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NICE: 'The Jewel in the NHS Crown'

By: Ben Gowland @ccginsider
Published: Friday, August 22, 2014 - 12:21 GMT Jump to Comments

NICE has to make difficult decisions because there is not enough money in the NHS, and it plays a critical role in making sure we make the most of the money we have.

NICE has been in the headlines recently with two high profile decisions to reject NHS funding for end of life cancer treatments, and has been subject to articles like this one in the Telegraph entitled, ‘Did NICE listen to cancer patients when they rejected abiraterone and kadycla’. 

So what is NICE? Set up as the National Institute for Clinical Excellence in 1999, it became the National Institute for Health and Care Excellence in 2013 when it took on new responsibilities for social care. Originally set up to provide more consistency of approach across the NHS, its most notable function has become the explicit determination of cost-benefit boundaries for new treatments and technologies.

As a non-departmental government body it aims to make decisions that are independent of government and lobbying power, and to base decisions fully on clinical and cost effectiveness.  Easy to say but hard to do, so how does it determine cost effectiveness?

Before we get into that, let’s be clear that there is not enough money in the NHS to meet the total demand for health care. This is not NICE’s fault. It is a function of the cash constrained environment that the NHS operates in. Decisions have to be made about what is funded and what is not. What NICE does is assess the cost–effectiveness of new treatments by analysing the cost and benefit of the proposed treatment relative to the next best treatment that is currently in use. 

NICE does this by using what is known as the quality-adjusted life year (QALY) to quantify the benefits of a treatment, and it uses an indicative maximum threshold of £30,000 per QALY – i.e. any treatment should offer this level of value above the next best alternative (which may be no treatment) in order to be approved.

Clearly this is not without controversy, and there are those who advocate strongly for a higher cost per QALY threshold, while at the same time there are many CCGs who struggle to afford to implement the new treatments that are approved by NICE.  But remember the underlying problem is not NICE; it is lack of available resources.

And there are always two sides to the equation. While on the one side there is the effectiveness of the treatment, on the other side there is the cost that the pharmaceutical firms are charging.  The cost per QALY calculation is always a function of the price charged. 

The arguments here are that the price has to reflect the cost of many years of research and development incurred by the pharmaceutical firms, not just the costs of production. I, however, am still smarting from the rise in the costs of epilepsy drugs two years ago. In this case, a drug was renamed from ‘Epanutin’ to ‘Phenytoin Sodium Flynn Hard Capsules’. Everything else, including the capsules themselves, remained identical, but the price was increased by an eye-watering amount. The cost to my CCG alone was (and still is) hundreds of thousands of pounds every year.  The cost to the NHS is over £40m per year. You can read about it here, in an article which includes a quote from a doctor describing this switch as, ‘a quite scandalous abuse of a monopoly position’. 

I remember speaking to colleagues from the US about the NHS while the Obama-care reforms were in development, and they described NICE as the ‘jewel in the NHS crown’ - the part of the NHS that they were most envious of. Without NICE, who can stand against the pharma companies charging whatever they want?

In value for money terms, the NHS consistently does well in international comparisons (see for example the Commonwealth Fund’s International Health Survey). NICE plays its role in that.  Ultimately we can pretend there is enough money in the NHS to meet the totality of the healthcare requirements, or we can accept the reality that there is not and be thankful that we have NICE playing the role it does to help maximise the value of funding that is available.

The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the official policy or position of The Information Daily, its parent company or any associated businesses.

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