The National Institute for Health and Care Excellence has taken the unprecedented step of expressing its ‘disappointment’ with a multinational drug giant in a row over a new breast cancer drug and the government’s pricing deal with the pharmaceutical industry.

Roche claims NICE’s failure to approve Kadcyla for the treatment of advanced breast cancer “underlines a systemic failure” of the recently agreed pricing deal between the Department of Health and the pharmaceutical industry.

However, this claim has been roundly dismissed by NICE, the DH and the Association of British Pharmaceutical Industry.

In a statement Jayson Dallas, general manager of Roche Products Limited, said the company had offered a “significant discount” on the list price for the drug and planned to appeal NICE’s decision, which he described as an “incredible injustice”.

“NICE’s rejection of Kadcyla demonstrates quite simply that their current system is broken, not fit for purpose and in need of a complete overhaul when it comes to advanced cancer,” he said.  

HSJ understands the drug is priced at more than three times the £50,000 per quality adjusted life year generally regarded as NICE’s threshold for end of life drugs.

Kadcyla extends life by an average of almost six months compared with currently available drugs, and is available through the cancer drugs fund.

This means patients in England will be able to access the drug despite NICE’s decision.

NICE chief executive Sir Andrew Dillon said: “We are really disappointed that Roche were not able to demonstrate more flexibility to help us make a positive recommendation.

“The company is well aware that we could not have recommended Kadcyla at the price it proposed.”

He said Roche’s argument - that NICE should ignore the price a company sets for a drug as the NHS will get a rebate under the pharmaceutical price regulation scheme agreement - was not the “expectation” of the agreement.

Under the scheme all drug companies signed up to the scheme will pay the government a rebate if the drugs budget grows above agreed levels. This has been set at 0 per cent in 2014-15. A rebate of £74m has already been paid for the first quarter.

The aim of the scheme is to increase uptake of new drugs in the NHS and incentivise the industry to set reasonable prices.

Roche was suspended from the ABPI in 2008 for breach of its code, and its tactics are increasingly disliked by other pharmaceutical companies.

One senior industry figure told HSJ that Roche was a “law unto itself” and claimed it had set a “silly price” for Kadcyla. Another alleged its actions were part of a lobbying exercise for the extension of the cancer drugs fund.

However, Roche argues NICE should be more flexible on price as the technology involved in Kadcyla has taken more than 30 years to develop. A spokeswoman pointed out that the drug was the eighth consecutive treatment for advanced breast cancer NICE had rejected this year, an issue affecting the “whole” pharmaceutical industry.

She said the company welcomed the cancer drugs fund as a short term solution but was focused on “working with NICE” to ensure that Kadcyla was made routinely available.

A spokesman for the DH said NICE was right to take account of “clinical and cost effectiveness” when evaluating new drugs.

Stephen Whitehead, chief executive of the ABPI, said the scheme did “not require NICE to accept whatever price a company places on a new medicine” but “recognises the need to work together in what is a period of unprecedented austerity and where we are all equal partners responsible for the medicines bill”.

The coalition government in 2010 originally introduced the cancer drugs fund, which was overspent last year.

It is widely regarded as a political stop gap pending the introduction of value based pricing.

However, this has proved more difficult to develop than the government anticipated, and the cancer drugs fund was extended for two years until 2016 as a result.

Mr Whitehead said the ABPI recognised that NICE “frequently struggles” with assessing the value of cancer, and highly specialised medicines and the organisations were “working together to look at the issues involved in assessing the value of cancer and other specialised medicines”.