Pricing the value of life

In the UK our National Health Service has limits on its budgets. How do we decide which treatments we can afford to offer?
27 May 2014

Interview with 

Carole Longson, National Institute for Health and Care Excellence


Another type of coin


Chocolate MoneyHannah - First up, in the UK our National Health service, as we hear in the newspaper all the time, has limits on its budgets.  And that means we have to decide which drugs we can afford to fund and which are out of our price range.

So how do we decide which drugs we have access to on the NHS?

NICE or the National Institute for Health and Care Excellence, are the body that makes these recommendations after balancing the number of years of life that would be added due to a medicine and the quality of that added life with the cost of the medicine to come up with a figure known as a QALY.

Kate Lamble asked the Director of their Centre for Health Technology Evaluation, Carole Longson how they come to a decision.

Carole - We could talk about this in a very technical way. We use health economics and cost-effectiveness analysis. So, they're the technical terms but in essence, at the heart of it is, trying to understand the added benefit that a medicine or other technology might bring and compare that to the added costs that we have to incur when we're using that. that's called cost-effectiveness analysis. But it's very much like looking at a budget and thinking about the best way to spend the money that they have available to deliver the best effects.

Kate - So, when you have to know how effective the drug is, who gives you that information?

Carole - Increasingly, we're taking a look at medicines very early and as a consequence of that, we rely quiet heavily on the companies that produce those medicines to provide the evidence to us. And added to that, we ask patient groups, we ask health professionals to give us information and an understanding and experience of what it's like to both live with that condition and also, manage that condition in the healthcare service. It's all that information that comes into our decision-making which is done by an independent committee. It's not NICE staff that sit on that committee. An independent committee that takes a look at all of that evidence and information in the round when judging whether or not a new medicine is in fact, good value for money.

Kate - Some people like for example the science journalist Ben Goldacre argue that there's a bias in the evidence that some pharmaceutical companies produce towards positive results and negative results that show it's not that effective, aren't necessarily brought up. Do you think that that can in any way influence NICE's decision?

Carole - So, what Ben Goldacre is talking about there is what the researcher's term, publication bias, it's actually a very standard common phenomenon in science overall. So, it's not just about the companies. In that researchers tend to want to tell people about their positive results. When the results are not so positive, tend not to want to publish. And you do have to be very careful that you're looking at all of the data. We would use both published and non-published data, but you're right. it is a very, very important aspect of all science to be honest that you are careful about the data that you are looking at and you make inferences about what data may or may not be available at the time that you're looking and making the decision.

Kate - So, you take into account evidence published and unpublished, but also these personal accounts of what it's like living with a disease for example. How do you make that idea of this cost-benefit analysis? Is any amount too much?

Carole - This gets into the area of, again, an economic term called 'opportunity cost'. You've got a pot of money and if you use it to buy something, you can't use it to buy something else. You can only spend the money once. And through some analysis, we can understand what it is, the health service in particular is using their budget for and also, how much health they're generating for that spend. We use that as the basis of estimating value for money. That opportunity cost translates into something called a cost per quality adjusted life year so another technical term. And at a particular level of a quality adjusted life year which is 20,000 pounds per quality adjusted life year, we know that the NHS gets good value for money at that level.

Kate - And so, this 20,000-pound figure, when we're talking about a quality adjusted life year, are we saying that if I were sick, that would be a good year of my life.

Carole - What we're saying is that a new technology can bring improved quality of life. So, how well you're able to undertake activities of daily living for example or extend your life, or hopefully, both of those things. So again, it's not about the cost to gain that particular increment. It's about how that increment stacks up against how much you have to pay to gain it. That's really at the heart of what we do. It's not the whole thing that we take into account because all of those patient accounts and thinking about the efficiency of the healthcare system also feeds into the judgement which in the end, the committee has to make it. So, it's not an algorithm. It's not a flowchart for how to do this. It's a judgement.

Kate - So, NICE sort of acts as the gateway to the NHS which is quite a big market for drugs I suppose. How much is their - you're the doorman sort of guiding the way and they have to be effective and how much is their some kind of negotiation about the price or can they come back to you if something is rejected?

Carole - Now, that's a really interesting question. Yes, we probably do see our role, both as - I suppose as gatekeepers and enablers. So, we do have to be very careful that the NHS in using new medicines is spending that money as wisely as they can. But we have to do that in a way that enables these promising new innovations to be used in our healthcare system. Recently, it's been introduced a concept of patient access schemes. This provide a mechanism for companies to reflect and come back to us with a new proposal and they have provided an extremely useful mechanism for us to act in that enabling role with companies.

Kate - When you reject a drug, there was a recent 90,000-pound breast cancer drug that was rejected and it sort of hit the headlines because there are a lot of patient groups who obviously feel like they need the drug and they get upset that it wouldn't be made available to them. Did you at NICE understand their position and why they're so desperate? Does it become very difficult for the people on the panels to make those decisions?

Carole - The people on those panels really do have probably one of the hardest jobs in public life. But what they really do have to do is to try to balance those needs of the individual with the needs of everybody who uses the NHS and to make sure that their judgments reflect to that balance as best they can.


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