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Drug assessments will take into account burden of illness and societal impact under NICE plans

The long-awaited consultation by the National Institute for Health and Care Excellence on how it will incorporate the Government’s plan for value-based assessment (VBA) of new medicines for the NHS is finally published today (27 March 2014).

NICE is proposing to change its technology appraisal systems to add two new factors (known as modifiers) to its drug assessments: the burden of illness and wider societal impact (see Panel).

However, the threshold it currently applies, known as an incremental cost effectiveness ratio (ICER), which addresses quality-adjusted life years (QALYs) gained, will not change and will still range from £20,000 per QALY up to £50,000.

NICE’s 28-page consultation paper says: “We need to place an upper limit on acceptability of an ICER, because valuable care elsewhere in the NHS might be displaced without at least an equally valuable gain being achieved. This holds true even when taking into account burden of illness and wider societal impact.”

Paul Catchpole, the Association of the British Pharmaceutical Industry’s director for value and access, told PJ Online that he was disappointed that NICE has applied an upper £50,000 ICER limit, saying it is going to be challenging, because one of the things “we need to achieve in terms of the consultation is how VBA can be used to approve innovative medicines”.

The concept of “wider societal impact” has caused some concern that NICE may discriminate against some patient groups, especially the elderly, but NICE emphasises the position it stated in January board paper: “We want to make it clear in this consultation that our appraisal committees will not use the age of people with particular conditions as the basis for deciding whether or not the NHS should offer new treatments.”

It adds: “Regardless of the way the proposals in this paper are incorporated into the appraisal process, we will ensure that age or any of the other protected characteristic[s] will not tip the balance of a recommendation against the use of a treatment.”

A spokesman for NICE told PJ Online: “Age can’t be the deciding factor for decisions by the appraisal committee.”

Katherine Murphy, chief executive of the Patients Association, told PJ Online: “We are encouraged to learn that the NICE appraisal committees will not use the age of people with particular conditions to make decisions as to whether a new treatment is recommended or not.”

The severity of a disease and its impact on a patient’s quality of life should form the basis of the assessment criteria for potential new health technologies, she added. “Patients are people, and human life cannot be assessed in terms of cost and benefit.”

Industry concerns

The exercise was originally branded as value-based pricing but changed its name to value-based assessment after the Government concluded, in November 2013, its pricing negotiations with the pharmaceutical industry on branded medicines, known as the Pharmaceutical Price Regulation Scheme. The PPRS stated that NICE would not negotiate or be involved in setting drug prices.

“Moving away from price setting proposals (value-based pricing) to value-based assessment signals a further step-change towards the use of a broader definition of value for appraising new medicines by NICE in England and Wales,” said Mr Catchpole.

Using proportional and absolute QALY loss values: difficult concepts?

NICE has proposed that “proportional” and “absolute” QALY loss values will be calculated as part of a technology appraisal and that they will be used as the basis for assessing burden of illness and wider societal impact, respectively.

The proposals will also mean that NICE’s current approach, where its committees consider life extending treatments (the end-of-life treatments protocol), will be replaced by the “burden of illness” modifier.

The ABPI said it was concerned about the potential impact of incorporating NICE’s existing “end-of-life criteria” into the new system. “We need to ensure that this does not lead to fewer medicines for patients at the end of their lives being approved. There is currently an issue with NICE approving too few new cancer medicines, which the new agreement must address,” said Mr Catchpole.

Asked who might be the winners and losers in the new appraisal system, Mr Catchpole told PJ Online that it was too early to say: “It comes down to how the additional criteria are applied in practice. [The consultation] was delayed so it could be explained in terms understood by the public.”

Could “proportional and absolute QALYs” be difficult concepts to explain to the public? He told PJ Online that “these concepts are extensions of economic analysis so [they will be] difficult for an average person to understand. NICE has tried to make it as clear as possible.”

Sweden looking into it, too

NICE will not be the first health technology body in Europe to apply societal cost and benefits into its assessments — Sweden does it already. A spokeswoman for NICE told PJ Online: “We are aware that Sweden is looking into the possibility of capturing societal benefits of technologies, but we have not explored what other countries do or intend to do in detail.”

The three-month consultation, which closes on 20 June 2014, will update NICE’s “guide to methods of technology appraisal”.

Analysis: concept of “flexible” value-based assessment

NICE is proposing that value-based assessment look at two additional features for assessing the cost per quality-adjusted life year (QALY) gained for a treatment: burden of disease and wider societal benefit.

Omar Ali, a formulary development pharmacist for Surrey and Sussex Healthcare NHS Trust and external adviser to NICE, told PJ Online: “This VBA represents a more flexible approach. It allows new medicines to be given a higher threshold (and hence a higher price) for those conditions where individuals suffer a significant loss of quality of life and significant loss of engagement with wider society. By having a flexible, elastic cost per QALY, certain drugs which would have been given a NICE negative will now be given a NICE positive for certain conditions.”

He explained the new system, adding that there are now two ways that a medicine can gain a higher price:

  1. The basic cost/QALY threshold still applies at £20,000/QALY
  2. Then an additional leeway will be given for burden of illness (ie, increase the cost/QALY)
  3. Then an additional leeway will be given for wider societal benefit (ie, increase the cost/QALY)

NICE has decided this can go up to 2.5 times the threshold (up to £50,000 per QALY), which is reflective of current practice when flexibility has been applied in exceptional circumstances, ie, end-of-life considerations.

Mr Ali said: “This effectively means that a drug can gain a higher price if it contributes towards burden as well as societal benefit. Those drugs that don’t contribute will be left to fit through the £20,000 cost per QALY. This may mean that either NICE will say ‘no’ or the [pharmaceutical] company will have to agree a discount or a [patient] access scheme to bring the cost per QALY down.”

Burden of illness will look at loss or shortfall in quality of life that occurs as a result of having a condition when compared with someone who does not have the condition. So this will factor in two aspects: how poor is quality of life (hence magnitude of loss of QALY); and how long does the condition present for over the rest of a patient’s life.

This QALY shortfall will replace the end-of-life consideration that NICE used to give to cancer drugs used at the end of life. “We won’t have this anymore. Instead the burden equation will come into effect,” explained Mr Ali.

VBA will also address societal impact, which focuses on loss of QALY from the individual’s perspective rather than society’s perspective. “It is clear that neither age nor gender will in itself be a basis for whether or not the NHS should offer new treatments, although it is inescapable that age has an impact on what we draw on resource and what we contribute as a resource to society, however broad the remit of the evaluation,” he says.

Why are high NHS list prices important to companies?

The UK and Germany are used for international price referencing by countries in the EU and globally. For this reason pharmaceutical companies look for the highest prices in these countries, says Mr Ali. For instance, 5 per cent of a company’s revenue may come from the UK market, but over 40 to 50 per cent of its pricing negotiations around the globe will be affected by the list price it achieves in the UK.

“So if the UK forces a low list price, it will lose significant revenue globally (other countries will use the UK as a reference price). The beauty of VBA is it will allow companies to have a high list price (but the NHS doesn’t necessarily have to pay it). With patient access schemes and risk sharing [schemes], companies can negotiate commercially sensitive deals with the Department of Health to gain acceptance by NICE but still have a high list price,” said Mr Ali. 

Citation: The Pharmaceutical Journal DOI: 10.1211/PJ.2014.11136568

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