As the economic bite retains its hold, Alan Maynard looks at NICE’s work, the cost of it and how the government and industry undermine its value
The National Institute for Health and Care Excellence is creating inflationary pressures in the NHS and contributing to increased solvency problems in NHS hospitals and clinical commissioning groups.
‘The cost of introducing evidence based technologies into the NHS is now a major threat to the solvency of commissioners and providers’
Can its excellent work be afforded in times of austerity when every NICE announcement creates an opportunity cost, such as foregone health gains or quality adjusted life years (QALYs), elsewhere in the NHS?
NICE was established in 1999 with three functions: to produce appraisals of new technologies; to develop clinical guidelines; and to develop public health advice.
All three activities are informed by evidence of cost effectiveness. Technology appraisals produce mandatory decisions and these medical interventions have to be funded by the NHS. Its other two activities, clinical guidelines and public health advice, are advisory.
The technology appraisals permit the introduction of evidence based technologies into the NHS. Pharmaceutical companies submit cases for consideration of their new drugs, providing NICE with clinical trial data and setting the drug price. This evidence is then evaluated; NICE approves interventions that cost less than £30,000 per QALY.
This work has added several billion pounds to NHS expenditure in 15 years. During the period of high NHS expenditure growth, this pressure was coped with. Now, however, it is a major threat to the solvency of NHS commissioners and providers.
‘It is a tradition in public health to lament the persistence of health inequalities with regular reports’
NICE guidance can also be inflationary. This is not mandatory for NHS commissioners to provide but pressure from the media and lobby groups can make it difficult for CCGs and trusts to ignore.
For instance, after publication of the Francis report there has been debate about “optimal” nurse staffing ratios in hospitals. NICE guidance recommends a ratio of one nurse for eight patients. The budget consequence of this is estimated to be £200m-250m.
What QALYs will this produce to compensate for the loss of expenditure elsewhere that would produce alternative health gains? NICE should demonstrate that this opportunity cost produces more health gains or QALYs than an alternative use of these scarce resources.
Public health advice from NICE is made difficult because of the regular failure of those evaluating such interventions to produce good quality data that includes cost effectiveness information.
The nanny state
It is a tradition in public health to lament the persistence of health inequalities with regular reports, such as Black in 1980, Acheson in 1998 and Marmot in 2010. These documents and the academic literature find, unsurprisingly, that health inequalities are related to social income class. They recommend radical measures, such as taxation increases, which are generally ignored by politicians constrained by pressure groups such as the drinks, food and tobacco industries.
‘NICE tries to improve resource investment in public health but its advice rarely has strong lobbies supporting its marginal efforts’
The media may lament such inequalities but often undermine efforts to ameliorate differences in the wellbeing of the disadvantaged by denigrating government expenditure with phrases like “the nanny state”.
NICE tries to improve resource investment in public health but, unlike with clinical guidelines and healthcare groups that are often supported by industry and the medical profession, its advice rarely has strong lobbies supporting its marginal efforts.
Wealth over health
NICE is of considerable benefit to NHS decision making and evidence based practice. The government’s attempts to undermine it, with the cancer fund for instance, demonstrate its willingness to put industry wealth before population health.
The NICE cut-off of £30,000 exceeds those used by primary care trusts and CCGs and should not be raised. Industry pressure to erode it is an inevitable product of the desire for profit. Foregoing increased industry profit frees resources to enhance NHS health gains.
NICE is an invaluable guide for NHS decision makers. The inflationary effects of its activities cannot be ignored in the current period of austerity.
‘Government attempts to undermine NICE demonstrate its willingness to put industry wealth before population health’
Its work must be accompanied by advice from NHS England, associated regulators and academic groups on what to decommission. It also requires significant improvements in NHS management to identify and reduce unwarranted clinical practice variations.
Without evidence based decommissioning of poor value services and improved NHS management it will be difficult to achieve financial solvency and show efficient resource management.
The activities of NICE show that there is no such thing as a free lunch: all investment decisions have opportunity costs in terms of failing to fund alternative treatments and foregoing the health gains they would produce.
Beware the siren calls of industry and its lobbies. Demand improved guidance on how to manage the inflationary consequences of NICE advice.
Alan Maynard is an Emeritus professor of health economics at York University and chair of Vale of York Clinical Commissioning Group. He is writing in personal capacity