In a four-part series, Bluebirdbio is exploring how the NHS can embrace the power of gene therapy as a treatment for rare diseases in the UK, including some of the systemic changes that will be needed. In this third column, David Taylor, emeritus professor of Pharmaceutical and Public Health Policy at UCL, looks at the role and significance of the discount rate when bringing gene therapies to market.

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When people assess the present value of future benefits, they normally apply – whether they know it or not – a discount rate. The reasons why are clear. For one thing, if someone is promised a reward next year for something done today, there is a risk she or he might not live to receive it. If payment were not due for decades its value today might seem close to nothing.

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However, societies are not individuals. It is more or less certain that their overall populations will still exist in, say, 20 or even 50 years. This simple insight has major policy implications, especially for children and younger adults. For example, with regard to climate change, applying even a modest discount rate can make it look like not worth investing now to prevent major harm towards the end of this century. But this is a judgement that increasing numbers of people are now challenging, regardless of their age.

Discounting future benefits also affects the amounts the NHS and other health care systems with health economics-based approaches to controlling the prices of innovative treatments are willing to pay. When it was first created in 1999, NICE applied a discount rate of 1.5 per cent to future health benefits and one of 6 per cent to future treatment costs. Real costs typically fall as technologies mature. Yet today it applies a single rate of 3.5 per cent in both contexts. By contrast, the recommended Treasury rate for discounting future benefits is still 1.5 per cent.

A discrepency

This discrepancy means that the value of saving future lives through more effective forms of health care is being discounted more than is the case with benefits generated in other ways. At the same time, the long-term costs of spending on health improvement are being overstated. Like with climate change, it is young people threatened by catastrophic disease consequences who (along with members of the next generation) personally stand to lose the most from applying a high discount rate to future benefits.

For those who face living from their childhoods onwards with inherited or acquired conditions, the price of unfairly discounting the future benefits of better treatments could prove even greater

For example, a curative intervention for a condition like a cancer that typically effects people in their 60s might, if a discount rate of 1.5% were applied, offers each person receiving it an average of 17 additional QALYs over 20 years or so. If a 3.5 per cent figure were used, the present value of the therapy in question would fall to 14 QALYs per recipient. The difference of 3 QALYs is significant but its impacts on the amount the NHS would be prepared to pay would be unlikely to make the treatment’s supply uneconomic.

However, in the case of an advanced medicinal or other therapy that could cure a disabling and/or fatal disease if given during childhood, the calculations come out very differently. Over 50 or more years a total benefit of around 36 QALYs might be expected if a discount rate of 1.5 per cent were applied. But the benefit figure drops to just 22 QALYs over the same time in the case of a 3.5 per cent discount rate. This represents a fall of over a third in the treatment’s perceived value to a purchaser such as the NHS.

Differences of such a magnitude threaten the economic viability of developing such forms of care and could slow the speed with which they become available. Given that NICE also values additional quality adjusted life years at under half the Treasury recommended £60,000, there is serious reason for concern.

NICE is presently conducting a methods review. This should draw attention to the neglected problem of encouraging investment in developing and supplying medicines like gene therapies that have the potential to improve the health of individuals far into the future.

For healthcare providers facing pressures like those created by the covid-19 pandemic, it may seem right to try to drive costs down in any possible way. But for a nation that will need to earn its future living through its contributions in areas like the life sciences, there are risks in paying too little for innovation. For those who face living from their childhoods onwards with inherited or acquired conditions, the price of unfairly discounting the future benefits of better treatments could prove even greater.