjective, fashionable opinions held by some influential health economists and academics who specialise in the area. The true decisions are political, ethical and philosophical and are largely a matter of personal belief and conscience.  Is the life of a convicted terrorist really worth the same as that of a young mother? Is the quality of life of someone with Alzheimer’s disease better or worse than for a person with terminal cancer? How much is an average human life worth? The media and politicians are paying less attention to such questions than is deserved. One reason is that much of the debate appears more complex than it is because of the language in which much of the material is expressed.

  1. The variation in the response of patients to drugs is too great for NICE to consider all possible circumstances.

Helping to consider the exact population of patients for which a drug is appropriate is certainly a useful activity for NICE to undertake. However, whilst discussion and debate is constructive, the final decision should rest with doctors in consultation where appropriate with patients. There are simply too many differences between patients and their illnesses for NICE to be able to cover every possibility. The wide variation makes any attempt to use a particular price as a cut-off point for a drug inherently unfair. The cost of giving a drug to a patient obviously depends on a number of variables such as the dose, which provides an example of one cause of widely varying costs. The optimum dosage for a patient may be affected by issues like the following;

i)    The weight of the patient.

ii)   How rapidly the patient excretes or uses up the drug.

iii)  The stage or severity of the disease

iv)  Limitations caused by side effects. Some drugs work best if used at the highest possible       dose with acceptable side effects. Different patients may experience different side                 effects and therefore be able to tolerate different doses.

v)    Combination use of drugs. Some patients may receive two or more drugs for the same         condition. Depending on whether there is synergy between the different drugs dose             may be affected.

In the real world the highest used dose of a drug can often be two to five times higher than the lowest. Variations of this magnitude make a mockery of any value-based assessment involving a single price target. In addition, a drug may be preferred because it is more effective or cheaper than alternatives, but this can be just pie in the sky to a patient who is allergic to it or for whom it is contraindicated.

  1. Some of NICE’s conclusions seem to be compromised by a focus on political correctness.

NICE has been partly motivated by a fear of becoming entangled in the forms of discrimination that are illegal or contrary to the ethos of the NHS. Nobody should be disadvantaged or held back on grounds of age, race, ethnic origin, gender, sexual orientation or religion. However, there is a danger that NICE will follow inconsistent and flawed systems in the name of equality by taking decisions that are unnecessary to avoid unacceptable biases. There are many circumstances where best medical practice for all requires the circumstances of different groups of people to affect treatment or screening policies. The following is just a few non-controversial examples.

a)    Women in the UK on average live longer than men.

b)    The incidence of many diseases such as cancer and most forms of dementia increase             with age and is the greatest in the elderly. Some complaints are quite different. For               example, lupus is most frequently diagnosed in women of childbearing age.                            Chickenpox is commonest in children. Any screening programme that does not focus on        the patients most at risk is absurd.

c)     Skin cancer occurs principally in fair, white people.

d)     Some drugs, for example certain blood pressure lowering products, work less well in patients of certain ethnic origins

e)      In the Ashkenazi Jewish population one in four individuals is thought to be a carrier             of one of a number of potentially harmful genetic conditions.

The efforts of NICE would be best directed at recommending what is medically and intellectually best rather than taking political decisions under cover of jargon and a methodology.

  1. Value-based assessments of drugs should be based on the best reasonable forecasts, not purely on hard facts.

When the MHRA is considering the approval of a drug, a very high burden of proof is rightly required. We do not want patients to suffer serious unexpected side effects because of the unproven views of regulators or other advocates. We also want to know that the drug does what the manufacturer claims. There is no room for shortcuts or unsubstantiated opinion, even from experts. Doctors need confidence that all the necessary tests have been carried out before launch.

The position with work done for economic or financial purposes is quite different. An economist, manager, politician or investment analyst is supposed to take account of what is expected to happen in the future.  He cannot say that he chooses to rely solely on what has been proven beyond reasonable doubt.

Some of the decisions by NICE to have received the most criticism have occurred because NICE has rejected expert opinion about the future owing to uncertainty or a lack of proof. As in the case of Alzheimer’s disease NICE has sometimes changed its mind after the necessary evidence has become available. If we accept that NICE’s forecasts would be better than random, patients would be better served if these forecasts were followed rather than by an assumption that the present state of knowledge will continue.

  1. There is insufficient emphasis on R&D and innovation.

The whole point about giving the pharmaceutical industry attractive UK prices is to encourage R&D for the long-term benefit of mankind and to make the UK a favoured country in which to invest. The aim is not to squabble about the financial value of individual drugs, a process which undermines confidence and creates ill feeling. Under the 2014 PPRS doctors could be allowed to prescribe all drugs that they wish. The total bill to the NHS would still be fixed with the risk being taken by the pharmaceutical industry.

Hopefully the present public consultation will see an appropriate level of public debate and will result in many of the issues being resolved or clarified without the need for further Government intervention.

About Barbara Arzymanow

Barbara Arzymanow is a Research Fellow at 2020health and is a founding director of an independent healthcare consultancy firm. She has been an investment analyst specialising in Pharmaceuticals for 25 years, prior to which she carried out academic medical research in university laboratories. Her experience, obtained entirely from outside the pharmaceutical industry, gives her a unique, political perspective independent of commercial lobbies. She has extensive experience in financing the biotechnology industry, which is vital for the long-term standing of medical research in the UK. She has always been inspired by the scientific excellence within the UK and would like to see collaborations between industry, the NHS and academia strengthened. For more information about Barbara's research and writings including submissions to Government Departments please visit . Barbara also tweets as @barbararesearch .
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