Different Perspectives on Value Based Pricing in the UK

Thoughts on the proposed UK Value Based Pricing System

Give me another chance! The NICE technology appeals process is updated

By Sian Claire Owen

The UK National Institute for Health and Clinical Excellence (NICE) has released its updated guide to their technology appraisal appeals process. Interested parties have until 22 March 2010 to comment on this document before the new version is set in stone. At 30 pages, it is dry material indeed, but important nonetheless.

Established in 1999, NICE was created to provide guidance on the use of health technologies within the UK National Health Service (NHS). For a new drug or technology to be available on the NHS, it must be approved by NICE. Technologies are assessed on clinical efficacy and cost-effectiveness.

Producing clinical guidance is a laborious process, taking up to 24 months (11 to 13 months if guidance is urgently needed), and the chance to appeal the Final Appraisal Decision (FAD) must be squeezed into this time frame. And ‘squeeze’ is the operative word – appellants have only 15 working days to appeal an FAD from the day it is published in any medium, including on the NICE website.

There is no doubt as to the importance of the appeals process. Barbara McLaughlan is the Campaigns Manager for the Royal National Institute for the Blind (RNIB) and Chair of Patients Involved in NICE (PIN), a group of patient organisations involved in NICE decision-taking. As she explains: “Having a NICE FAD appeals process is essential because the health economics that support NICE decision-making are not an exact science.”

“Decisions can give grounds to appeal and it is not in the interest of any stakeholders to forgo that option.” However, she adds that: “Any controversies about the assumptions used in the decision-making process should be ironed out during the ACD and FAD consultation process. Having to go to appeal is not in the interest of anybody, least the patient who is hoping to gain access to new treatments.”

The past year has seen some fundamental changes in the technology appraisal process to oil the wheels and make the system more efficient. Updated guides to multiple and single technology appraisal processes, and the Patient Access and Flexible Pricing Schemes were introduced, all of which have impacted the appraisal process – hence, the revised appeals manual.

Alice Law, a spokesperson for NICE says: “The aim of these changes is to ensure that the grounds of appeal are consistent with those outlined in the Secretary of State’s Directions. But the revised manual also provides greater clarification on the appeal process.”

This clarification gives us more information on the modus operandi of NICE appeals, as well as details on exactly what is acceptable and what is not. There also has been some ‘textual pruning’ to eliminate repetition between sections. This is undoubtedly useful information, saving first-time appellants precious time, and preventing them from becoming tangled in a bureaucratic quagmire.

Centred at the core of the FAD appeal process are three grounds, and any appeal is strictly limited to the scope of these grounds:

Ground One: The institute has failed to act fairly and in accordance with the appraisal procedures set out in the Institute’s Guide to the Technology Appraisal Process

Ground Two: The Institute has prepared guidance, which is perverse in the light of evidence submitted.

Ground three: The Institute has exceeded its powers.

These remain largely unchanged, with one minor revision in Ground Two, which now states:

Ground Two: The Institute has formulated guidance, which cannot reasonably be justified in the light of evidence submitted.

“This amendment was not intended to change the scope of appeals,” says Law. “We felt that ‘cannot reasonably be justified’ means the same as ‘perverse’ but was easier to understand,” which is in line with their aim of keeping it clear.

McLaughlin was involved in the NICE FAD appeals process brought forward by Derbyshire Primary Care Trust (PCT) on the decision not to approve Macugen (used in the treatment of macular degeneration) for use on the NHS. She agrees that greater clarification is needed. “Personally I would have expected one or two of the appeal grounds put forward by Derbyshire PCT and the manufacturer of Macugen to succeed. It was surprising to me that none of them did, and clarification of the process may have helped.”

The proposed appeals process also irons out any discrepancies in the time it takes to consider appeals – the final appeal decision should be considered within 10 working days of receipt, and the final guidance published on the NICE website 15 days after the Guidance Executive meeting.  New updates recommend that the Department of Health apply funding direction as soon as the NICE guidance is published, in any medium, so consistency is key.

Given her experience with this process, McLaughlin adds that if she personally could introduce further changes to the guidelines, she would allow the introduction of new evidence and arguments in cases where the appeals process becomes lengthy. “Where appraisals stretch to a year and more there may well be occasions where new evidence becomes available that has a bearing on the decision about the safety, efficacy and cost-effectiveness of a new treatment,” she says. “In these cases it should be possible for the appeals panel to refer a decision back to the Appraisal Committee.”

So will McLaughlin and colleagues be commenting on these updated guidelines? “We are in the process of putting together a response,” she says. “Our draft will then be circulated among members of PIN, and then we will submit a joint response to strengthen the patient voice in these discussions.”

All in all, these alterations are designed purely to make the appeals process quicker and slicker. When asked who would benefit most from these changes, Law says: “The appeals manual is targeted towards consultees involved in technology appraisals who would like to lodge an appeal.” In other words everyone’s a contender, time willing.

• The updated guide to the technology appraisal appeals process is available on the NICE website [Link: http://www.nice.org.uk/]
• Interested parties have until 22 March 2010 to comment on the revised appeals manual.

The updated guide clarifies and standardizes the acceptable grounds for appeal and provides a clearer picture of the appeal process.

A UK perspective: how can the US have reform without rational debate?

By Sian Claire Owen

Historically, the issue of US healthcare reform has always been a political hot potato. And in the recent rounds, as the argument intensifies, the notion of ‘rational debate’ seems to have been thrown out of the window and replaced with scare tactics, in the mainstream media at least.

In particular, the UK healthcare system (the National Health Service, or NHS) recently came under heavy criticism by the anti-reform lobby.

In the US a series of high-profile, anti-reform TV adverts targeted the NHS to highlight the ‘horrors’ of socialised medicine. These adverts paint the NHS as an archaic, almost medieval structure plagued with ‘death panels’, endless waiting lists and the refusal of vital medicines, with patient choice denied in the face of stifling Government bureaucracy.

Although the NHS is far from perfect, these adverts – produced by Creative Response Concepts, the same PR firm responsible for the ‘Swiftboat Veterans for Truth’ campaign that sunk John Kerry’s presidential bid in 2004 – hardly ring true.

Fittingly, Senator John Kerry recently called for these lies to be exposed, and last week an open letter addressed to Senator Kerry and signed by some of the leading NHS healthcare professionals was published in the British Medical Journal in answer to that call.

Dr Jacky Davis, co-chair of the NHS Consultants Association is one of the co-authors. She explains that she was moved to write the letter not only to refute the lies, but also because she believes that the American public deserve an honest debate focusing on the real issues, rather than hyperbole drummed up by opposition factions.

Davis, whose husband is American, says: “The US healthcare system can be described as ‘islands of excellence in a sea of misery’. For those with appropriate coverage the care is excellent, but for those with no insurance or who are denied care because of pre-existing conditions, their situation is dire.”

“Obama needs to be allowed to take this issue on,” she adds. “We feel strongly that the US needs a fair debate.”

Dragging the NHS into the equation could muddy the already murky waters even further. As Davis says: “We can’t tell the Americans how to run their health services, but they do deserve a good debate. Currently this strategy [of using scare tactics about the NHS] is playing into people’s lack of knowledge. It’s quite disgraceful.”

So what will this letter, signed by more than 100 leading NHS professionals, achieve? As Davis says: “We haven’t had a political response yet. I don’t know whether they will acknowledge it.” And true to form representatives of Senator Kerry were unavailable for comment.

“But the take home message is that the NHS delivers care to everybody for half the money they spend in the US,” she adds. “In the US there’s a huge vested interest behind the campaign. You can see how much money is made in profits.”

Of note, NHS Consultants Association is, according to its web site, an organisation formed in 1976, “by consultants with a strong commitment to the NHS and its founding principles… [it] believes in planning and cooperation rather than market forces and commercial competition for healthcare.” Dr Davis is also a member of the BMA Council and is co-founder of the Keep Our NHS Public campaign group.

‘You say HTA, I say CER’: international perspectives on evidence-based health policy

Terms such as ‘evidence-based health policy’, ‘comparative effectiveness research’ (CER) and ‘health technology assessment’ (HTA) are no longer restricted to discussions among health economists – they have become household topics.

But are people defining them differently? Or are we all unwittingly speaking the same language? After all, George Bernard Shaw once described America and England as two countries separated by a common language. For health economists (or any other interested persons) seeking to understand healthcare systems outside their own country, there are several, recently available resources:

The Milbank Quarterly recently published an article (Chalkidou K et al. 2009;87(2)) analysing CER and evidence-based health policy in four countries: Britain, France, Australia and Germany. The authors, who are employed by each of the four countries’ HTA/CER entities, as well as the Center for Medical Technology Policy in the USA, interviewed key stakeholders in CER entities in each country, as well as reviewed the agencies’ web sites and legal framework documents. This article was designed to provide a ‘lessons learned’ summary for the USA as it works to develop its own CER, from other Western countries that use HTA/CER in their decision making.

Using 10 core attributes that capture the main aspects of the four HTA/CER agencies, Chalkidou et al concluded that while each country’s HTA/CER entity has developed HTA/CER unique to its own health system, each has adopted a core set of desirable procedural principles to ensure that the HTA/CER is relevant to each country’s healthcare system.

Overall, some of the key lessons learned are:

• HTA/CER should be a demand-driven entity (ie, relevant to its stakeholders and not merely an academic pursuit);
• Negative press coverage and intense controversy are par for the course (and indeed indicate that the HTA/CER entity is fulfilling its role); and
• The three ingredients for success are strong political endorsement, early engagement of stakeholders, and commitment to evidence-based practices to gain professional approval.

For a more academic discussion of differences in HTA, check out Claude Le Pen’s editorial in the European Journal of Health Economics (2009;10;121-123), in which he compares the philosophical differences in social contracts underlying Britain’s NHS and France’s Sécurité Sociale.

An interview with Dr Naoki Ikegami in Expert Review of Pharmacoeconomics & Outcomes Research (2009;9(3):201-204) provides some insights into the Japanese healthcare system, especially in comparison with the UK’s NHS and NICE.  Dr Ikegami is Professor and Chair of the Department of Health Policy and Management at Keio University School of Medicine. However, he offers international expertise to his perspective as he received a Master of Arts degree in health services studies with Distinction from Leeds University and was a visiting professor at the University of Pennsvlania’s Wharton School of Business and Medical School.

Shishkin and Vlassov discuss the need for modernisation of Russia’s healthcare system in the British Medical Journal (BMJ 2009;338:b2132). They describe the recent reforms as Russia transitioned to a market economy and the proposed reforms through 2020.

Finally, the ISPOR (International Society for Pharmacoeconomics and Outcome Research) website provides a detailed description of many countries’ health care systems (the Global Health Care Systems Road Map), including processes for pricing and reimbursement, and health technology assessment (HTA, referred to as comparative effectiveness research [CER] in the USA).

The website also provides access to papers from a special issue of Value in Health — Health Technology Assessment in Evidence-Based Health Care Reimbursement Decisions Around the World: Lessons Learned (June 2009;12(s2):S1 – S53).

Greenflint, the sister company to Rx Communications Ltd, understands the challenge faced by health economists in helping people to understand what comparative effectiveness research and evidence-based medicine really are – in language that people who are not directly involved with these disciplines can readily understand.

Our booklet, Comparative Effectiveness and Evidence-based Medicine, doesn’t come from a health policy approach, however. We take a more practical standpoint, by helping the reader understand how and when these methods are applied, and their uses, limitations and applications to healthcare provision. In addition, we’ve designed the content so that you can add your own company examples and perspectives into the text to make it relevant to your own audience.

If you would like to see a copy of this booklet, please go to our website or contact either Steve Handley or Ruth Whittington at Rx Communications Ltd for more information.

Is it time for NICE to revise its threshold?

By Mary Gabb (mary.gabb@rxcomms.com)

“There just isn’t, and never will be, enough money to provide every possible service” – a reminder to participants of the NICE Citizens Council (November 27–29, 2008) as they were asked to consider in what circumstances should NICE recommend interventions where the cost per QALY (quality-adjusted life-year) is above the threshold range of £20–30,000. The Council’s conclusions drew criticism from Alan Maynard, OBE, a professor of health economics.

Professor Peter Littlejohns, clinical and public health director of NICE, offered the reminder as part of the meeting’s introduction. As he noted, NICE was created by the Government in the United Kingdom (UK) in 1999, but was left to develop its own criteria for recommending technologies to the National Health Service (NHS) as well as its own threshold. The £20–30,000 range was set in 2004 and, according to the Council’s report, is divided as follows: “ £20,000 per QALY as the sum below which an effective treatment would normally be accepted; and £30,000 per QALY as the sum above which very good reasons would be needed to gain acceptance. The acceptance of interventions costing between these two figures would be subject to debate.”

During the 3-day meeting, participants considered the myriad factors affecting the decision of whether to maintain the threshold and to recommend a technology, including the certainty of the evidence under consideration, disease severity, avoiding immediate loss of life, averting a public health threat, fostering potentially valuable medical research, treatment of rare diseases, to address need and/or equity, unmet clinical need, the existence of other therapies, whether the technology is a bridge to future therapies, ease of obtaining patient compliance, and whether a technology creates extra costs or benefits outside the health arena, to carers or the wider community (e.g., a reduction in crime due to drug misuse). Overall, the committee voted on 15 circumstances that might prompt a departure from the threshold; the results are shown below.

*An initial vote revealed that two of the 29 Council members felt there were no circumstances in which NICE should depart from the established threshold. These two members took no further part in the voting.

Also according to the report, NICE authorised medicines that lie above the £30,000 threshold on “only four or five occasions”. Deviations from the threshold have received criticism from Prof Maynard, Professor of Health Economics and Director of the York Health Policy Group in the Department of Health Sciences at the University of York, UK (He also noted that he was “involved in establishing NICE” in 1997). Prof Maynard argues that “this decision to ignore the efficiency rule and apply an arbitrary equity value judgment is inherently unfair for those not in the last two years of life.” This unfairness also applies to higher and more generous thresholds for those with rarer conditions. Moreover, he notes the problem of definition – “What is end-of-life? What is a rare disease? Both of these categories are rather ambiguous.”

Despite inflation and increased NHS funding, the NICE threshold has never been changed, according to report. Moreover, not every technology is appraised by NICE and “much decision-making in the NHS, including which treatments to pay for, is still local.” Prof Maynard agrees: “Essentially, we’ve got two rationing mechanisms.”

The Council report will be presented to the NICE Board in May 2009. It is available on-line and is open for comments.

Tough choices about expensive drugs

By Mary Gabb (mary.gabb@rxcomms.com)

The UK ‘s National Institute for Health and Clinical Excellence (NICE) has recently ruled that four drugs used to treat advanced kidney cancer are not effective enough to warrant their coverage by the National Health Service (NHS). NICE estimated that the drugs cost between £71,500 and £171,300 per QALY, far exceeding the typical NICE cut-off of £30,000 per QALY.

This isn’t the first controversial decision by NICE. The BMJ reports on a survey of England ‘s primary care trusts (with which patients can lodge an ‘exceptional request’ for drugs to be funded that are not approved by NICE), showing large differences in the policies and processes for approving such requests or appeals.

Moreover, the impact of NICE decisions does not remain solely in the UK . The US has been watching and studying NICE, as part of an effort to rein in the more than US$2 trillion (16% of US GDP) it spends on healthcare each year. A bill was introduced into the US Senate to establish the Health Care Comparative Effectiveness Research Institute, which would review evidence and conduct studies to determine which drugs and devices provide the best clinical outcomes. Annual funding for the institute after 5 years is projected to be US$300 million.

Another strategy used by the US to manage such high-cost medications is to incorporate co-insurance into the tiered drug co-payment system. In the tiered system, drugs are prioritised to tiers 1, 2, or 3 based on the payers’ preference for the drugs, and patients are required to pay a fixed fee (a ‘co-pay’ based on the tier, see below).

Co-insurance is sometimes referred to as tier 4 drugs, but instead of a fixed amount for co-payment, the consumer is charged a percentage of the overall drug cost (usually 20% to 33%). Co-insurance is applied to drugs with very high price tags, such as the latest biologic drugs developed for cancer and other chronic illnesses that require long-term therapy. For a drug that costs $100,000 per year, the tier 4 co-payment (or co-insurance cost) could be more than $30,000 for the patient.

Sir Michael Rawlins, who (in an interview with The Observer) vehemently criticised the pharmaceutical industry for ‘perverse incentives’ to increase the price of drugs, also pointed out that “we have a finite amount of money for healthcare, and if you spend money one way, you can’t spend it in another”. Nonetheless, the cost-effectiveness criteria used by NICE may be under review next year.

Another proposal under consideration by the NHS is to base drug pricing on the value a drug offers, not on the cost to develop it. Currently, the UK Department of Health negotiates with the Association of the British Pharmaceutical Industry to set price controls and profit caps for pharmaceutical manufacturers.

With rumours of co-pays being instituted in the NHS and a US presidential election in full swing (see the August 21 edition of the New England Journal of Medicine for a review of each candidate’s health care plan) , health economists will be making more of these decisions with other stakeholder.

Is the NHS on its last legs?

With the NHS in the UK nearing its 60th birthday, there’s been considerable talk about whether the system should be put into retirement. At the recent European-based World Healthcare Congress in Berlin the Chief Executive Officer David Nicholson explained why he felt that there was plenty of life in the old girl yet.

Nicholson pointed out that the last 18 months have seen significant change in the NHS. One year ago, the NHS was in its third year of producing a deficit – averaging about £0.5 billion annually. In 2007 the organisation managed to turn this around so successfully that they created a surplus of £0.5 billion, and this year the surplus is projected to be 3 times that. Now, why, you may ask, is a surplus a good thing in a non-profit organisation? Simply because when you have money you have an element of control over what you do. Being constantly in debt leaves you on the back foot and leaves little room for manoeuvre. So it is with the NHS, Nicholson claims.

Thinking of the NHS as purely a system helps with the implementation of change, according to Nicholson. He described the changes that have happened in the NHS as a series of phases.

The first phase began in the post 1997 era with a focus on building capacity based on national targets. In this phase the NHS grew by almost a third, in staff buildings and all levels of healthcare provision.

Phase Two of the change was in providing reforms in healthcare delivery – setting up tariff systems and organisational models.

Phase Three, underway at the moment is the individualisation and personalisation of care – making patients partners in their own healthcare provision.

From the 1st of April (a somewhat unfortunate choice of date) patients will have free choice of their secondary healthcare. The NHS is hoping to introduce an element of choice and contestability into healthcare, and also to integrate primary and secondary care a little better with advanced IT systems. To that end, they are working closely with BT Health to develop electronic patient records.

A start of this phase is the ability for patients to interact with their own healthcare records via HealthSpace on the web. So it seems, with an exciting future ahead, the NHS is heading a second youth/swinging sixties/second wind.