NICE’s wrong turns: opportunity costs and missed opportunities

By Jonathan Michaels.

The National Institute for Health and Care Excellence (NICE) is consulting on its methods for health technology evaluation, seeking ‘public’ views on over two thousand pages of highly technical supporting material.  NICE was established to promote “clinical and cost-effectiveness through guidance and audit” and address ‘postcode prescribing’ and has led the world in developing methods for health technology appraisal (HTA).  Many decisions are controversial, and under media, commercial and political pressure, some previous developments in method highlight a fundamental imbalance, which may disadvantage some patient and professional groups.

Single Technology Appraisal

In 2006, NICE introduced single technology appraisal (STA). Rather than an academic group, whose independence was strictly monitored, the manufacturer became responsible for submitting the evaluation.  A review NICE commissioned from its Decision Support Unit (DSU), suggested that the absence of an independent submission was incompatible with a process that does not place the burden of proof on the manufacturer.  Considering the large number of value judgements and uncertainties inherent in every appraisal, it seems unlikely that any company will find their product to lack cost effectiveness.  However, this is now the standard process for most appraisals.

End-of-life drugs

In 2009 NICE introduced guidance that assigns higher value to extension of life in those with short life expectancy.  Despite a subsequent review and empirical research by the DSU failing to demonstrate a clear case for this, it was subsequently incorporated into the standard appraisal process.

NICE’s consultation on value-based assessment suggested replacing this with a more general procedure for considering burden of illness, but this proposal was dropped after numerous adverse responses to the consultation, particularly from industry, although it returns in the current consultation.

Differential discount rates

In 2011 NICE allowed differential discount rates to be applied to costs and benefits in certain circumstances.  This was introduced in response to the appraisal of a childhood cancer drug and effectively allowed it to be approved despite a cost effectiveness ratio, which, based upon the standard rate, was over twice the accepted threshold.

Highly Specialised Technologies

In 2017 NICE introduced new procedures for appraising highly specialised technologies (HST) that allows increased thresholds of up to £300,000 per QALY, for drugs for rare conditions with large benefits and high cost.  This was introduced, despite NICE stating that special provision was not appropriate for rarity and that the ‘rule of rescue’ is not applicable  All thirteen HST appraisals to date have had positive recommendations, potentially displacing 10-20 QALYs for every one gained by the new technologies.

The way forward

NICE considers the ‘opportunity cost’ of adopting health technologies.  The changes described above effectively increase, either directly or indirectly, the cost at which a technology may be consider acceptable.  The willingness-to-pay threshold of £20,000 to £30,000 per QALY was originally selected without empirical evidence, but subsequent research has suggested that the threshold is already set too high.  Rather than take the opportunity to correct this, subsequent changes have led to the acceptance of higher thresholds in selected circumstances, without a corresponding reduction for situations that do not meet the relevant criteria.

This highlights a fundamental imbalance in NICE procedures, which favour the identifiable over the unidentifiable.  Identifiable stakeholders participate in every decision; patients, carers, and clinicians seek access to the most effective technology, regardless of cost, and manufacturers have a financial interest in positive recommendations.  Opportunity costs fall on unidentified and unidentifiable patients, whose services may be displaced, delayed or diluted by cost pressures, and who remain unaware of, and unrepresented in, the decision-making process.  Displaced activity may disproportionately affect services such as those caring for people with chronic physical and mental health problems.  This bias towards the identifiable may be exacerbated by a public, media and political system that is attracted to personal stories and new technologies.  Furthermore, the metric used by NICE to measure benefit may fail to adequately capture effects on mental health and disability and does not include processes of care that may be considered of value.

NICE decisions risk displacing cost-effective treatments and care, with the losses largely falling on the disadvantaged, disempowered, chronically sick and disabled, exacerbating the health inequalities that NICE has committed to addressing.  With an increasing emphasis on mental health and the inclusion of social care in NICE’s portfolio, the time is right for a complete rethink of how NICE measures and assigns value, in a way that encompasses all aspects of the caring that is so often displaced in the name of efficiency.  New and consistent procedures need to take into account the views and interests of those unidentified patients, carers and professionals most likely to be disadvantaged by escalating opportunity costs.  Consultation must extend beyond the ‘usual suspects’ who represent commercial and political interests with the resources to engage with, and challenge, policies that would be unfavourable to their vested interests.


Author: Jonathan Michaels

Affiliations: School of Health and Related Research, University of Sheffield

Competing interests: None

Social media accounts of post author: @JonM_ScHARR

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