The UK’s National Health Service (NHS) has a duty to achieve value for money for the country’s taxpayers and since the system’s introduction in 1948 various methods have been adopted to both limit public expenditure on medicines and to promote cost-effective prescribing. National constraints on company profits, general practice drug budgets, local formularies, prescribing advice and priority-setting guidance are just some of the strategies that have been employed in the pursuit of value. Currently, the National Institute for Care and Health Excellence (NICE) provides recommendations on the use of new medicines and medical technologies in order to give ‘all NHS patients access to the most clinically and cost-effective treatments available’.
In spring 2013, the UK government launched a consultation process seeking comments on the methods used by NICE when assessing the value of money of new drugs. In particular, views were sought on the ways in which the body should make recommendations on the use of new health technologies, which should take account of its new terms of reference for ‘value-based assessment’. With this new approach, the ‘value of a new treatment is considered net of the value of what is displaced’. In other words, the government equates value for money with the economist’s notion of ‘opportunity cost’. If the benefits of a new technology are greater than the benefits that could have been secured if the money had been spent elsewhere, then the treatment is cost-effective (and vice versa). As the government has agreed to maintain NICE’s baseline cost-effectiveness threshold of between £20,000 and £30,000 per Quality Adjusted Life Year (QALY), value-based assessment is not an attempt to secure the cheapest possible drugs, but to ensure that the government promotes efficient prescribing within the existing cost per QALY framework.
NICE has no current plans to drop its cost per QALY approach, regardless of any limitations
Central to the consultation process is the question of the adequacy of using the QALY alone to measure the benefits produced by new health technologies. As the name suggests, QALYs try to capture health benefits in terms of quality of life (that is, a patient’s health status), and this is then adjusted for the length of time in that state. For instance, one year in full health equals 1 QALY. When assessing value for money, the way in which ‘health’ is measured is vital. For instance, the popular EQ-5D health outcome measurement focuses on quality of life in terms of the five dimensions of mobility, self-care, usual activities, pain/discomfort and anxiety/depression. If a new product offers benefits not captured by these domains, then they will not enter the cost-effectiveness calculation. It is because of concerns that the NICE is currently failing to capture all relevant benefits in its appraisal process that the current consultation has been launched.
Measuring benefits
The primary aim of the current consultation is to amend the Guide to Methods of Technology Appraisal 2013, which is used by the independent committees of experts who appraise medicines and other technologies on behalf of NICE, for use in the NHS. Currently, the body’s Appraisal Committees consider the QALY gains offered by all new treatments to have the same value, regardless of the nature of the disease or condition. The Appraisal Committees are able to take account of particular features of both the illness and the treatment, or to exercise judgement on whether the health gains captured have been properly captured by the current appraisal method. Despite these safeguards, the UK Department of Health has asked NICE to take the concept of ‘burden of illness’ and ‘wider societal impact’ into account more explicitly and systematically during the appraisal process.
According to NICE’s consultation document, burden of illness is the loss (or shortfall) in quality and length of life, measured in QALYs, which occurs as a consequence of having a disease or condition, when compared with the QALYs that people would expect to have over the rest of their lives without the condition. The shortfall in QALYs will be considered relative to what people could expect without the condition at the time of treatment and is therefore called the ‘proportional QALY shortfall’.
NICE also intends to consider the wider impact of a disease a person’s ability to be part of society, which the organisation term wider societal impact. In technical terms, NICE guidance defines this as the loss (or shortfall) in a person’s capacity to engage with society as a result of living with the disease or condition, compared with his or her capacity to engage with society without the condition. The body proposes to calculate wider societal impact by calculating the ‘absolute shortfall’ in QALYs, which is measured by subtracting the total QALYs expected as a consequence of having the condition from the total QALYs expected for people with the same age and gender distribution without the condition.
Value elements
After consultation, the new ‘value elements’ of burden of illness and wider societal impact will be added to the factors that Appraisal Committees may take into account when considering a new technology. The consultation process is designed to determine how, in technical terms, these new value elements should be applied in practice. In particular, NICE is interested in views on ways in which QALY loss or shortfall can be calculated, such as the absolute shortfall mentioned previously.
Pharma should now be considering burden of illness and wider societal impact in its NICE submissions
Longer durations of disease are more significant than shorter durations (for example, a chronic condition compared with a treatable acute illness). Diseases which cause very premature death are more significant than those in which death is delayed (such as childhood cancer compared with chronic heart failure). Alternatively, ‘proportional shortfall’ measures total QALYs for a person with a disease or condition relative to those expected for a person of the same age and gender without the condition. This approach recognises the position of those patients who stand to lose the greatest proportion of their remaining health expectancy (such as diseases where a person is facing imminent death).
Weighing the benefits
Subject to the outcome of consultation, Appraisal Committees will be asked to adopt a more favourable approach when considering treatments for people whose conditions have a progressively higher burden of illness and wider societal impact. Therefore, new interventions with a cost higher than the current £20,000 per QALY baseline would be acceptable, under given circumstances. However, a maximum weight of 2.5 will be applied, so that all factors (including burden of illness and societal impact) cannot increase the benefits side of the cost-effectiveness calculations than more than this amount. Given the planned changes, the consultation document asked the following questions:
- Does proportional QALY shortfall appropriately reflect burden of illness?
- Does ‘absolute’ QALY shortfall provide a reasonable proxy for wider societal impact?
- Does a maximum weight of 2.5 in circumstances represent a reasonable maximum?
- Should NICE allocate specific ‘weights’ to the QALY and how?
- Will the new approach improve the judgements made by Appraisal Committees?
- What are the risk and how may they be reduced?
As this suggests, the consultation process is primarily concerned with technical issues, so that the new appraisal framework may be successful introduced. Given the technical nature of these issues, clarification is required before action may be taken. For instance, Adrian Towse and Paul Barnsley of the Office of Health Economics reported that there has been some confusion around the concepts of proportional ‘absolute’ shortfalls. In particular, there has been a lack of clarity regarding the starting point for the concept of proportional shortfall (that is, should it start at the current point in a person’s life or be measured from birth?). Although seemingly philosophical, trying to find answers to difficult technical questions such are these are the reason the consultation process was begun.
The UK pharma position
The ABPI was quick to reply to the consultation process. The core of its response was a focus on how NICE determines the value of new products. To date, the Institute’s methods have been very limited in its measurement of the monetary worth of pharmaceuticals. In response, the ABPI suggests that NICE needs a new appraisal process.
This should:
- Be fit-for-purpose and responsive to the new medicines that are being developed by the pharmaceutical industry
- Embrace the opportunity to progress a more ambitious set of proposals for VBA, including explicit opportunities for NICE to adopt a more ‘pro-innovation’ perspective
- Ensure patients are not worse off than they were before, particularly in relation to the evaluation of products used at the end of life
- Provide a clear framework to Appraisal Committees, including an explicit decision making framework document to provide a greater degree of predictability and ensure that all relevant elements of value are considered.
Given its concerns, the ABPI requested further engagement with the pharmaceutical industry and other key stakeholders before the methods for Value Based Assessment are finalised.
This much we can say
The consultation period has currently ended, and the results are currently being analysed. Before they are reported, three conclusions may be safely drawn. First, NICE has no current plans to drop its cost per QALY approach to measuring cost-effectiveness, regardless of any limitations. Next, the industry has made some headway in terms of ensuring that new products that are beneficial in terms not captured by the QALY methodology are analysed properly. Three, the approach outlined in the consultation document will be implemented, with any changes being technical and not substantial policy alterations. Therefore, we can conclude that burden of illness and wider societal impact are two important factors that pharma should now be considering in its NICE submissions. However, the ABPI’s stance suggests that the issue of NICE appraisal methods have not gone away. Therefore, we may predict that further challenges will be made to the methods of health technology appraisal used by the body. Consequently, in the future we may see the appraisal methods being amended to fit the needs of the industry rather than the industry being straight jacketed into the limited NICE approach.