NICE’s Cost-Effectiveness Range: Should it be Lowered?

J. P. Raftery 0 0 J. P. Raftery (&) University of Southampton , Southampton, UK - NICE, takes the NHS budget as fixed and tries to estimate the NHS ICER from variations in spend and performance. This approach was first reported in relatively short papers [57], worked up into a major project led by a York team [8]. The best estimate by the York team put the NHS ICER at just under 13k. This meant that NICEs ICERs were much too high and should be reduced. This work was criticised by the Office of Health Economics (OHE), leading to a standoff. A plenary session on this topic at the large European International Society for Pharmacoeconomics and Outcomes Research (ISPOR) conference in late 2013 had to be cancelled due to claims from the York team that their work was about to be misrepresented by the OHE. The OHE critique has since been published [9]. This article steps gingerly into that contested space. To understand the issues in contention, some background is necessary. The York approach analyses differences in spend by disease group between 152 Primary Care Trusts linked to differences in life-years, via differences in mortality. In brief, expenditure and mortality data exist for ten disease groups from which a cost per life-year can be estimated. This was extrapolated first to cover the other 13 disease groups and then put in terms of QALYs. Mortality data covering half the NHS were thus used to generate QALYs for the entire NHS. Many assumptions were required to estimate life-years from these data, even more to get to QALYs. The debate is largely about the plausibility or otherwise of the assumptions (Table 1). The row over the reasonableness of the assumptions takes place within the terms of economics, with emphasis on terms such as elasticities, diminishing marginal returns, and so on. The York report lists nine key assumptions and justifies them in relation to the lack of alternatives. This is Table 1 Key differences in assumptions between the York team and the Office of Health Economics [9, 10] 1. Deaths averted by a change in expenditure returns an individual to the mortality risk of the general population (matched for age and gender) 2. Expenditure and outcome elasticities are uncorrelated 11. A PCTs response can be estimated from other PCTs with same expenditure and outcomes 3. Mortality effects of changes in expenditure (reported at PCT level) can be applied 12. 28 % of spending not accounted for can be to all mortality recorded in a PBC distributed pro rata 4. The PBC QALY effects are a weighted average of effects within each of the ICDs 13. Past and future spend effects cancel out that contribute to the PBC based on the proportion of the total PBC population within each contributing ICD codes 5. Health effects of changes in expenditure are restricted to the population at risk 14. York assume quality of life gains are enjoyed now so during 1 year do not need to be discounted 6. Health effects restricted to the PBC in which expenditure changes. No health 15. Rising NHS productivity offsets rise in threshold due effects associated with changes in GMS expenditure (or PBC22, Social Care) to increased NHS spending 7. Same proportional effect on QALY burden of disease as the estimated proportional 16. Given the uncertainty of the estimates, the lower effect on the life-year burden of disease should be chosen 8. Life-year effects are lived at a quality of life that reflects a proportionate improvement to the quality of life with disease 9. Proportional effect on QALY burden of disease in PBCs where mortality effects could not be estimated is assumed to be the same as the overall proportional effect on the life-year burden of disease across those PBCs where mortality effects could be estimated GMS General Medical Services, ICD International Classification of Diseases, NHS National Health Service, OHE Office of Health Economics, PBC programme budget categories, PCT Primary Care Trust, QALY quality-adjusted life-year Additional assumption required according to OHE 10. Programme budgeting data are reliable reasonable only if one insists on generating an ICER for the NHS. Failure was not an option for the York team. The OHE query most of the York teams assumptions but also point to a further seven assumptions (Table 1) that need to hold for the estimate to be valid. More assumptions could be readily added, notably the adjustment of local spending by the NHS needs index. The York work is pathbreaking in showing how the NHS ICER might be estimated. The assumptions required indicate the research needed for a more robust model. Rather than discuss each assumption in detail, I ask whether the NICE threshold should be reduced on the basis of this work. The answer I think must be no for two reasons. First, the assumptions required are too many and sweeping to be the basis of a major policy change. Second, the threshold may matter less than commonly thought. In practice, NICE almost never says no on grounds of cost effectiveness. Of the 512 technologies with recommendations listed on the NICE website, 15 % (or 79) were not recommended [10]. Of these, only 29 were not cancer drugs (fundable through the Cancer Drugs Fund). Of the 29 non-cancer refusals, 14 were later accepted. Ten were rejected as either lacking evidence, as outmoded technologies, or were less effective than their alternatives. Two high-cost drugs for MS were rejected but then funded by the Department of Health through a special scheme. The three drugs remaining were rejected only at particular doses or in favour of close substitutes. Factors explaining these results, besides the Cancer Drugs Fund, and the Multiple Sclerosis Scheme [11], include the end-of-life criteria [12] and Patient Access Schemes. A rise in NICEs threshold to around 40k [13] has also taken place. This is not to say that NICEs threshold does not matter, but it plays a less important role than commonly thought. Estimates exist for the NHS cost per QALY gained for the most common elective surgical procedures. Hip [14] and knee [15] replacements, and hernia [16] and varicose vein [17] repair cost less than 10k per QALY gained. Elective procedures such as these are often first to be reduced when the NHS is short of resources. They starkly illustrate the potential opportunity cost to the NHS of NICE guidance. Worryingly, the cost of these procedures varied widely by hospital, in ways that were not linked to outcomes [18]. Yet, the York work assumes variations in NHS spend are linked to outcomes. One way of minimising the opportunity cost would be for the NHS to protect treatments of proven cost effectiveness. Basing the NHS opportunity cost on services displaced raises the question of whether these should be services potentially or actually displaced [19]. Maximising QALYs from a fixed budget requires displacement of all services with sub-optimal cost/QALY. But given NICEs narrower remit of appraising the clinical and cost effe (...truncated)