Following the Money: NHS England moves its tanks

NICE to see you

Last week, on the same day the Care Quality Commission published its annual State of Care report, a hugely important joint consultation between the National Institute for Health and Care Excellence and NHS England slipped out to much less fanfare.

The consultation proposes some big changes to the way new drugs are approved for NHS funding.

Since its creation in 1999, NICE has made this decision for most treatments on the basis of how cost effective they are.

However, it is now suggesting that considerations of “affordability” – or the overall cost to the NHS – should be included in its decision making.

This would happen through a “budget impact test”. If a new drug would result in an annual cost to the NHS greater than £20m, then the manufacturer will have to enter negotiations with NHS England to get the price down. If they can’t reach a deal, the drug will be subject to a slower rollout.

The test could be called “the hepatitis C clause”: NHS England was caught napping by the arrival of new therapies for the disease in 2015.

The drugs were judged by NICE to be cost effective, but they posed a significant financial risk to NHS England’s budget because they are very expensive and because of the disease’s prevalence.

To mitigate this risk, NHS England negotiated an unprecedented delay to the introduction of the drugs, followed by an unprecedented phased rollout with courses of treatment capped at 10,000 in 2016-17.

NHS England will hope the new policy will save its fingers from being burnt again by drugs that are both cost effective and expensive.

Cost effectiveness no longer king?

So is cost effectiveness no longer king in the NICE appraisal process?

While that’s true for the most part, cost effectiveness is actually being extended in one area.

As well as introducing the budget impact test, the consultation proposes introducing a cost effectiveness threshold to NICE’s “highly specialised technology” assessments – its process for authorising drugs for very rare diseases.

The threshold would be set at £100,000 per quality adjusted life year for these drugs.

While this is more than three times higher than NICE’s standard threshold, the introduction of such a hurdle could still make it more difficult for these drugs to win NICE approval unless companies lower their prices.

Tanks on the lawn

Taken together, the two proposals are likely to be anathema for the pharmaceutical industry and some patient groups, though NICE has tried to sugar the pill by offering “fast track” appraisals for the most cost effective new drugs with a QALY predicted to be below £10,000.

The response from these two constituencies has been quite muted so far, but expect the volume to rise when drugs start coming a cropper at the new hurdles.

For its part, NHS England will argue the changes are a sensible way of managing the competing demands on its budget in a period of austerity. If companies want to get their drugs to patients then all they have to do is offer a more competitive price, NHS England will argue.

But is there another party which is not best pleased with the changes?

Take a look at these two carefully worded sentences from the consultation document:

“Some of the proposals in this consultation relate to NICE’s processes and methods and others to the way in which NHS England manages its budgets. In some cases the changes that NICE is proposing are a consequence of the approach that NHS England wants to take.”

It would not be surprising if NICE was not terribly happy with the developments – it represents a major change to the way the organisation works, and an ebbing of power to NHS England.

Simon Stevens, the NHS England chief executive, first floated the idea of a budget impact test in an interview with HSJ earlier this year, when he also criticised the current NICE process for making it “harder” for his organisation to strike the best deals with pharma companies.

With this consultation, NHS England’s tanks have been placed squarely on NICE’s lawn.