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Simon Stevens on the top-up payment maze

The government has committed to answering at some time in the coming weeks a highly awkward dilemma: whether or not to allow NHS patients to make 'top-up' payments to cover treatments the NHS will not fund.

This, you will recall, is an issue thrust into the limelight by the emotive case of cancer patients told that, if they pay for cancer drugs not available on the NHS, they will forfeit all other aspects of their free NHS cancer care.

That this situation would arise was probably inevitable given the combination of two trends - increasing public awareness of effective new treatments, coupled with greater explicitness about NHS rationing.

Exceptional circumstances

Indeed the National Institute for Health and Clinical Excellence has been admirably transparent in indicating that only in exceptional circumstances will treatments that cost more than£30,000 per quality-adjusted life year be recommended for NHS funding. But if you are a cancer patient you may regard£40,000 for another year of life as eminently worthwhile. The question then is: if the NHS was willing to fund£30,000 of that, should you just be faced with paying an extra£10,000 at the margin, or is the NHS right to require you to pay the full£40,000 if you decline its less clinically effective but more cost-effective alternative treatment?

Unless there is going to be a complete ban on patients' private spending on healthcare (estimated at£15bn-£20bn annually), equitable allocation of care is presumably a decision rule confined to the allocation of NHS-funded care. If so, denying a patient their£30,000 of NHS-funded care when an identically situated patient would receive it, solely on the basis that the first patient is going to spend an additional£10,000 privately, could be held to conflict with rather than fulfil the NHS's universalist values. Reasoning such as this has led both the energetic think tank Reform as well as the left-of-centre Institute for Public Policy Research to argue that in principle there is a case for allowing some form of top-up payments.

However before the "in principle" case can be accepted in practice, I see five other considerations that have to be addressed.

Settling the balance

First, there are legitimate worries about how drug companies would respond to top-ups being allowed. At the moment, they are incentivised to hold down prices to reasonable levels so their product is rated as "cost-effective" by NICE, meaning they can get NHS reimbursement. But once top-ups are allowed, knowing better-off individuals will only be faced with the marginal cost over and above the default NHS treatment the drug companies' best bet may now be to have higher prices - even if that means lower sales volumes.

This is why many countries either prohibit providers and drug companies from levying top-up charges (a ban on so-called "balance billing") or, if they do have co-payments, the government or insurer often still uses its purchasing power to hold down the top-up costs patients face. Without this there is a real risk of "price discrimination": drug prices already generally reflect what a country is willing to pay, rather than the relative value or underlying costs of a treatment. Top-up payments could mean prices rise further in the UK.

Managing expectations

Second, we know exaggerated expectations are sometimes created in the minds of desperate patients about the latest "miracle" treatment. To protect patients and their families from such exploitation there is a case for saying top-ups to NHS care should only be allowed for treatments that on the balance of probabilities have been shown to be more effective (but less cost-effective) than the NHS-funded alternatives. NICE could be tasked with identifying these interventions.

Third, people who are currently completely opting out of the NHS would now start having at least some of their care reimbursed by it.

So if the NHS is going to start funding (to continue the example above) the first£30,000 of the treatment costs for people who have until now been paying the entire£40,000 themselves, there is a "deadweight" cost that needs to be calculated and understood. While it may be considered "fair" to do so for the universalist reasons described above, in the real world of a cash-limited NHS budget there is an opportunity cost if primary care trusts "crowd out" what was previously private spending with new public spending.

Reduced NHS funding

Fourth, some have expressed concern that over the medium term too much topping up would reduce public pressure on politicians to ensure high levels of NHS funding for a near-comprehensive core package of healthcare. If the scope of top-up payments is drawn narrowly this may be less of a risk - for example if they are only permitted for "lifesaving" new cancer drugs specifically designated as eligible by NICE.

But critics worry about slippery slopes and setting precedents that are later applied more broadly to create new charging regimes.

No "right" answer

So fifth, it should by now be obvious there is no entirely clear-cut answer to the dilemma. In his new book Just Health, Norman Daniels argues that in situations like this distributive justice cannot pre-specify the "right" answer; instead it has to emerge from fair decision procedures. In what is likely to prove a noble but futile effort to depoliticise this decision, the Department of Health has outsourced this particular judgement of Solomon to cancer czar Mike Richards.

He needs to design a topping-up mechanism that addresses all these policy concerns. But deciding whether to go down that path should then depend on the values of the public.

Fortunately we have a body created to advise on exactly these types of social value judgements. Step forward, the NICE citizens' council. Your moment has arrived.

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