James Raftery: The government response to the value based pricing consultation

The publication of the Government response to the value based pricing consultation provides some further insight into current thinking. 188 responses are summarised to the 20 questions posed in the consultation, along with the Department of Health response to each. Of the 20 questions, seven asked yes/no questions along the lines of do you agree that X is best. Given that such questions will have been crafted with mandarin nuance, one might be surprised if some gave the wrong answers. Several did.

Early questions warmed up respondents. Question 1 asked if the objectives (better patient outcomes, greater innovation, more transparent assessment, and better value for money) were the right ones. Unsurprisingly, a majority (61%) responded yes. Question 4 asked if we should pay more for medicines in areas of highest need. 50%  said yes but some warned of the dangers of a “hierarchy of disease” (Para 5.30). Question 7 which asked if people agreed with a premium for innovation, had 51% saying  yes.

Two  bigger questions were held to later. Question 13 asked if the proposed way forward was best (“Does the system set out above describe the best combination of rapid access to prices and affordability?). Question 16 asked if the proposed changes would achieve their objectives (“Will the approach outlined in this document achieve the proposed objectives….?”).  The majority of responses to both questions was No. For question 13, 29% said no, 21% yes and 50% did not reply. 19% said no to question 16,  15% yes and 66% did not reply. The government response to these acknowledged that its work on these remained “at an early stage.” Given that negotiations are due to begin on in 2012 (para 5.6) for a successor to PPRS in 2014, the timescale is, to say the  least, a challenge.   

What else can  be learnt?
QALYs seem safe. Question 10 asked if QALYs or patient experience or expert opinion should be used. “The great majority of responses favoured a system that used QALY s….” (p.23). The Government response agreed “with the majority of respondents that QALYs should form the starting point in assessing the value of treatments.” However it proposes to deal with the “insensitivities” of  QALYs by calculating QALY weights to reflect the societal benefits and innovation. It was considering “whether the insensitivities in the current approach to the calculation of QALYs are sufficiently significant to warrant mitigation.” Acknowledging  the lack of evidence on which to build such weights, it  intends to commission “ a programme of  high quality, robust, and independent  research” (para 5.37) . This it states will inform the weights and provide the clarity that stakeholders are seeking. Getting research results to meet the above timetable constitutes another challenge.

The linking of any cost per QALY threshold to the NHS opportunity cost is endorsed in the Government response. The maximum price would be the “price at which the benefits of the product are at least as great as the benefits that would have been provided to other patients if the funds were used elsewhere in the NHS” (p.25).

As noted above, innovation was supported in the consultation, with a  51% positive response to the carefully posed question 7 (“Do you agree …we should be willing to pay an extra premium to incentivise the development of innovative drugs that deliver step changes in benefits to patients but pay less for less innovative drugs?”). However some respondents were strongly opposed. The Government response acknowledged the complexity of the issue, that double counting must be avoided and it aimed to find, “a better balance where we don’t have to restrict access, that the NHS can offer new drugs to patients who can benefit from them, at an affordable price.” Reiterating ones aims when faced with difficulties is …sometimes …..all that one can do!

NICE is presented more positively than in last December’s consultation document, although none of the 20 questions focused on NICE. “We envisage NICE will have a central role in the VBP system including undertaking the planned pharmacoeconomic evaluation in which it is a world leader”. (p.34). The paper is silent on issues raised in that consultation document which might have sidelined NICE, such as expert panels to advise on premiums.

In its submission to the consultation NICE emphasised the importance of a “funding direction” meaning a mandate that the NHS fund technologies recommended by NICE. The Government response states that in its response to the Future Forum report “we said that we intend to maintain the effect of the funding direction in the value based pricing arrangements…….the NHS will be required to fund drugs already recommended by NICE, as well as drug treatments subject the value based pricing regime.” (p.13).
Question 12 asked about how to operate value based pricing  when insufficient information was available. Although this was framed  to do with new products it may have to apply more generally if value based pricing is to be introduced as planned in 2014. The Government response states that “our current thinking is that our approach is likely to be based on setting a contingent or interim price, as early as possible.” Although the consultation document anticipated the end of Patient Access Schemes (PAS), the Government response states “we have not ruled out the possibility that there may be a role for some type of PAS in the new system.”

Question 15 asked about transition beyond the Cancer Drugs Fund. Here again, since the fund was planned to be incorporated into value based pricing, delays seems likely. The Government response states that “it may be beneficial to defer a final decision on this issue in order to allow consideration of experience with the fund.” It also clarifies that “the successor arrangements to the PPRS …will cover the vast majority of drugs already on the market before 2014.”

Overall, then, the consultation shows  small majorities of respondents disagreeing  that the proposed way forward is best or will meet its objectives. The Government response overall marks a retreat from some of the more extreme positions outlined in last year’s consultation document. It acknowledges that its thinking on many difficult problems remains at an early stage. It plans to commission research to help with these matters but that seems unlikely to be ready in time. Delays are signalled several times as is “continued engagement with the full range of stakeholders’. This policy remains at an early stage of evolution.

James Raftery is a health economist with several decades experience of the NHS. He is Professor of Health Technology Assessment at Southampton University. A keen ‘NICE-watcher’, he has provided economic input to technical assessment reports for NICE but has never been a member of any of its committees. The opinions expressed here are his personal views. Comments welcomed.