The recent proposals by NICE and NHS England to change arrangements for evaluating and funding drugs and other health technologies not only tidy up the processes, but introduce some important new elements.

The four proposed elements are to:

1. Introduce a “fast track” NICE technology appraisal process for the most promising new technologies, which fall below an incremental cost-effectiveness ratio of £10,000 per QALY (quality adjusted life year).
2. Operate a “budget impact threshold” of £20 million, set by NHS England, to signal the need for a dialogue with companies to agree special arrangements to better manage the introduction of new technologies recommended by NICE.
3. Vary the timescale for the funding requirement when the budget impact threshold is reached or exceeded, risking disruption to the funding of other services.
4. Automatically fund, from routine commissioning budgets, treatments for very rare conditions (highly specialised technologies) up to £100,000 per QALY (5 times greater than the lower end of NICE’s standard threshold range), and provide the opportunity for treatments above this range to be considered through NHS England’s process for prioritising other highly specialised technologies.

The first of these is non-contentious and probably should have been introduced long ago. It is estimated to reduce appraisal time by 25%. Some interventions are likely to be cost effective if they are even mildly effective and incur low cost. From 2007 to 2014, around 15% of NICE’s technology appraisals fell at or below £10k per QALY.

Specialised services, of which 146 exist, cover a diverse range of disparate and complex services, from services for long-term conditions, such as renal and mental health problems, to services for uncommon conditions such as rare cancers. Funded by a variety of means and lacking standard data, responsibility for commissioning specialised services was shunted from agency to agency until 2013 when NHS England took on responsibility.

Proposals two and three, which are to do with specialised services, reflect the recent rows over funding drugs for hepatitis C when NICE’s approval of sofosbufir led to delays by NHS England due their total cost impact. Besides a BMJ investigation, this led to a considered review by the House of Commons Public Accounts Committee (PAC).

The PAC showed that between 2013–14 and 2015–16, the budget for specialised services increased from £13 billion to £14.6 billion, or 6.3% a year, well above that for the NHS. By 2020–21, the budget for these services is expected to rise to £18.8 billion, 16% of the total NHS budget.

In 2013–14, NHS England overspent on specialised services by £377 million (2.9%) and in 2014–15, it overspent by £214 million (1.5%). In 2014–15, the Cancer Drugs Fund accounted for £136 million of the overspend.

NHS England told the PAC that about three-quarters of NICE recommended drugs apply to specialised services and that most of the budget increase for 2016–17 was related to NICE approved drugs.

The PAC showed that the arrangements for pricing (Department of Health), appraising (NICE) and funding (NHS England) of specialized services were misaligned. It recommended that the Department of Health and NHS England should, in collaboration with NICE, ensure affordability is considered when making decisions that have an impact on specialised services. Proposals 2 and 3 formalise arrangements between NICE and NHS England for appraising and funding these services.

The fourth proposal marks the most radical change by setting the cost per QALY threshold for highly specialised (as opposed to specialised) technologies at £100k, which is five times greater than the lower end of NICE’s standard threshold range. Although this reflects the higher thresholds that have been allowed for some extreme “orphan drugs,” it lacks any coherent rationale besides political necessity. This leaves NICE with at least three cost per QALY thresholds, one of £20k-30k for standard technologies, one of around £50k for end of life technologies and one of £100k for highly specialised technologies.

This joint consultation by NICE and NHS England is open until 13 January. Although the questions posed are, as always, carefully phrased to avoid controversy, the responses will as always be worth reading.

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.