The National Institute for Health and Clinical Excellence will no longer directly decide whether the NHS funds a drug under the proposed new pricing system, health secretary Andrew Lansley has confirmed.

In a speech to the NICE annual conference, Mr Lansley renewed the government’s commitment to introducing a value-based pricing system by January 2014 for medicines containing new active substances.

In a consultation response on the issue last year, the Department of Health said NICE would continue to undertake a pharmacoeconomic evaluation under value-based pricing.

Speaking to delegates, Mr Lansley said although NICE would examine the cost effectiveness of drugs it would “no longer be obliged to make a yes/no decision”.

The government will set price thresholds to reflect burden of disease and unmet need which will be used instead of the £30,000 quality adjusted life year measure used by NICE. Once a value-based price is agreed between the government and the company the NHS will be required to fund it in the same way as if it is a NICE recommended drug now.

Mr Lansley said: “We might pay more for a medicine that helps people with greater need or where there is no alternative treatment. Conversely there will be some medicines that do not bring this kind of value where we pay less.”

He told the conference that removing the need for NICE to make a judgement against a specific cost threshold would make NICE advice even more applicable across the world, building on its growing international reputation.

HSJ understands NICE’s role in VBP will form part of the negotiations between the DH and industry which are due to start later this year.

Mr Lansley also promised the new system would be open and transparent. However, the industry wants any prices agreed under the proposed new value based pricing system to remain secret in order to protect the price around the world.

A spokeswoman for the Association of British Pharmaceutical Industry told HSJ that forcing companies to make the value based price public could deter global pharma bosses from doing business in the UK.

She also warned the lack of detail on how the policy will work means drug companies will not be ready for January 2014.

“If a company was going to be ready to put a drug forward for VBP in January 2014 they would need to have started work a year ago but nobody knows what work to start. There’s going to be a big logjam in getting new and innovative medicines to patients,” she said.

“We are concerned about the delays in getting new and innovative medicines to patients.”